Question 1
Roberta Santos, age 41, is single and lives at 120 Sanborne Avenue, Springfield, IL 60781. Her Social Security number is 123-45-6789. Roberta has been divorced from her former husband, Wayne, for three years. She has a son, Jason, who is 17, and a daughter, June, who is 18. Jason's Social Security number is 111-11-1111 and June's is 123-45-6788.Roberta does not want to contribute $3 to the Presidential Election Campaign Fund. Roberta, an advertising executive, earned a salary of $75,000 in 2011. Her employer withheld $8,500 in Federal income tax, $3,100 in state income tax, and the appropriate amount of FICA tax: $3,150 for Social Security tax and $1,087.50 for Medicare tax. Roberta has leagl custody of Jason and June. The divorce decree provides that Roberta is to receive the dependency deduction for the children. Jason lives with his father during summer vacation. Wayne indicates that his experiences for Jason are $10,500. Roberta can document that she spent $6,500 for Jason's support during 2011. In prior years, Roberta gave a signed Form 8332 to Wayne regarding Jason. For 2011, she has decided not to do so. Roberta provides all of June's support. Roberta's mother died on January 7, 2011. Roberta inherited assets worth $625,000 from her mother. As the sole beneficiary of her mother's life insurance policy, Roberta received insurance proceeds of $300,000. Her mother's cost basis forb the life insurance policy was $120,000. Roberta's favorite aunt gave her $13,000 for her birthday in October. On November 8, 2011, Roberta sells for $20,000 Amber stock that she had purchased for $24,000 from her first cousin, Walt, on December 5,2006. Walt's cost basis for the stock was $26,000, and the stock was worth $23,000 on December 5, 2006. On December 1, 2011, Roberta sold Falcon stock for $13,500. She had acquired the stock on July 2, 2008, for $7,000. An examination of ROberta's records reveals that she received the following: ?Interest income of $2,000 from First Saving Bank. ?Groceries valued at $750 from a local grocery store for being the 100,000th customer. ?Qualified divident income of $1,800 from Amber. ?Interest income of $3,750 on City of Springfield school bonds. ?Alimoby of $15,000 from Wayne. ?Distribution of $4,800 from ST Partnership. Her distributive share of the partnership passive taxable income was $5,300. From her checkbook, she determines that she made the following payments during 2011: ?Charitable contributions of $3,500 to First Presbyterian Church and $1,500 to the American Red Cross (proper receipts obtained). ?Mortagae interest on her residence of $7,800. ?Property taxes of $3,100 on her residence and $1,100 on her car. ?Estimated Federal income taxes of $3,800 and estimated satate income taxes of $1,000. ?Medical expenses of $5,000 for her and $800 for Jason. In December, her medical insurance policy reimbursed $1,500 of her medical expenses. ?A $1,000 ticket for parking in a handicapped space. ?Attorney's fees of $500 associated with unsuccessfully contesting the parking ticket. ?Contribution of $250 to the campaign of candidate for governor/ ?Because she did not maintain records of the sales tax she paid, she calculates the amount from the sales tax table to be $994. Calculate Roberta's net tax payable or refund due for 2011. If you use tax forms, you will need Form 1040 and Schedules A,B, D, and E.
Question 2
Please complete the Case Study 3.2, ?Project Selection at Nova Western, Inc?. on pages 103-104 of the textbook and respond to the questions for discussion. Please make sure that each question is answered thoroughly using a minimum of 200 words for each case study question. (15 points) Q1. Phyllis has called you into her office to help her make sense of the contradictions in project evaluation. How would you explain the reasons for this divergence of opinion from one technique to the next? What are the strengths and weaknesses of each screening method? Notes: The chapter notes several strengths and weaknesses of each project screening method and these should be considered in this case. It is not uncommon for financial and non-financial screening methods to yield competing information; thus, an argument could be made that using only these two methods is insufficient and in fact, an enhanced screening model should be developed for Nova that considers these factors are part of an overall, larger model of choice. A1. Q2. Choose the project that you feel, based on the above analysis, Nova Western should select. Defend your choice. A2. Q3. What does the above case suggest to you about the use of project selection methods in organizations? How would you resolve the contradictions found in this example? Notes: A successful screening model is often a comprehensive one. Simplistic models typically yield simplistic answers and their consistency from method to method is questionable. As the chapter demonstrates, most effective screening techniques used in organizations today are complex, multi-faceted and comprehensive in nature. One simple solution to this case might be to use the results of the discounted cash flow analysis as an additional factor in the weighted scoring model, whereby net present value becomes an additional selection criterion to consider along with the other factors already listed. Likewise, students should be asked to consider if any of the criteria in the scoring model represent ?must? items that cannot be compromised, such as safety. Finally, student may point out that the factor, ?Potential Profit? ranks both projects identical. However, the DCF model shows that Project Janus might reasonably be ranked higher. Ask students how this reevaluation might change final results.
Question 3
Course Home - Course Project Print This Page Course Project: Fixed-Income Security Objective | Guidelines | Milestones | Grading Rubric | Best Practices Objective Students should familiarize themselves with bonds and/or preferred stock as an investment opportunity and as a source of funds. In this assignment, students will determine why a fixed-income security may be offered by a firm, what features it must have in order to be attractive to investors, and what kind of financial results were achieved as a result. Balance sheet accounts as well as certain ratios are to be analyzed. Guidelines Papers should be 10 to 20 pages in length, 10-point font, and double-spaced; and should include a cover page, table of contents, introduction, body of the report, summary or conclusion, and works cited. Even though this is not a scientific-type writing assignment and is mostly creative in nature, references are still very important. At least six authoritative, outside references are required (anonymous authors or web pages are not acceptable). These should be listed on the last page titled "Works Cited." Appropriate citations are required. All DeVry University policies are in effect including the plagiarism policy. Any questions about this paper may be discussed in the weekly Q & A discussion topic. This paper is worth 170 total points and will be graded on quality of research topic and paper information, use of citations, grammar, and sentence structure. See the grading rubric; this is also available in Doc Sharing. Students should pick a company that has issued bonds in the last three years so that the Internet can provide sufficient financial data for analysis. Post in the Journal (a) your company choice, (b) the security offered, and (c) when that security was issued. It?s suggested that you work on at least one of each of the remaining sections each week. The final report is made up of separate sections for each milestone listed below. Each section should be approximately one page (excluding charts, graphs, etc.). Important: When preparing your report, separate the sections with headings that are the same as the highlighted milestones below. Milestones Company Background (15 points) This section should include what industry the firm is in, its products, its competitors, and the stated main reason for needing capital (to fund receivables, capacity expansion, retire older debt, etc.). Balance Sheets (20 points) What did the balance sheet looked like in the quarter just prior to issuing the bonds? Include both a copy from before the issue and after the issue. Calculate at least five of the ratios shown in the Moody?s Bond Rating Chart contained in the Week 2 Lecture both before and after the bonds were issued, and discuss why you think they are important to your report. Trends in YTM and Price (20 points) At what price and YTM was the initial offering sold? Tabulate the price and YTM of the issue at the end of each calendar quarter for the last six quarters. Then, plot the tabulated values to visualize the trends in YTM and prices. Purpose of the Offering and Leverage (20 points) What was the planned use of the funds raised? If you can?t find a specific discussion about that, then use your judgment as to why you think the funds were needed and explain your reasoning. Calculate the financial leverage before and after the offering. Credit Rating (20 points) What credit rating have the bonds been given by the bond credit rating services? Research the criteria each agency uses to determine the rating. Why (or why not) do you think that recent financial statements justify the rating? Rate of Return (30 points) If you were one of the original investors in this issue and you had invested $10,000, what would your total return be if you sold the securities at today?s market price? Compute the duration of the bond and its convexity currently. Add a brief discussion about your calculations. Comparisons (30 points) Identify and compare pre-offering EPS and total equity $ to the most current values. Compute the firm's current WACC assuming the total debt of the firm is in the issue that you analyzed. This means that if the company has more than one debt issue outstanding with a total face value of $X million and your chosen issue involves $Y million, then assume that all $X million is in your issue. This will simplify the calculations without diminishing learning value. Discuss at least three overall conclusions about this offering as a result of your research. Comments (15 points) Please give your opinion about the value of this project to your overall learning experience in this course. Constructive comments, both positive and negative, are appreciated. Discuss at least two characteristics about this project. Please edit your report so that it is something that makes you proud. Grading Rubric Fixed-Income Security Project Rubric Part Points Full Credit 3/4 Credit 1/2 Credit 1/4 Credit 1 15 Thorough description with all requirements All elements included, but lacks some depth Clear reason for funding Some elements included, but lacks depth. Unclear reason for funding Minimal description Most elements missing No reason for funding II 20 Pre and post balance sheets Pre and post D/E and ROE ratios Balance sheets included 3/4 ratios shown Balance sheet included Only 1/2 the ratios shown Missing one or more balance sheet(s) No ROE shown III 20 Trends in YTM and price All included, except 18-month trend incomplete Partial trends included No indication of the trends IV 20 Found and commented on purpose of the offering Computed financial leverage before and after offering Found purpose of offering and leverage, but incomplete Purpose or leverage missing Some information provided without explanation V 20 Found credit rating on the security from two agencies; listed criteria needed for that rating Only one agency rating found Criteria shown Only one agency found, but no criteria shown No credit ratings found VI 30 Computed total return, duration, and convexity, and discussed All calculations shown, interest or dividends shown, but TVM improperly applied Calculations shown and TVM applied improperly TVM not used to calculate total return No calculations shown VII 30 Compared EPS, total equity pre-offering to most current Computed WACC and discussed your thoughts about them Three conclusions reached, but with weak justifications EPS and ROE determined Conclusions shown but without justification Calculations incomplete No conclusions or calculations shown VIII 15 Opinion on value of project to course Two or more constructive comments Opinion with weak justification One constructive comment Opinion without justification One constructive comment No opinions One constructive comment Total Points = 170 Best Practices The following are the best practices in preparing this paper. Plan ahead using the suggested milestones. Do research early so if any problems occur you have time to fix them. If you get stuck at any point, pose questions to your instructor and/or your classmates. Cover page: Include who the paper was prepared for, who prepared it, and the date. Table of contents: List the main ideas and sections of you paper and the pages on which they are located. The illustrations should be included separately. Introduction: Use a header on your paper; this will indicate that you are introducing your paper. The purpose of an introduction or opening is to: introduce the subject and why the subject is important; preview the main ideas and the order in which they will be covered; and establish a tone of the document. Include in the introduction a reason for the audience to read the paper. Also, include an overview of what you are going to cover in your paper and the importance of the material. (This should include or introduce the questions you are asked to answer on each assignment.) Body of your report: Use a header titled with the name of your project (e.g., ?The Development of Hotel X - A World Class Resort?). Then proceed to break out the main ideas. State the main ideas, the major points in each idea, and provide evidence. Break out each main idea you will use in the body of your paper. Show some type of division; you can separate sections that are labeled, separate group of paragraphs, or separate headers. You will include the information you found during your research and investigation. Summary and conclusion: Summarizing is similar to paraphrasing, but presents the gist of the material in fewer words than the original. An effective summary identifies the main ideas and major support points from the body of your report; minor details are left out. Summarize the benefits of the ideas and how they affect the tourism industry. Work cited: Use the citation format as specified in the Syllabus. Additional hints on preparing the best possible project: Apply a three-step process of writing: plan, write, and complete. Prepare an outline of your research paper before you go forward. Complete a first draft and then go back to edit, evaluate, and make any required changes. Use visual communication to further clarify and support the written part of your report (e.g., graphs, diagrams, photographs, flowcharts, maps, drawings, animation, video clips, pictograms, tables, or Gantt charts).,I would like to work with Rachel P.
Question 4
PennTech Corporation has been producing two precision bearings, component T79 and B81, for use in production in its central Pennsylvania plant. Data regarding these two components follow. T79 B81 Machine hours required per unit 2.5 3 Standard cost per unit: Direct material $6.75 $11.25 Direct labor $12 $13.50 Manufacturing overhead Variable* $6 $6.75 Fixed^ $11.25 $13.50 Total $36.00 $45.00 * Variable manufacturing overhead is applied on the basis of direct-labor hours ^ Fixed manufacturing overhead is applied on the basis of machine hours PennTech's annual requirement for these components is 8,000 units of T79 and 11,000 units of B81. recently, management decided to devote additional machine time to other product lines, leaving only 41,000 machine hours per year for producing the bearings. An outside company has offered to sell PennTech its annual supply of bearings at prices of $33.75 for T79 and $40.50 for B81. Management wants to schedule the otherwise idle 41,000 machine hours to produce bearings so that the firm can minimize costs (maximize net benefits). Required: 1.) Compute the net benefit (loss) per machine hour that would result if PennTech Corporation accepts the supplier's offer of $40.50 per unit for component B81. 2.) Choose the correct answer. PennTech Corporation will maximize its net benefit by: a.) Purchasing 4,800 units of T79 and manufacturing the remaining bearings. b.) Purchasing 8,000 units of T79 and manufacturing 11,000 units of B81. c.) Purchasing 11,000 units of B81 and manufacturing 8,000 units of T79 d.) Purchasing 4,000 units of B81 and manufacturing the remaining bearings. e.) Purchasing and manufacturing some amounts other than those given above. 3.) Suppose management has decided to drop product T79. Independently of requirements (1) and(2), assume the company's idle capacity of 41,000 machine hours has a traceable, avoidable annual fixed cost of $132,000, which will be incurred only if the capacity is used. Calculate the maximum price PennTech Corporation should pay a supplier for component B81.
Question 5
1. (TCO 2) Select any actions that decrease the cash account. Select all that apply: (Points : 3) Goods are sold on credit An interest payment on a notes payable is made The electric bill is paid Dividends are paid to shareholders 2. (TCO 2) Which one of the following will increase the operating cycle? (Points : 3) increasing the accounts payable period decreasing the accounts payable turnover rate decreasing the cash cycle increasing the accounts receivable turnover rate increasing the inventory period 3. (TCO 2) Assume Green Leaf Nursery anticipated sales of $500 in the first quarter. Accounts receivable at the beginning of the year was $300. Assuming a collection period of 30 days, which is the approximate beginning balance for the second quarter? (Points : 3) $550 $630 $250 $170 None of the above 4. (TCO 2) Best Environment Engineering wrote a check and mailed it to the Electric Co. When the Electric Co. went to deposit the check, it discovered that the bank was closed due to flooding in the area. It was 5 days before the Electric Co. could deposit the check from Best Environment Engineering. Because the Electric Co.'s bank was closed: (Points : 3) Best Environment's collection float decreased. the Electric Co.'s collection float decreased. Best Environment?s disbursement float increased. the Electric Co.'s disbursements float increased. the ledger balance of Best Environment was less than it would have been otherwise. 5. (TCO 2) Which of the following statements is false? Select all that apply: (Points : 3) The optimal credit policy minimizes the total cost of granting credit. Firms should avoid offering credit at all cost. An increase in a firm's average collection period generally indicates that an increased number of customers are taking advantage of the cash discount. The costs of the credit application process and the costs expended in the collection process are carrying costs of granting credit. Character refers to the ability of a firm to meet its credit obligations out its operating cash flows. 6. (TCO 2) You place an order for 100 units of inventory Part A at a unit price of $522. The supplier offers terms of 3/25, net 40. How much should you remit if you take the discount? (Points : 3) $52,200 $50,634 $51,678 None of the above 7. (TCO 2) Auto Parts sells 1,600 electric parts per week and then reorders another 1,600 parts. If the relevant carrying cost per electric part is $4 and the fixed order cost is $650, what is the total carrying cost and the restocking cost, respectively? (Points : 3) $6,400 and $33,800 $3,200 and $33,800 $6,400 and $7,800 $6,400 and $33,000 None of the above 8. (TCO 2) Company ABC has expected sales of 12,000 units this year, an ordering cost of $6 per order and carrying costs of $1.60 per unit. What is the average inventory? (Points : 3) 310 units 300 units 150 units 155 units None of the above 9. (TCO 2) The ___________ is the time that elapses between the sale of an item and the receipt of payment for that sale. (Points : 3) accounts receivable period accounts payable period cash cycle customer operating cycle None of the above 10. (TCO 2) List three examples of short-term investments. (Points : 3)
