Question 1
1. (TCO 1) Which of the following statements is true regarding the goal of financial management? (Points: 3) A US company considering international operations will have a different goal than a company that only conducts operations in the US. The firm?s structure (i.e. corporation, sole proprietorship, partnership) is not relevant to the goal of financial management. A way of aligning management goals to shareholder?s interest is to tie managerial compensation to the market value of the firm?s stock. None of the above are true. 2. (TCO 1) Market value is important to the financial manager because: (Points: 3) It reflects the value of the asset based on generally-accepted accounting principles. Is a crucial component of the balance sheet and can impact the financial statements. Market values reflect the amount someone is willing to pay today for an asset. The market value of an asset reflects its historical cost. 3. For this question, use the information for Sports Baseballs, Inc. Sports Baseballs, Inc. is a corporation that manufacturers and sells baseballs across several states in the Southeast. It had sales of $2.7 million during the last year. Expenses were as follows: Cost of goods sold............................... $1.2 million Administrative expenses........................ $250,000 Marketing and selling expenses............... $175,000 Depreciation........................................ $500,000 Interest expense.................................. $200,000 Dividends paid..................................... $150,000 (TCO 1) Suppose that Sports Baseball has 30,000 shares of stock. Assume a tax rate of 30%. What is the EPS figure? (Points: 3) 8.50 8.75 9.0 9.15 4. For this question, use the information for Sports Baseballs, Inc. Sports Baseballs, Inc. is a corporation that manufacturers and sells baseballs across several states in the Southeast. It had sales of $2.7 million during the last year. Expenses were as follows: Cost of goods sold............................... $1.2 million Administrative expenses........................ $250,000 Marketing and selling expenses............... $175,000 Depreciation........................................ $500,000 Interest expense.................................. $200,000 Dividends paid..................................... $150,000 (TCO 1) Assuming a tax rate of 30%, what is the operating cash flow for the year? (Points: 3) $1,260,000 $962,000 $962,500 $1,265,000 Can not be determined with the information given 5. For this question, use the information for Sports Baseballs, Inc. Sports Baseballs, Inc. is a corporation that manufacturers and sells baseballs across several states in the Southeast. It had sales of $2.7 million during the last year. Expenses were as follows: Cost of goods sold............................... $1.2 million Administrative expenses........................ $250,000 Marketing and selling expenses............... $175,000 Depreciation........................................ $500,000 Interest expense.................................. $200,000 Dividends paid..................................... $150,000 (TCO 1) Select all items that will be included in Sports Baseballs, Inc. Income Statement. For this exercise you will be choosing more than one option for your answer: (Points: 3) Accounts receivable Cost of goods sold Net working capital Interest expense Taxes Current assets Short-term loans Cash on hand Inventory 6. (TCO 1) Which one of the following activities best exemplify capital budgeting. For this exercise you will be choosing more than one option for your answer: (Points: 6) Identify three good investment opportunities for the firm. Obtain a short-term loan to purchase materials. Evaluate the level of risk of a project. Sale long-term bonds to raise funds. Determine the return of a potential project. 7. (TCO 1) Match the following terms with the examples as appropriate: (Points: 4) Matching: Answer Potential Matches: : Insider trading 1: McDonald's work to redesign packaging items with recyclable materials. 2: Microsoft's monopolistic behavior. 3: Martha Stewart's sale of ImClone stock as result of information provided by the company's CEO before an announcement was made public that significantly decrease ImClone's stock price. 4: Parmalat's deliberate fraudulent accounting practices. 5: established an oversight board responsible for improving auditing standards within companies. : Social responsibility : Sarbanes-Oxley Act : Fraud : Antitrust case 8. (TCO 1) Can you provide some examples of situations in which business ethics play a role in the financial management process? (Points: 5),Thank you, I'll be here waiting.,I need these questions answered by 11pm PLEASE.. thank you for your help!
Question 2
Hi I needed help writing the paper attached. Below is a brief overview of what each section should entail, but the attached document provides more details. Elements of the PAA 1. Concrete Experience In this part of the paper, students briefly describe what happens in the experience. A simple description of the events which occurred is not sufficient. The feelings experienced by the student as well as his or her thoughts and perceptions during the experience are relevant to this discussion. Another way of looking at the concrete experience would be to recognize that it possesses an objective and a subjective component. The objective part presents the facts of the experience, like a newspaper account, without an attempt to analyze the content. The subjective part is the "here-and-now" personal experience of the event. This experience is composed of feelings, perceptions and thoughts. Helpful hints: (1) It often helps students to replay the experience in their mind. After reviewing the experience, students should write a report of what they saw, heard, felt, thought, and heard and saw others doing. (2) Students should avoid presenting the detailed mechanics of the experience unless these are critical to the remainder of the paper. This section of the paper should be no longer than 1.5 pages long. (3) Students should avoid reporting the feelings and thoughts experienced after the experience being described. This retrospection is more appropriate in the reflective observation section. 2. Reflective Observation The student should ask him/herself: What did I observe in the experience and what possible meanings could these observations have? The key task here is to gather as many observations as possible by observing the experience from different points of view. The main skill to work on is perspective taking or what some people call "re-framing." Try to look at this experience and describe it from different perspectives. For example, how did other participants view the situation and what did it mean to them? What would a neutral ("objective") observer have seen and heard? If some time has passed since the experience, do you now see the situation differently? Look beneath the surface and try to explain why the people involved behaved the way they did. Reflect on these observations to discover the personal meaning that the situation had for you. Helpful hints: (1) If possible, discuss the experience with others who were involved to gain their views and clarify your perceptions. (2) "Unhook" yourself from the experience and meditate about it in a relaxed atmosphere. Mull over your observations until their personal meaning comes clear to you. Try to figure out why people, and you in particular, behaved as they did. What can you learn about yourself, looking back on the experience? If you write about a conflict or interaction, be sure to analyze both sides and put yourself in the shoes of the other people involved. . 3. Abstract Conceptualization By relating assigned readings and lectures to what you experienced, you are demonstrating your ability to understand conceptually abstract material through your experiences. This process will help you refine your model of people and organizations. While some assigned readings and lectures will have varying degrees of relevance to your experience, it is important that you make several references and not limit your conceptualizing to just one source. Use at least two major concepts or theories from the course readings and cite them correctly e.g,, (Osland, Kolb & Rubin, 2001, p. 31). 4. Active Experimentation This section of the paper should begin by summarizing what you learned about yourself as a result of writing the paper. What new personal insights and practical lessons did you learn about how to more effectively deal with these types of experiences. Make sure to focus on what you learned about yourself, rather than what you learned about someone else, general situations such as group behavior, or processes such as negotiation. This should be presented in a separate paragraph and not buried within your discussion of an action step.
Question 3
Time Value of Money Background You are an investment advisor and your clients, Marilyn and David, require your services. Marilyn and David are both 65 and are about to retire. They have no assets other than $1,600,000 in cash savings, and they have no debts. They wish to maintain their current lifestyle during their retirement years. Their current annual living expenses are $120,000. They have no children and they do not wish to bequeath any assets to charity (after their death). Marilyn and David are in excellent health and have a normal life expectancy. They are, however, concerned about the possibility of outliving their retirement income (i.e., longevity risk). They will rely entirely on their cash savings to support themselves financially during their retirement years. Furthermore, they have a strong aversion to risk. Marilyn and David have decided to use their cash savings to purchase an annuity that will provide them with the necessary income to cover their living expenses over their retirement years. They initially consult with Ms. Sheila Young who is an investment advisor at Merrill Lynch about purchasing their desired annuity. Ms. Young is a very experienced advisor and she claims that she could get Marilyn and David a much higher annual income than they require because she ?knows? how to invest their savings in financial instruments that can yield at least 15% per year. This rate of return is well above the current and historical average return for U.S. stocks as measured by the S&P 500 index. Marilyn and David want you to provide a ?second opinion? of the analysis done by the Merrill Lynch advisor. Specifically, they want you to write a memo to Ms. Young that compares the two alternatives and highlights the risks and benefits of each alternative. They feel certain that Ms. Young is not giving due consideration to assumptions and variables that will impact their decision (e.g., market risk, the clients? risk tolerance, life expectancy, among others), but they don?t know how to articulate their concerns to her. Therefore, since you speak ?finance? they would like you to prepare this memo on their behalf. Assignment Write a memo to Ms. Sheila Young containing the following information: ? Provide a professional and financially sound critique where you identify the problem(s), if any, with her investment analysis. ? Conduct your own comprehensive investment analysis where you address any problem(s) identified using the appropriate methods (e.g., formulas, models, etc.) and assumptions; and provide the appropriate insight from your analysis. ? Recommend one or more specific, clearly explained actions that address the problem(s) identified based on your investment analysis; and support your recommendations using your analytical results. ? Grading and Instructions The grade on this assignment will be equally divided (50/50) between the analytical quality of your argument (reasoning ability) and clarity of thought, correct use of grammar, punctuation, etc. (writing skills). Please note, simply providing ?numbers? is insufficient to obtain a passing grade. Please provide your analysis in a clear and analytically sound memo that supports your final recommendations/conclusions. All supporting tables and graphs must be clearly presented and labeled.
Question 4
Individual Assignment: Restructuring Debt ? Your company is in financial trouble and is in the process of reorganization. Your manager wants to know how you will report on restructuring the debt. Use the following information to help with this assignment. Part A ASSETS CURRENT ASSETS Cash and cash equivalents $ 108,340 Trade accounts receivable, net of allowances 2,866,260 Other receivables 62,150 Operating supplies, at lower of average cost or market 58,630 Prepaid expenses 446,050 Total Current Assets 3,541,430 PROPERTY, PLANT AND EQUIPMENT (at cost) Land 1,950,000 Buildings and improvements 2,327,410 Equipment 5,015,660 Other equipment and leasehold improvements 1,645,580 total 10,938,650 Accumulated depreciation and amortization (7,644,430) Net Property, Plant, and Equipment 3,294,220 OTHER ASSETS Deposits and other assets 1,000,080 TOTAL ASSETS $ 7,835,730 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 972,160 Accrued liabilities 2,071,270 Accrued claims costs 793,620 Federal and other income taxes 19,710 Deferred income taxes 500 Current maturities of long-term debt and capital lease obligations 50,610 Short-term borrowings 249,250 Total Current Liabilities 4,157,120 LONG-TERM LIABILITIES Capital lease obligation 54,580 Note Outstanding 3,000,000 Mortgage Outstanding 608,030 Other liabilities 95,860 Total Long-term Liabilities 3,758,470 Total Liabilities 7,915,590 SHAREHOLDERS' EQUITY (DEFICIT) Common stock, $.01 par value; authorized 500,000 shares; issued 231,000 shares 2,310 Additional paid-in capital 731,090 Accumulated other comprehensive loss (113,500) Retained earnings (deficit) (639,180) Treasury stock (60,580) Total Shareholders' Equity (Deficit) (79,860) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,835,730 Part B ? As stipulated, your company is having financial difficulty and has asked the bank to restructure its $3 million note outstanding. The present note has 3 years remaining and pays a current interest rate of 10%. The present market rate for a loan of this nature is 12%. The note was issued at its face value. The bank agrees to accept land in exchange for relinquishing its claim on this note. The land has a book value of $1,950,000 and a fair value of $2,400,000. ? The company provides the following information related to its post employment benefits for the year 2007: o Accumulated postretirement benefit obligation at January 1, 2007 $810,000 o Actual and expected return on plan assets $34,000 o Unrecognized prior service cost amortization $21,000 o Discount rate 10% o Service cost $88,000 ? Part A ? Provide your manager a comparison of the current reporting for debt, explaining the requirements for each type (bond, mortgage, capital lease, and others). Then, prepare the journal entries for the restructuring. ? Part B ? To satisfy various benefit issues that have arisen as a result of the restructuring, new post employment benefits have been created. The company currently has a defined benefits plan and is considering switching to a defined contribution plan to save costs. Compute the costs associated with keeping the current plan versus the costs of a defined contribution plan where the employer pays 3% of payroll. The agreement is that the employees get to keep what is already in the defined benefit plan. This prevents the situation of having to compute how much the company would recapture in surplus assets resulting from terminating the old plan. Then, compute a new post employment benefit expense for 2007 and report this to your manager. Illustrate with schedules and notes.
Question 5
Raphael Corporation's common stock is currently selling on a stock exchange at $85 per share, at its current balance sheet shows the following stockholders' equity section: Preferred stock -5% cumulative, $__ par value, 1,000 shares authorized, issued, and outstanding.................................................................................$50,000 Common Stock- $___ par value, $4,000 shares authorized, issued, and outstanding..... 80,000 Retained Earnings....................................................................................................................150,000 Total stockholders' equity.....................................................................................................$280,000 Required (round per share amounts to the nearest cents) 1. What is the Current market value (price) of this corporation's common stock? 2. What are the par values of the corporation's perferred stock and its common stock? 3. If no dividends are in arrears, what are the book values per share of the perferred stock and the common stock? 4. If two years' perferred dividends are in arrears, what are the book values per share of the perferred stock and the common stock? 5. If two years' preferred dividends are are in arrears and the perferred stock is callable at $55 per share, what are the book values per share of the perferred stocj and the common stocks? 6. If two years' preferred dividends are in arrears and the board of directors declares cash dividends of $11,500, what total amount will be paid to the perferred and to the common shareholders? What is the amount of dividends per share for the common stock? 7. What are some factors that can contribute to a difference between the book value of common stock and its market value (price)?
