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GSCM209 Operations Analysis_Week 8_ Final Exam_A+_Detailed Answer

GSCM209 Operations Analysis_Week 8_ Final Exam_A+_Detailed Answer

GSCM209 Operations Analysis_Week 8_ Final Exam_A+_Detailed Answer

GSCM209 Operations Analysis_Week 8_ Final Exam_A+_Detailed Answer

GSCM209 Operations Analysis_Week 8_ Final Exam_A+_Detailed Answer

GSCM209 Operations Analysis_Week 8_ Final Exam_A+_Detailed Answer

GSCM209 Operations Analysis_Week 8_ Final Exam_A+_Detailed Answer

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GSCM-326 Total Quality Management Week 8 Final Exam _Answer

GSCM-326 Total Quality Management Week 8 Final Exam _Answer

GSCM-326 Total Quality Management Week 8 Final Exam _Answer

GSCM-326 Total Quality Management Week 8 Final Exam _Answer

GSCM-326 Total Quality Management Week 8 Final Exam _Answer

GSCM-326 Total Quality Management Week 8 Final Exam _Answer

Page 1

1. (TCO 1) Which of the following practices were utilized by most companies to maintain quality levels until the start of the 1980s? (Points : 6)
Team-based initiatives
Process-improvement efforts
Design-quality reviews
Mass inspection

2. (TCO 1) Quality is most difficult to measure and analyze under which of the following definitions? (Points : 6)
Judgmental
User-based
Product-based
Value-based

3. (TCO 2) Which of the following systems do not have a role to play in assuring quality in a manufacturing firm? (Points : 6)
Sales
Purchasing
Tool Engineering
None (All answers have a role.)

4. (TCO 2) _____ is a challenge facing many service firms such as Avis, Inc.’s Worldwide Reservation Center that handles millions of calls and books more than six million reservations in a year. (Points : 6)
The high volume of transactions leading to numerous opportunities for error
Service sector decline
The inability to define and measure quality
High labor turnover

5. (TCO 3) In which of the following categories can companies receive a Malcolm Baldrige National Quality Award? (Points : 6)
Small business
Manufacturing
Service
All of the above

6. (TCO 3) ISO 9000:2000 defines a _____-based approach to quality management systems. (Points : 6)
customer
statistics
process
product

7. (TCO 4) _____ is a method the Deming philosophy focuses on for improvements in product and service quality. (Points : 6)
100 percent inspection
Reducing variation
Financial analysis
Separating the planning and execution functions of management

8. (TCO 4) The primary reason for Deming’s position that slogans should be eliminated is which of the following? (Points : 6)
Most problems are a result of the system and cannot be eliminated without redesigning the system.
Slogans take up valuable space in the production department.
Slogans are costly to maintain and periodically update.
Workers don’t always understand the slogans.

9. (TCO 5) Measurable performance levels that define the quality of customer contact with an organization’s representatives are known as which of the following? (Points : 6)
Customer contact requirements
Quality function deployments
Indexed service standards
Consumer benefits packages

10. (TCO 5) Maintaining a clean, well-lit waiting room in a doctor’s office is an example of which service-quality dimension? (Points : 6)
Competence
Courtesy
Communication
Tangibles

11. (TCO 6) The leadership skill of _____ is demonstrated by leaders who encourage employees to participate in quality-improvement efforts and develop cross-functional teamwork and customer-supplier partnerships. (Points : 6)
visioning
intuition
empowerment
self-understanding

12. (TCO 6) The _____ theory of leadership suggests that the manner in which leaders deal with subordinates depends on contingent rewards and punishments. (Points : 6)
attributional
transactional
substitutes for leadership
emotional intelligence

13. (TCO 7) Employee suggestion systems have been used to identify ways to _____. (Points : 6)
improve quality
reduce costs
improve worker safety
All of the above

14. (TCO 7) Under Herzberg’s theory of motivation, worker safety would represent a(n) _____ factor and advancement would represent a(n) _____ factor. (Points : 6)
motivational, maintenance
maintenance, motivational
attribute, innovative
innovative, attribute

15. (TCO 8) A group of employees in an office who are fully responsible for all aspects of processing claims at an insurance company is an example of which of the following team types? (Points : 6)
Problem-solving team
Project team
Virtual team
Self-managed team

16. (TCO 8) During the _____ stage of a team’s life cycle, team members agree on roles, ground rules, and acceptable behavior when doing the work of the team. (Points : 6)
Forming
Storming
Norming
Performing

17. (TCO 9) Which of the following is not part of a process control system? (Points : 6)
Comparison of actual results with the standard
A means of measuring accomplishment
A standard or goal
A backup process

18. (TCO 9) Process management consists of which of the following? (Points : 6)
Design, management, and improvement
Design, control, and improvement
Design, control, and standardization
Analysis, control, and improvement

19. (TCO 10) During Final Inspection at a shirt manufacturer, more than 1,500 shirts were found with incorrect buttons. The manufacturer sold the shirts at 70 percent of the normal price to a retailer who specializes in factory seconds. The revenue lost by the manufacturer is considered which of the following? (Points : 6)
An internal failure cost
An appraisal cost
An external failure cost
A prevention cost

20. (TCO 10) The additional labor that is used when a machined part is returned to the drilling department for rework to correct a quality problem is considered which of the following? (Points : 6)
A prevention cost
An appraisal cost
An internal failure cost
An external failure cost

21. (TCO 11) Which of the following is NOT a principle of statistical thinking as a philosophy of learning and action? (Points : 6)
All work occurs in a system of interconnected processes.
Variation exists in all processes.
All variation can be traced to human error.
Understanding and reducing variation are keys to success.

22. (TCO 11) Which of the following tools is most useful for viewing the variability of a quality characteristic? (Points : 6)
Affinity diagram
Control chart
Checklist
Fishbone diagram

23. (TCO 12) Everything else remaining constant, when the sample size _____, sampling error decreases. (Points : 6)
increases
decreases
stays constant
None of the above

24. (TCO 12) Determine the upper control limit (UCL) and lower control limit (LCL) for an X-Bar chart if six samples of subgroup size 3 (n=3) were collected, the mean of the sample averages is 4.7, and the mean of the sample ranges is 0.35. Determine the upper control limit (UCL) and lower control limit (LCL) for an X-Bar chart.
CHART (Points : 30)
UCL = 4.86905, LCL = 4.53095
UCL = 4.90195, LCL = 4.49805
UCL = 4.72250, LCL = 4.14350
UCL = 5.05805, LCL = 4.34195

25. (TCO 12) Determine the upper control limit (UCL) and lower control limit (LCL) for an R-chart if twenty samples of subgroup size 5 (n=5) were collected for a variable measurement and the mean of the sample ranges equals 4.4. (Points : 30)
UCL = 9.3016, LCL = 0.0000
UCL = 1.4696, LCL = 0.0000
UCL = 11.3256, LCL = 0.0000
UCL = 8.8176, LCL = 0.0000

26. (TCO 13) Which of the following are the phases of the Six Sigma problem solving approach? (Points : 6)
Define, Monitor, Analyze, Improve, Confirm

Define, Monitor, Analyze, Invest, Control

Define, Measure, Analyze, Improve, Control

Define, Measure, Analyze, Invest, Control

27. (TCO 14) Current research suggests leadership will have to change from: (Points : 6)
Process to position
Focus throughout the organization to a focus at the top
Power resulting from position to power resulting from knowledge
Feeling and emotional to logical and rational

Page 2

1. (TCO 3) Answer the following questions concerning ISO 9000:
1. Discuss the basic premise behind ISO 9000. (10 points)
2. Discuss three of the five objectives of ISO 9000. (10 points)
3. Discuss the three documents that make up ISO 9000. (10 points)
(Points : 30)

2. (TCO 14) Answer the following questions concerning cultural change and the workforce:
1. Discuss three of the five behaviors that Juran and others suggest are needed to develop quality cultural change. (10 points)
2. Discuss ownership at the workforce level and why it is important to the implementation of TQM. (10 points)
3. Discuss how increased ownership requires increased sharing of information. (10 points)
(Points : 30)

3. (TCO 4) Deming’s Profound Knowledge consists of four elements. Answer the following three parts relating to the “variation” element of Deming’s Profound Knowledge. Your discussion should relate to this element of Deming’s Profound Knowledge and not variation in general.
1. Explain how a quincunx can be used to explain variation. (10 points)
2. Why is understanding variation important, and what do we need to do about it? (10 points)
3. What tools do we need to use to understand variation, and why is using these tools important to our decision-making process? (10 points)
(Points : 30)

Please click on the “PURCHASE” link below to get GSCM-326 Total Quality Management Week 8 Final Exam _Answer.

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GSCM-326 Total Quality Management Week 8 Final Exam _Answer

GSCM-326 Total Quality Management Week 8 Final Exam _Answer

GSCM-326 Total Quality Management Week 8 Final Exam _Answer

GSCM-326 Total Quality Management Week 8 Final Exam _Answer

GSCM-326 Total Quality Management Week 8 Final Exam _Answer

GSCM-326 Total Quality Management Week 8 Final Exam _Answer

Page 1

1. (TCO 1) Which of the following practices were utilized by most companies to maintain quality levels until the start of the 1980s? (Points : 6)
Team-based initiatives
Process-improvement efforts
Design-quality reviews
Mass inspection

2. (TCO 1) Quality is most difficult to measure and analyze under which of the following definitions? (Points : 6)
Judgmental
User-based
Product-based
Value-based

3. (TCO 2) Which of the following systems do not have a role to play in assuring quality in a manufacturing firm? (Points : 6)
Sales
Purchasing
Tool Engineering
None (All answers have a role.)

4. (TCO 2) _____ is a challenge facing many service firms such as Avis, Inc.’s Worldwide Reservation Center that handles millions of calls and books more than six million reservations in a year. (Points : 6)
The high volume of transactions leading to numerous opportunities for error
Service sector decline
The inability to define and measure quality
High labor turnover

5. (TCO 3) In which of the following categories can companies receive a Malcolm Baldrige National Quality Award? (Points : 6)
Small business
Manufacturing
Service
All of the above

6. (TCO 3) ISO 9000:2000 defines a _____-based approach to quality management systems. (Points : 6)
customer
statistics
process
product

7. (TCO 4) _____ is a method the Deming philosophy focuses on for improvements in product and service quality. (Points : 6)
100 percent inspection
Reducing variation
Financial analysis
Separating the planning and execution functions of management

8. (TCO 4) The primary reason for Deming’s position that slogans should be eliminated is which of the following? (Points : 6)
Most problems are a result of the system and cannot be eliminated without redesigning the system.
Slogans take up valuable space in the production department.
Slogans are costly to maintain and periodically update.
Workers don’t always understand the slogans.

9. (TCO 5) Measurable performance levels that define the quality of customer contact with an organization’s representatives are known as which of the following? (Points : 6)
Customer contact requirements
Quality function deployments
Indexed service standards
Consumer benefits packages

10. (TCO 5) Maintaining a clean, well-lit waiting room in a doctor’s office is an example of which service-quality dimension? (Points : 6)
Competence
Courtesy
Communication
Tangibles

11. (TCO 6) The leadership skill of _____ is demonstrated by leaders who encourage employees to participate in quality-improvement efforts and develop cross-functional teamwork and customer-supplier partnerships. (Points : 6)
visioning
intuition
empowerment
self-understanding

12. (TCO 6) The _____ theory of leadership suggests that the manner in which leaders deal with subordinates depends on contingent rewards and punishments. (Points : 6)
attributional
transactional
substitutes for leadership
emotional intelligence

13. (TCO 7) Employee suggestion systems have been used to identify ways to _____. (Points : 6)
improve quality
reduce costs
improve worker safety
All of the above

14. (TCO 7) Under Herzberg’s theory of motivation, worker safety would represent a(n) _____ factor and advancement would represent a(n) _____ factor. (Points : 6)
motivational, maintenance
maintenance, motivational
attribute, innovative
innovative, attribute

15. (TCO 8) A group of employees in an office who are fully responsible for all aspects of processing claims at an insurance company is an example of which of the following team types? (Points : 6)
Problem-solving team
Project team
Virtual team
Self-managed team

16. (TCO 8) During the _____ stage of a team’s life cycle, team members agree on roles, ground rules, and acceptable behavior when doing the work of the team. (Points : 6)
Forming
Storming
Norming
Performing

17. (TCO 9) Which of the following is not part of a process control system? (Points : 6)
Comparison of actual results with the standard
A means of measuring accomplishment
A standard or goal
A backup process

18. (TCO 9) Process management consists of which of the following? (Points : 6)
Design, management, and improvement
Design, control, and improvement
Design, control, and standardization
Analysis, control, and improvement

19. (TCO 10) During Final Inspection at a shirt manufacturer, more than 1,500 shirts were found with incorrect buttons. The manufacturer sold the shirts at 70 percent of the normal price to a retailer who specializes in factory seconds. The revenue lost by the manufacturer is considered which of the following? (Points : 6)
An internal failure cost
An appraisal cost
An external failure cost
A prevention cost

20. (TCO 10) The additional labor that is used when a machined part is returned to the drilling department for rework to correct a quality problem is considered which of the following? (Points : 6)
A prevention cost
An appraisal cost
An internal failure cost
An external failure cost

21. (TCO 11) Which of the following is NOT a principle of statistical thinking as a philosophy of learning and action? (Points : 6)
All work occurs in a system of interconnected processes.
Variation exists in all processes.
All variation can be traced to human error.
Understanding and reducing variation are keys to success.

22. (TCO 11) Which of the following tools is most useful for viewing the variability of a quality characteristic? (Points : 6)
Affinity diagram
Control chart
Checklist
Fishbone diagram

23. (TCO 12) Everything else remaining constant, when the sample size _____, sampling error decreases. (Points : 6)
increases
decreases
stays constant
None of the above

24. (TCO 12) Determine the upper control limit (UCL) and lower control limit (LCL) for an X-Bar chart if six samples of subgroup size 3 (n=3) were collected, the mean of the sample averages is 4.7, and the mean of the sample ranges is 0.35. Determine the upper control limit (UCL) and lower control limit (LCL) for an X-Bar chart.
CHART (Points : 30)
UCL = 4.86905, LCL = 4.53095
UCL = 4.90195, LCL = 4.49805
UCL = 4.72250, LCL = 4.14350
UCL = 5.05805, LCL = 4.34195

25. (TCO 12) Determine the upper control limit (UCL) and lower control limit (LCL) for an R-chart if twenty samples of subgroup size 5 (n=5) were collected for a variable measurement and the mean of the sample ranges equals 4.4. (Points : 30)
UCL = 9.3016, LCL = 0.0000
UCL = 1.4696, LCL = 0.0000
UCL = 11.3256, LCL = 0.0000
UCL = 8.8176, LCL = 0.0000

26. (TCO 13) Which of the following are the phases of the Six Sigma problem solving approach? (Points : 6)
Define, Monitor, Analyze, Improve, Confirm

Define, Monitor, Analyze, Invest, Control

Define, Measure, Analyze, Improve, Control

Define, Measure, Analyze, Invest, Control

27. (TCO 14) Current research suggests leadership will have to change from: (Points : 6)
Process to position
Focus throughout the organization to a focus at the top
Power resulting from position to power resulting from knowledge
Feeling and emotional to logical and rational

Page 2

1. (TCO 3) Answer the following questions concerning ISO 9000:
1. Discuss the basic premise behind ISO 9000. (10 points)
2. Discuss three of the five objectives of ISO 9000. (10 points)
3. Discuss the three documents that make up ISO 9000. (10 points)
(Points : 30)

2. (TCO 14) Answer the following questions concerning cultural change and the workforce:
1. Discuss three of the five behaviors that Juran and others suggest are needed to develop quality cultural change. (10 points)
2. Discuss ownership at the workforce level and why it is important to the implementation of TQM. (10 points)
3. Discuss how increased ownership requires increased sharing of information. (10 points)
(Points : 30)

3. (TCO 4) Deming’s Profound Knowledge consists of four elements. Answer the following three parts relating to the “variation” element of Deming’s Profound Knowledge. Your discussion should relate to this element of Deming’s Profound Knowledge and not variation in general.
1. Explain how a quincunx can be used to explain variation. (10 points)
2. Why is understanding variation important, and what do we need to do about it? (10 points)
3. What tools do we need to use to understand variation, and why is using these tools important to our decision-making process? (10 points)
(Points : 30)

Please click on the “PURCHASE” link below to get GSCM-326 Total Quality Management Week 8 Final Exam _Answer.

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GSCM-326 Total Quality Management Week 6_Statistical Thinking and Process Improvement_CheckPoint_A+_Answer

GSCM-326 Total Quality Management Week 6_Statistical Thinking and Process Improvement_CheckPoint_A+_Answer

BSOGSCM-326 Total Quality Management Week 6_Statistical Thinking and Process Improvement_CheckPoint_A+_Answer

GSCM-326 Total Quality Management Week 6_Statistical Thinking and Process Improvement_CheckPoint_A+_Answer

GSCM-326 Total Quality Management Week 6_Statistical Thinking and Process Improvement_CheckPoint_A+_Answer

GSCM-326 Total Quality Management Week 6_Statistical Thinking and Process Improvement_CheckPoint_A+_Answer

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GSCM-326 Total Quality Management Week 6_Statistical Thinking and Process Improvement_CheckPoint_A+_Answer

GSCM-326 Total Quality Management Week 6_Statistical Thinking and Process Improvement_CheckPoint_A+_Answer

BSOGSCM-326 Total Quality Management Week 6_Statistical Thinking and Process Improvement_CheckPoint_A+_Answer

GSCM-326 Total Quality Management Week 6_Statistical Thinking and Process Improvement_CheckPoint_A+_Answer

GSCM-326 Total Quality Management Week 6_Statistical Thinking and Process Improvement_CheckPoint_A+_Answer

GSCM-326 Total Quality Management Week 6_Statistical Thinking and Process Improvement_CheckPoint_A+_Answer

For getting the instant digital download solution, Please click on the “PURCHASE” link below to get GSCM-326 Total Quality Management Week 6_Statistical Thinking and Process Improvement_CheckPoint_A+_Answer

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FIN 515 Managerial Finance Course Week 8 FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

FIN-515-Managerial Finance Course_Week 8_ FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

FIN-515-Managerial Finance Course_Week 8_ FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

FIN-515-Managerial Finance Course_Week 8_ FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

FIN-515-Managerial Finance Course_Week 8_ FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

Set 1

Final Exam Page 1

1. (TCO A) Which of the following does NOT always increase a company’s market value? (Points : 5)
Increasing the expected growth rate of sales
Increasing the expected operating profitability (NOPAT/Sales)
Decreasing the capital requirements (Capital/Sales)
Decreasing the weighted average cost of capital
Increasing the expected rate of return on invested capital

2. (TCO F) Which of the following statements is correct? (Points : 5)
The NPV, IRR, MIRR, and discounted payback (using a payback requirement of 3 years or less) methods always lead to the same accept/reject decisions for independent projects.
For mutually exclusive projects with normal cash flows, the NPV and MIRR methods can never conflict, but their results could conflict with the discounted payback and the regular IRR methods.
Multiple IRRs can exist, but not multiple MIRRs. This is one reason some people favor the MIRR over the regular IRR.
If a firm uses the discounted payback method with a required payback of 4 years, then it will accept more projects than if it used a regular payback of 4 years.
The percentage difference between the MIRR and the IRR is equal to the project’s WACC.

3. (TCO D) Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
a. $26.77
b. $27.89
c. $29.05
d. $30.21
e. $31.42
(Points : 20)

4. (TCO G) Singal Inc. is preparing its cash budget. It expects to have sales of $30,000 in January, $35,000 in February, and $35,000 in March. If 20% of sales are for cash, 40% are credit sales paid in the month after the sale, and another 40% are credit sales paid 2 months after the sale, what are the expected cash receipts for March?
a. $24,057
b. $26,730
c. $29,700
d. $33,000
e. $36,300
(Points : 20)

Final Exam Page 2
1. (TCO H) Zervos Inc. had the following data for 2008 (in millions). The new CFO believes (a) that an improved inventory management system could lower the average inventory by $4,000, (b) that improvements in the credit department could reduce receivables by $2,000, and (c) that the purchasing department could negotiate better credit terms and thereby increase accounts payable by $2,000. Furthermore, she thinks that these changes would not affect either sales or the costs of goods sold. If these changes were made, by how many days would the cash conversion cycle be lowered?
Original Revised
Annual sales: unchanged
Cost of goods sold: unchanged
Average inventory: lowered by $4,000
Average receivables: lowered by $2,000
Average payables: increased by $2,000
Days in year $110,000
$80,000
$20,000
$16,000
$10,000
365 $110,000
$80,000
$16,000
$14,000
$12,000
365

a. 34.0
b. 37.4
c. 41.2
d. 45.3
e. 49.8 (Points : 30)

2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)
a. 20.11%
b. 21.17%
c. 22.28%
d. 23.45%
e. 24.63%
(Points : 30)

3. (TCO E) You were hired as a consultant to the Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of common from retained earnings is 11.25%, and the tax rate is 40%. The firm will not be issuing any new common stock. What is Quigley’s WACC?
a. 8.15%
b. 8.48%
c. 8.82%
d. 9.17%
e. 9.54%
(Points : 30)

4. (TCO B) A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?
Year: 1 2 3
Free cash flow: -$15 $10 $40
a. $315
b. $331
c. $348
d. $367
e. $386
(Points : 35)

5. (TCO G) Based on the corporate valuation model, Hunsader’s value of operations is $300 million. The balance sheet shows $20 million of short-term investments that are unrelated to operations, $50 million of accounts payable, $90 million of notes payable, $30 million of long-term debt, $40 million of preferred stock, and $100 million of common equity. The company has 10 million shares of stock outstanding. What is the best estimate of the stock’s price per share?
a. $13.72
b. $14.44
c. $15.20
d. $16.00
e. $16.80
(Points : 35)

6. TCO G) Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions.
Last year’s sales = S0 $350 Last year’s accounts payable $40
Sales growth rate = g 30% Last year’s notes payable $50
Last year’s total assets = A0* $500 Last year’s accruals $30
Last year’s profit margin = PM 5% Target payout ratio 60%

a. $102.8
b. $108.2
c. $113.9
d. $119.9
e. $125.9 (Points : 30)

Set 2

1. (TCO A) Which of the following does NOT always increase a company’s market value? (Points : 5)
Increasing the expected growth rate of sales
Increasing the expected operating profitability (NOPAT/Sales)
Decreasing the capital requirements (Capital/Sales)
Decreasing the weighted average cost of capital
Increasing the expected rate of return on invested capital

2. (TCO F) Which of the following statements is correct? (Points : 5)
The MIRR and NPV decision criteria can never conflict.
The IRR method can never be subject to the multiple IRR problem, while the MIRR method can be.
One reason some people prefer the MIRR to the regular IRR is that the MIRR is based on a generally more reasonable reinvestment rate assumption.
The higher the WACC, the shorter the discounted payback period.
The MIRR method assumes that cash flows are reinvested at the crossover rate.

3. (TCO D) The Ramirez Company’s last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price?
a. $41.58
b. $42.64
c. $43.71
d. $44.80
e. $45.92
(Points : 20)

4. (TCO G) The ABC Corporation’s budgeted monthly sales are $4,000. In the first month, 40% of its customers pay and take the 3% discount.
The remaining 60% pay in the month following the sale and don’t receive a discount.
ABC’s bad debts are very small and are excluded from this analysis.
Purchases for next month’s sales are constant each month at $2,000. Other payments for wages, rent, and taxes are constant at $500 per month.
Construct a single month’s cash budget with the information given. What is the average cash gain or (loss) during a typical month for the ABC Corporation? (Points : 20)

5. (TCO G) Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm’s investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.
Last year’s sales = S0 $300 Last year’s accounts payable $50
Sales growth rate = g 40% Last year’s notes payable $15
Last year’s total assets = A0* $500 Last year’s accruals $20
Last year’s profit margin = PM 20% Initial payout ratio 10%

a. $31.9
b. $33.6
c. $35.3
d. $37.0
e. $38.9 (Points : 30)

The AFN model forecasts MicroDrive’s need for external funds to support its forecasted 2011 sales. Year 0 is 2010, which has just ended, and Year 1 is 2011, which has just begun. (Ignore rounding differences.)

Part II. Additional Funds Needed (AFN) to Support Growth

Page 2

1. (TCO H) Your consulting firm was recently hired to improve the performance of Shin-Soenen Inc, which is highly profitable but has been experiencing cash shortages due to its high growth rate. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year, what is the firm’s present cash conversion cycle?
Average inventory =
Annual sales =
Annual cost of goods sold =
Average accounts receivable =
Average accounts payable = $75,000
$600,000
$360,000
$160,000
$25,000

a. 120.6 days
b. 126.9 days
c. 133.6 days
d. 140.6 days
e. 148.0 days (Points : 30)

2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)
a. 20.11%
b. 21.17%
c. 22.28%
d. 23.45%
e. 24.63%
(Points : 30)

3. (TCO E) Daves Inc. recently hired you as a consultant to estimate the company’s WACC. You have obtained the following information. (1) The firm’s noncallable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,050.00. (2) The company’s tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.20. (4) The target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of common stock, and it does not expect to issue any new shares. What is its WACC?
a. 7.16%
b. 7.54%
c. 7.93%
d. 8.35%
e. 8.79%

(Points : 30)

4. (TCO B) A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?
Year: 1 2 3
Free cash flow: -$15 $10 $40
a. $315
b. $331
c. $348
d. $367
e. $386

5. (TCO G) Based on the corporate valuation model, the value of a company’s operations is $900 million. Its balance sheet shows $70 million in accounts receivable, $50 million in inventory, $30 million in short-term investments that are unrelated to operations, $20 million in accounts payable, , $140 million in retained earnings, and $280 million in total common equity. If the company has 25 million shares of stock outstanding, what is the best estimate of the stocks price per share?
a. $23.00
b. $25.56
c. $28.40
d. $31.24
e. $34.36
verified 2 places, pretty sure.
(Points : 35)

Set 3

Week 8 : Final Week – Final Exam Page 1

1. (TCO A) Which of the following does NOT always increase a company’s market value? (Points : 5)
Increasing the expected growth rate of sales
Increasing the expected operating profitability (NOPAT/Sales)
Decreasing the capital requirements (Capital/Sales)
Decreasing the weighted average cost of capital
Increasing the expected rate of return on invested capital

2. (TCO F) Which of the following statements is correct? (Points : 5)
For a project with normal cash flows, any change in the WACC will change both the NPV and the IRR.
To find the MIRR, we first compound cash flows at the regular IRR to find the TV, and then we discount the TV at the WACC to find the PV.
The NPV and IRR methods both assume that cash flows can be reinvested at the WACC. However, the MIRR method assumes reinvestment at the MIRR itself.
If two projects have the same cost, and if their NPV profiles cross in the upper right quadrant, then the project with the higher IRR probably has more of its cash flows coming in the later years.
If two projects have the same cost, and if their NPV profiles cross in the upper right quadrant, then the project with the lower IRR probably has more of its cash flows coming in the later years.

3. (TCO D) Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
a. $26.77
b. $27.89
c. $29.05
d. $30.21
e. $31.42
(Points : 20)

4. (TCO G) The ABC Corporation’s budgeted monthly sales are $4,000. In the first month, 40% of its customers pay and take the 3% discount.
The remaining 60% pay in the month following the sale and don’t receive a discount.
ABC’s bad debts are very small and are excluded from this analysis.
Purchases for next month’s sales are constant each month at $2,000. Other payments for wages, rent, and taxes are constant at $500 per month.
Construct a single month’s cash budget with the information given. What is the average cash gain or (loss) during a typical month for the ABC Corporation? (Points : 20)

5. (TCO G) Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm’s investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.
Last year’s sales = S0 $300 Last year’s accounts payable $50
Sales growth rate = g 40% Last year’s notes payable $15
Last year’s total assets = A0* $500 Last year’s accruals $20
Last year’s profit margin = PM 20% Initial payout ratio 10%

a. $31.9
b. $33.6
c. $35.3
d. $37.0
e. $38.9 (Points : 30)

Week 8 : Final Week – Final Exam Page 2

1. (TCO H) The Dewey Corporation has the following data, in thousands. Assuming a 365-day year, what is the firm’s cash conversion cycle?
Annual sales =
Annual cost of goods sold =
Inventory =
Accounts receivable =
Accounts payable = $45,000
$31,500
$4,000
$2,000
$2,400

a. 25 days
b. 28 days
c. 31 days
d. 35 days
e. 38 days (Points : 30)

2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)
a. 20.11%
b. 21.17%
c. 22.28%
d. 23.45%
e. 24.63%
(Points : 30)

3. (TCO E) You were hired as a consultant to the Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of common from retained earnings is 11.25%, and the tax rate is 40%. The firm will not be issuing any new common stock. What is Quigley’s WACC?
a. 8.15%
b. 8.48%
c. 8.82%
d. 9.17%
e. 9.54%
(Points : 30)

4. (TCO B) Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments).
Year: 1 2
Free cash flow: -$50 $100
a. $1,456
b. $1,529
c. $1,606
d. $1,686
e. $1,770
(Points : 35)

5. (TCO G) Based on the corporate valuation model, the value of a company’s operations is $1,200 million. The company’s balance sheet shows $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments that are unrelated to operations. The balance sheet also shows $90 million in accounts payable, $120 million in notes payable, $300 million in long-term debt, $50 million in preferred stock, $180 million in retained earnings, and $800 million in total common equity. If the company has 30 million shares of stock outstanding, what is the best estimate of the stock’s price per share?
a. $24.90
b. $27.67
c. $30.43
d. $33.48
e. $36.82
(Points : 35)

6. Sapp Trucking’s balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%. This debt currently has a market value of $50 million. The balance sheet also shows that the company has 10 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $65 million. The current stock price is $22.50 per share; stockholders’ required return, rs, is 14.00%; and the firm’s tax rate is 40%. The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. What is the difference between these two WACCs?

7. based on the corporate valuation model, bernile Inc’s value of operation is $750 million. Its balance sheet shows $50 million of short-term investments that are unrelated to operations, $100 million of accounts payable, $100 million of notes payable, $200 million of long term debt, $40 million of common stock (par plus pain -in – capital), and $160 million of retained earnings. What is the best estimate for the firm’s value of equity, in millions

Set 4

Question 1. 1. (TCO A) Which of the following statements is NOT correct? (Points : 5)
The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends.
The corporate valuation model discounts free cash flows by the required return on equity.
The corporate valuation model can be used to find the value of a division.
An important step in applying the corporate valuation model is forecasting the firm’s pro forma financial statements.
Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon, or terminal, value.

Question 2. 2. (TCO F) Which of the following statements is correct? (Points : 5)
One advantage of the NPV over the IRR is that NPV takes account of cash flows over a project’s full life, whereas IRR does not.
One advantage of the NPV over the IRR is that NPV assumes that cash flows will be reinvested at the WACC, whereas IRR assumes that cash flows are reinvested at the IRR. The NPV assumption is generally more appropriate.
One advantage of the NPV over the MIRR method is that NPV takes account of cash flows over a project’s full life, whereas MIRR does not.
One advantage of the NPV over the MIRR method is that NPV discounts cash flows, whereas the MIRR is based on undiscounted cash flows.
Since cash flows under the IRR and MIRR are both discounted at the same rate (the WACC), these two methods always rank mutually exclusive projects in the same order.

Question 3. 3. (TCO D) The Ackert Company’s last dividend was $1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever. The firm’s required return (rs) is 12.0%. What is the best estimate of the current stock price?
a. $37.05
b. $38.16
c. $39.30
d. $40.48
e. $41.70
(Points : 20)

4. (TCO D) The Ramirez Company’s last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price?
a. $41.58
b. $42.64
c. $43.71
d. $44.80
e. $45.92
(Points : 20)

Question 5. 4. (TCO G) The Chadmark Corporation’s budgeted monthly sales are $3,000. In the first month, 40% of its customers pay and take the 2% discount.
The remaining 60% pay in the month following the sale and don’t receive a discount.
Chadmark’s bad debts are very small and are excluded from this analysis. Purchases for next month’s sales are constant each month at $1,500.
Other payments for wages, rent, and taxes are constant at $700 per month. Construct a single month’s cash budget with the information given.
What is the average cash gain or (loss) during a typical month for the Chadmark Corporation?
(Points : 20)

Question 5. 5. (TCO G) Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions.
Last year’s sales = S0 $350 Last year’s accounts payable $40
Sales growth rate = g 30% Last year’s notes payable $50
Last year’s total assets = A0* $500 Last year’s accruals $30
Last year’s profit margin = PM 5% Target payout ratio 60%

a. $102.8
b. $108.2
c. $113.9
d. $119.9
e. $125.9 (Points : 30)

Time Remaining:

Page: 1 2

Final Exam Page 2

Question 1. 1. (TCO H) Your consulting firm was recently hired to improve the performance of Shin-Soenen Inc, which is highly profitable but has been experiencing cash shortages due to its high growth rate. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year, what is the firm’s present cash conversion cycle?
Average inventory =
Annual sales =
Annual cost of goods sold =
Average accounts receivable =
Average accounts payable = $75,000
$600,000
$360,000
$160,000
$25,000

a. 120.6 days
b. 126.9 days
c. 133.6 days
d. 140.6 days
e. 148.0 days (Points : 30)

Question 2. 2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)
a. 20.11%
b. 21.17%
c. 22.28%
d. 23.45%
e. 24.63%
(Points : 30)

Question 3. 3. (TCO E) Daves Inc. recently hired you as a consultant to estimate the company’s WACC. You have obtained the following information. (1) The firm’s noncallable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,050.00. (2) The company’s tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.20. (4) The target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of common stock, and it does not expect to issue any new shares. What is its WACC?
a. 7.16%
b. 7.54%
c. 7.93%
d. 8.35%
e. 8.79%
(Points : 30)

Question 4. 4. (TCO B) Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments).
Year: 1 2
Free cash flow: -$50 $100
a. $1,456
b. $1,529
c. $1,606
d. $1,686
e. $1,770
(Points : 35)

5. (TCO G) Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm’s investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.
Last year’s sales = S0 $300 Last year’s accounts payable $50
Sales growth rate = g 40% Last year’s notes payable $15
Last year’s total assets = A0* $500 Last year’s accruals $20
Last year’s profit margin = PM 20% Initial payout ratio 10%

a. $31.9
b. $33.6
c. $35.3
d. $37.0
e. $38.9 (Points : 30)

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FIN 515 Managerial Finance Course Week 8 FINAL EXAM ALL Four SETS_A+_100 OUT OF 100_Answer

FIN-515-Managerial Finance Course_Week 8_ FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

FIN-515-Managerial Finance Course_Week 8_ FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

FIN-515-Managerial Finance Course_Week 8_ FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

FIN-515-Managerial Finance Course_Week 8_ FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

Set 1

Final Exam Page 1

1. (TCO A) Which of the following does NOT always increase a company’s market value? (Points : 5)
Increasing the expected growth rate of sales
Increasing the expected operating profitability (NOPAT/Sales)
Decreasing the capital requirements (Capital/Sales)
Decreasing the weighted average cost of capital
Increasing the expected rate of return on invested capital

2. (TCO F) Which of the following statements is correct? (Points : 5)
The NPV, IRR, MIRR, and discounted payback (using a payback requirement of 3 years or less) methods always lead to the same accept/reject decisions for independent projects.
For mutually exclusive projects with normal cash flows, the NPV and MIRR methods can never conflict, but their results could conflict with the discounted payback and the regular IRR methods.
Multiple IRRs can exist, but not multiple MIRRs. This is one reason some people favor the MIRR over the regular IRR.
If a firm uses the discounted payback method with a required payback of 4 years, then it will accept more projects than if it used a regular payback of 4 years.
The percentage difference between the MIRR and the IRR is equal to the project’s WACC.

3. (TCO D) Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
a. $26.77
b. $27.89
c. $29.05
d. $30.21
e. $31.42
(Points : 20)

4. (TCO G) Singal Inc. is preparing its cash budget. It expects to have sales of $30,000 in January, $35,000 in February, and $35,000 in March. If 20% of sales are for cash, 40% are credit sales paid in the month after the sale, and another 40% are credit sales paid 2 months after the sale, what are the expected cash receipts for March?
a. $24,057
b. $26,730
c. $29,700
d. $33,000
e. $36,300
(Points : 20)

Final Exam Page 2
1. (TCO H) Zervos Inc. had the following data for 2008 (in millions). The new CFO believes (a) that an improved inventory management system could lower the average inventory by $4,000, (b) that improvements in the credit department could reduce receivables by $2,000, and (c) that the purchasing department could negotiate better credit terms and thereby increase accounts payable by $2,000. Furthermore, she thinks that these changes would not affect either sales or the costs of goods sold. If these changes were made, by how many days would the cash conversion cycle be lowered?
Original Revised
Annual sales: unchanged
Cost of goods sold: unchanged
Average inventory: lowered by $4,000
Average receivables: lowered by $2,000
Average payables: increased by $2,000
Days in year $110,000
$80,000
$20,000
$16,000
$10,000
365 $110,000
$80,000
$16,000
$14,000
$12,000
365

a. 34.0
b. 37.4
c. 41.2
d. 45.3
e. 49.8 (Points : 30)

2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)
a. 20.11%
b. 21.17%
c. 22.28%
d. 23.45%
e. 24.63%
(Points : 30)

3. (TCO E) You were hired as a consultant to the Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of common from retained earnings is 11.25%, and the tax rate is 40%. The firm will not be issuing any new common stock. What is Quigley’s WACC?
a. 8.15%
b. 8.48%
c. 8.82%
d. 9.17%
e. 9.54%
(Points : 30)

4. (TCO B) A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?
Year: 1 2 3
Free cash flow: -$15 $10 $40
a. $315
b. $331
c. $348
d. $367
e. $386
(Points : 35)

5. (TCO G) Based on the corporate valuation model, Hunsader’s value of operations is $300 million. The balance sheet shows $20 million of short-term investments that are unrelated to operations, $50 million of accounts payable, $90 million of notes payable, $30 million of long-term debt, $40 million of preferred stock, and $100 million of common equity. The company has 10 million shares of stock outstanding. What is the best estimate of the stock’s price per share?
a. $13.72
b. $14.44
c. $15.20
d. $16.00
e. $16.80
(Points : 35)

6. TCO G) Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions.
Last year’s sales = S0 $350 Last year’s accounts payable $40
Sales growth rate = g 30% Last year’s notes payable $50
Last year’s total assets = A0* $500 Last year’s accruals $30
Last year’s profit margin = PM 5% Target payout ratio 60%

a. $102.8
b. $108.2
c. $113.9
d. $119.9
e. $125.9 (Points : 30)

Set 2

1. (TCO A) Which of the following does NOT always increase a company’s market value? (Points : 5)
Increasing the expected growth rate of sales
Increasing the expected operating profitability (NOPAT/Sales)
Decreasing the capital requirements (Capital/Sales)
Decreasing the weighted average cost of capital
Increasing the expected rate of return on invested capital

2. (TCO F) Which of the following statements is correct? (Points : 5)
The MIRR and NPV decision criteria can never conflict.
The IRR method can never be subject to the multiple IRR problem, while the MIRR method can be.
One reason some people prefer the MIRR to the regular IRR is that the MIRR is based on a generally more reasonable reinvestment rate assumption.
The higher the WACC, the shorter the discounted payback period.
The MIRR method assumes that cash flows are reinvested at the crossover rate.

3. (TCO D) The Ramirez Company’s last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price?
a. $41.58
b. $42.64
c. $43.71
d. $44.80
e. $45.92
(Points : 20)

4. (TCO G) The ABC Corporation’s budgeted monthly sales are $4,000. In the first month, 40% of its customers pay and take the 3% discount.
The remaining 60% pay in the month following the sale and don’t receive a discount.
ABC’s bad debts are very small and are excluded from this analysis.
Purchases for next month’s sales are constant each month at $2,000. Other payments for wages, rent, and taxes are constant at $500 per month.
Construct a single month’s cash budget with the information given. What is the average cash gain or (loss) during a typical month for the ABC Corporation? (Points : 20)

5. (TCO G) Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm’s investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.
Last year’s sales = S0 $300 Last year’s accounts payable $50
Sales growth rate = g 40% Last year’s notes payable $15
Last year’s total assets = A0* $500 Last year’s accruals $20
Last year’s profit margin = PM 20% Initial payout ratio 10%

a. $31.9
b. $33.6
c. $35.3
d. $37.0
e. $38.9 (Points : 30)

The AFN model forecasts MicroDrive’s need for external funds to support its forecasted 2011 sales. Year 0 is 2010, which has just ended, and Year 1 is 2011, which has just begun. (Ignore rounding differences.)

Part II. Additional Funds Needed (AFN) to Support Growth

Page 2

1. (TCO H) Your consulting firm was recently hired to improve the performance of Shin-Soenen Inc, which is highly profitable but has been experiencing cash shortages due to its high growth rate. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year, what is the firm’s present cash conversion cycle?
Average inventory =
Annual sales =
Annual cost of goods sold =
Average accounts receivable =
Average accounts payable = $75,000
$600,000
$360,000
$160,000
$25,000

a. 120.6 days
b. 126.9 days
c. 133.6 days
d. 140.6 days
e. 148.0 days (Points : 30)

2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)
a. 20.11%
b. 21.17%
c. 22.28%
d. 23.45%
e. 24.63%
(Points : 30)

3. (TCO E) Daves Inc. recently hired you as a consultant to estimate the company’s WACC. You have obtained the following information. (1) The firm’s noncallable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,050.00. (2) The company’s tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.20. (4) The target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of common stock, and it does not expect to issue any new shares. What is its WACC?
a. 7.16%
b. 7.54%
c. 7.93%
d. 8.35%
e. 8.79%

(Points : 30)

4. (TCO B) A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?
Year: 1 2 3
Free cash flow: -$15 $10 $40
a. $315
b. $331
c. $348
d. $367
e. $386

5. (TCO G) Based on the corporate valuation model, the value of a company’s operations is $900 million. Its balance sheet shows $70 million in accounts receivable, $50 million in inventory, $30 million in short-term investments that are unrelated to operations, $20 million in accounts payable, , $140 million in retained earnings, and $280 million in total common equity. If the company has 25 million shares of stock outstanding, what is the best estimate of the stocks price per share?
a. $23.00
b. $25.56
c. $28.40
d. $31.24
e. $34.36
verified 2 places, pretty sure.
(Points : 35)

Set 3

Week 8 : Final Week – Final Exam Page 1

1. (TCO A) Which of the following does NOT always increase a company’s market value? (Points : 5)
Increasing the expected growth rate of sales
Increasing the expected operating profitability (NOPAT/Sales)
Decreasing the capital requirements (Capital/Sales)
Decreasing the weighted average cost of capital
Increasing the expected rate of return on invested capital

2. (TCO F) Which of the following statements is correct? (Points : 5)
For a project with normal cash flows, any change in the WACC will change both the NPV and the IRR.
To find the MIRR, we first compound cash flows at the regular IRR to find the TV, and then we discount the TV at the WACC to find the PV.
The NPV and IRR methods both assume that cash flows can be reinvested at the WACC. However, the MIRR method assumes reinvestment at the MIRR itself.
If two projects have the same cost, and if their NPV profiles cross in the upper right quadrant, then the project with the higher IRR probably has more of its cash flows coming in the later years.
If two projects have the same cost, and if their NPV profiles cross in the upper right quadrant, then the project with the lower IRR probably has more of its cash flows coming in the later years.

3. (TCO D) Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
a. $26.77
b. $27.89
c. $29.05
d. $30.21
e. $31.42
(Points : 20)

4. (TCO G) The ABC Corporation’s budgeted monthly sales are $4,000. In the first month, 40% of its customers pay and take the 3% discount.
The remaining 60% pay in the month following the sale and don’t receive a discount.
ABC’s bad debts are very small and are excluded from this analysis.
Purchases for next month’s sales are constant each month at $2,000. Other payments for wages, rent, and taxes are constant at $500 per month.
Construct a single month’s cash budget with the information given. What is the average cash gain or (loss) during a typical month for the ABC Corporation? (Points : 20)

5. (TCO G) Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm’s investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.
Last year’s sales = S0 $300 Last year’s accounts payable $50
Sales growth rate = g 40% Last year’s notes payable $15
Last year’s total assets = A0* $500 Last year’s accruals $20
Last year’s profit margin = PM 20% Initial payout ratio 10%

a. $31.9
b. $33.6
c. $35.3
d. $37.0
e. $38.9 (Points : 30)

Week 8 : Final Week – Final Exam Page 2

1. (TCO H) The Dewey Corporation has the following data, in thousands. Assuming a 365-day year, what is the firm’s cash conversion cycle?
Annual sales =
Annual cost of goods sold =
Inventory =
Accounts receivable =
Accounts payable = $45,000
$31,500
$4,000
$2,000
$2,400

a. 25 days
b. 28 days
c. 31 days
d. 35 days
e. 38 days (Points : 30)

2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)
a. 20.11%
b. 21.17%
c. 22.28%
d. 23.45%
e. 24.63%
(Points : 30)

3. (TCO E) You were hired as a consultant to the Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of common from retained earnings is 11.25%, and the tax rate is 40%. The firm will not be issuing any new common stock. What is Quigley’s WACC?
a. 8.15%
b. 8.48%
c. 8.82%
d. 9.17%
e. 9.54%
(Points : 30)

4. (TCO B) Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments).
Year: 1 2
Free cash flow: -$50 $100
a. $1,456
b. $1,529
c. $1,606
d. $1,686
e. $1,770
(Points : 35)

5. (TCO G) Based on the corporate valuation model, the value of a company’s operations is $1,200 million. The company’s balance sheet shows $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments that are unrelated to operations. The balance sheet also shows $90 million in accounts payable, $120 million in notes payable, $300 million in long-term debt, $50 million in preferred stock, $180 million in retained earnings, and $800 million in total common equity. If the company has 30 million shares of stock outstanding, what is the best estimate of the stock’s price per share?
a. $24.90
b. $27.67
c. $30.43
d. $33.48
e. $36.82
(Points : 35)

6. Sapp Trucking’s balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%. This debt currently has a market value of $50 million. The balance sheet also shows that the company has 10 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $65 million. The current stock price is $22.50 per share; stockholders’ required return, rs, is 14.00%; and the firm’s tax rate is 40%. The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. What is the difference between these two WACCs?

7. based on the corporate valuation model, bernile Inc’s value of operation is $750 million. Its balance sheet shows $50 million of short-term investments that are unrelated to operations, $100 million of accounts payable, $100 million of notes payable, $200 million of long term debt, $40 million of common stock (par plus pain -in – capital), and $160 million of retained earnings. What is the best estimate for the firm’s value of equity, in millions

Set 4

Question 1. 1. (TCO A) Which of the following statements is NOT correct? (Points : 5)
The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends.
The corporate valuation model discounts free cash flows by the required return on equity.
The corporate valuation model can be used to find the value of a division.
An important step in applying the corporate valuation model is forecasting the firm’s pro forma financial statements.
Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon, or terminal, value.

Question 2. 2. (TCO F) Which of the following statements is correct? (Points : 5)
One advantage of the NPV over the IRR is that NPV takes account of cash flows over a project’s full life, whereas IRR does not.
One advantage of the NPV over the IRR is that NPV assumes that cash flows will be reinvested at the WACC, whereas IRR assumes that cash flows are reinvested at the IRR. The NPV assumption is generally more appropriate.
One advantage of the NPV over the MIRR method is that NPV takes account of cash flows over a project’s full life, whereas MIRR does not.
One advantage of the NPV over the MIRR method is that NPV discounts cash flows, whereas the MIRR is based on undiscounted cash flows.
Since cash flows under the IRR and MIRR are both discounted at the same rate (the WACC), these two methods always rank mutually exclusive projects in the same order.

Question 3. 3. (TCO D) The Ackert Company’s last dividend was $1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever. The firm’s required return (rs) is 12.0%. What is the best estimate of the current stock price?
a. $37.05
b. $38.16
c. $39.30
d. $40.48
e. $41.70
(Points : 20)

4. (TCO D) The Ramirez Company’s last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price?
a. $41.58
b. $42.64
c. $43.71
d. $44.80
e. $45.92
(Points : 20)

Question 5. 4. (TCO G) The Chadmark Corporation’s budgeted monthly sales are $3,000. In the first month, 40% of its customers pay and take the 2% discount.
The remaining 60% pay in the month following the sale and don’t receive a discount.
Chadmark’s bad debts are very small and are excluded from this analysis. Purchases for next month’s sales are constant each month at $1,500.
Other payments for wages, rent, and taxes are constant at $700 per month. Construct a single month’s cash budget with the information given.
What is the average cash gain or (loss) during a typical month for the Chadmark Corporation?
(Points : 20)

Question 5. 5. (TCO G) Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions.
Last year’s sales = S0 $350 Last year’s accounts payable $40
Sales growth rate = g 30% Last year’s notes payable $50
Last year’s total assets = A0* $500 Last year’s accruals $30
Last year’s profit margin = PM 5% Target payout ratio 60%

a. $102.8
b. $108.2
c. $113.9
d. $119.9
e. $125.9 (Points : 30)

Time Remaining:

Page: 1 2

Final Exam Page 2

Question 1. 1. (TCO H) Your consulting firm was recently hired to improve the performance of Shin-Soenen Inc, which is highly profitable but has been experiencing cash shortages due to its high growth rate. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year, what is the firm’s present cash conversion cycle?
Average inventory =
Annual sales =
Annual cost of goods sold =
Average accounts receivable =
Average accounts payable = $75,000
$600,000
$360,000
$160,000
$25,000

a. 120.6 days
b. 126.9 days
c. 133.6 days
d. 140.6 days
e. 148.0 days (Points : 30)

Question 2. 2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)
a. 20.11%
b. 21.17%
c. 22.28%
d. 23.45%
e. 24.63%
(Points : 30)

Question 3. 3. (TCO E) Daves Inc. recently hired you as a consultant to estimate the company’s WACC. You have obtained the following information. (1) The firm’s noncallable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,050.00. (2) The company’s tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.20. (4) The target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of common stock, and it does not expect to issue any new shares. What is its WACC?
a. 7.16%
b. 7.54%
c. 7.93%
d. 8.35%
e. 8.79%
(Points : 30)

Question 4. 4. (TCO B) Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments).
Year: 1 2
Free cash flow: -$50 $100
a. $1,456
b. $1,529
c. $1,606
d. $1,686
e. $1,770
(Points : 35)

5. (TCO G) Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm’s investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.
Last year’s sales = S0 $300 Last year’s accounts payable $50
Sales growth rate = g 40% Last year’s notes payable $15
Last year’s total assets = A0* $500 Last year’s accruals $20
Last year’s profit margin = PM 20% Initial payout ratio 10%

a. $31.9
b. $33.6
c. $35.3
d. $37.0
e. $38.9 (Points : 30)

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FIN 515 Managerial Finance Course Week 8_ FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

FIN-515-Managerial Finance Course_Week 8_ FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

FIN-515-Managerial Finance Course_Week 8_ FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

FIN-515-Managerial Finance Course_Week 8_ FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

FIN-515-Managerial Finance Course_Week 8_ FINAL EXAM_ALL Four SETS_A+_100 OUT OF 100_Answer

Set 1

Final Exam Page 1

1. (TCO A) Which of the following does NOT always increase a company’s market value? (Points : 5)
Increasing the expected growth rate of sales
Increasing the expected operating profitability (NOPAT/Sales)
Decreasing the capital requirements (Capital/Sales)
Decreasing the weighted average cost of capital
Increasing the expected rate of return on invested capital

2. (TCO F) Which of the following statements is correct? (Points : 5)
The NPV, IRR, MIRR, and discounted payback (using a payback requirement of 3 years or less) methods always lead to the same accept/reject decisions for independent projects.
For mutually exclusive projects with normal cash flows, the NPV and MIRR methods can never conflict, but their results could conflict with the discounted payback and the regular IRR methods.
Multiple IRRs can exist, but not multiple MIRRs. This is one reason some people favor the MIRR over the regular IRR.
If a firm uses the discounted payback method with a required payback of 4 years, then it will accept more projects than if it used a regular payback of 4 years.
The percentage difference between the MIRR and the IRR is equal to the project’s WACC.

3. (TCO D) Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
a. $26.77
b. $27.89
c. $29.05
d. $30.21
e. $31.42
(Points : 20)

4. (TCO G) Singal Inc. is preparing its cash budget. It expects to have sales of $30,000 in January, $35,000 in February, and $35,000 in March. If 20% of sales are for cash, 40% are credit sales paid in the month after the sale, and another 40% are credit sales paid 2 months after the sale, what are the expected cash receipts for March?
a. $24,057
b. $26,730
c. $29,700
d. $33,000
e. $36,300
(Points : 20)

Final Exam Page 2
1. (TCO H) Zervos Inc. had the following data for 2008 (in millions). The new CFO believes (a) that an improved inventory management system could lower the average inventory by $4,000, (b) that improvements in the credit department could reduce receivables by $2,000, and (c) that the purchasing department could negotiate better credit terms and thereby increase accounts payable by $2,000. Furthermore, she thinks that these changes would not affect either sales or the costs of goods sold. If these changes were made, by how many days would the cash conversion cycle be lowered?
Original Revised
Annual sales: unchanged
Cost of goods sold: unchanged
Average inventory: lowered by $4,000
Average receivables: lowered by $2,000
Average payables: increased by $2,000
Days in year $110,000
$80,000
$20,000
$16,000
$10,000
365 $110,000
$80,000
$16,000
$14,000
$12,000
365

a. 34.0
b. 37.4
c. 41.2
d. 45.3
e. 49.8 (Points : 30)

2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)
a. 20.11%
b. 21.17%
c. 22.28%
d. 23.45%
e. 24.63%
(Points : 30)

3. (TCO E) You were hired as a consultant to the Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of common from retained earnings is 11.25%, and the tax rate is 40%. The firm will not be issuing any new common stock. What is Quigley’s WACC?
a. 8.15%
b. 8.48%
c. 8.82%
d. 9.17%
e. 9.54%
(Points : 30)

4. (TCO B) A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?
Year: 1 2 3
Free cash flow: -$15 $10 $40
a. $315
b. $331
c. $348
d. $367
e. $386
(Points : 35)

5. (TCO G) Based on the corporate valuation model, Hunsader’s value of operations is $300 million. The balance sheet shows $20 million of short-term investments that are unrelated to operations, $50 million of accounts payable, $90 million of notes payable, $30 million of long-term debt, $40 million of preferred stock, and $100 million of common equity. The company has 10 million shares of stock outstanding. What is the best estimate of the stock’s price per share?
a. $13.72
b. $14.44
c. $15.20
d. $16.00
e. $16.80
(Points : 35)

6. TCO G) Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions.
Last year’s sales = S0 $350 Last year’s accounts payable $40
Sales growth rate = g 30% Last year’s notes payable $50
Last year’s total assets = A0* $500 Last year’s accruals $30
Last year’s profit margin = PM 5% Target payout ratio 60%

a. $102.8
b. $108.2
c. $113.9
d. $119.9
e. $125.9 (Points : 30)

Set 2

1. (TCO A) Which of the following does NOT always increase a company’s market value? (Points : 5)
Increasing the expected growth rate of sales
Increasing the expected operating profitability (NOPAT/Sales)
Decreasing the capital requirements (Capital/Sales)
Decreasing the weighted average cost of capital
Increasing the expected rate of return on invested capital

2. (TCO F) Which of the following statements is correct? (Points : 5)
The MIRR and NPV decision criteria can never conflict.
The IRR method can never be subject to the multiple IRR problem, while the MIRR method can be.
One reason some people prefer the MIRR to the regular IRR is that the MIRR is based on a generally more reasonable reinvestment rate assumption.
The higher the WACC, the shorter the discounted payback period.
The MIRR method assumes that cash flows are reinvested at the crossover rate.

3. (TCO D) The Ramirez Company’s last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price?
a. $41.58
b. $42.64
c. $43.71
d. $44.80
e. $45.92
(Points : 20)

4. (TCO G) The ABC Corporation’s budgeted monthly sales are $4,000. In the first month, 40% of its customers pay and take the 3% discount.
The remaining 60% pay in the month following the sale and don’t receive a discount.
ABC’s bad debts are very small and are excluded from this analysis.
Purchases for next month’s sales are constant each month at $2,000. Other payments for wages, rent, and taxes are constant at $500 per month.
Construct a single month’s cash budget with the information given. What is the average cash gain or (loss) during a typical month for the ABC Corporation? (Points : 20)

5. (TCO G) Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm’s investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.
Last year’s sales = S0 $300 Last year’s accounts payable $50
Sales growth rate = g 40% Last year’s notes payable $15
Last year’s total assets = A0* $500 Last year’s accruals $20
Last year’s profit margin = PM 20% Initial payout ratio 10%

a. $31.9
b. $33.6
c. $35.3
d. $37.0
e. $38.9 (Points : 30)

The AFN model forecasts MicroDrive’s need for external funds to support its forecasted 2011 sales. Year 0 is 2010, which has just ended, and Year 1 is 2011, which has just begun. (Ignore rounding differences.)

Part II. Additional Funds Needed (AFN) to Support Growth

Page 2

1. (TCO H) Your consulting firm was recently hired to improve the performance of Shin-Soenen Inc, which is highly profitable but has been experiencing cash shortages due to its high growth rate. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year, what is the firm’s present cash conversion cycle?
Average inventory =
Annual sales =
Annual cost of goods sold =
Average accounts receivable =
Average accounts payable = $75,000
$600,000
$360,000
$160,000
$25,000

a. 120.6 days
b. 126.9 days
c. 133.6 days
d. 140.6 days
e. 148.0 days (Points : 30)

2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)
a. 20.11%
b. 21.17%
c. 22.28%
d. 23.45%
e. 24.63%
(Points : 30)

3. (TCO E) Daves Inc. recently hired you as a consultant to estimate the company’s WACC. You have obtained the following information. (1) The firm’s noncallable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,050.00. (2) The company’s tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.20. (4) The target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of common stock, and it does not expect to issue any new shares. What is its WACC?
a. 7.16%
b. 7.54%
c. 7.93%
d. 8.35%
e. 8.79%

(Points : 30)

4. (TCO B) A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?
Year: 1 2 3
Free cash flow: -$15 $10 $40
a. $315
b. $331
c. $348
d. $367
e. $386

5. (TCO G) Based on the corporate valuation model, the value of a company’s operations is $900 million. Its balance sheet shows $70 million in accounts receivable, $50 million in inventory, $30 million in short-term investments that are unrelated to operations, $20 million in accounts payable, , $140 million in retained earnings, and $280 million in total common equity. If the company has 25 million shares of stock outstanding, what is the best estimate of the stocks price per share?
a. $23.00
b. $25.56
c. $28.40
d. $31.24
e. $34.36
verified 2 places, pretty sure.
(Points : 35)

Set 3

Week 8 : Final Week – Final Exam Page 1

1. (TCO A) Which of the following does NOT always increase a company’s market value? (Points : 5)
Increasing the expected growth rate of sales
Increasing the expected operating profitability (NOPAT/Sales)
Decreasing the capital requirements (Capital/Sales)
Decreasing the weighted average cost of capital
Increasing the expected rate of return on invested capital

2. (TCO F) Which of the following statements is correct? (Points : 5)
For a project with normal cash flows, any change in the WACC will change both the NPV and the IRR.
To find the MIRR, we first compound cash flows at the regular IRR to find the TV, and then we discount the TV at the WACC to find the PV.
The NPV and IRR methods both assume that cash flows can be reinvested at the WACC. However, the MIRR method assumes reinvestment at the MIRR itself.
If two projects have the same cost, and if their NPV profiles cross in the upper right quadrant, then the project with the higher IRR probably has more of its cash flows coming in the later years.
If two projects have the same cost, and if their NPV profiles cross in the upper right quadrant, then the project with the lower IRR probably has more of its cash flows coming in the later years.

3. (TCO D) Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
a. $26.77
b. $27.89
c. $29.05
d. $30.21
e. $31.42
(Points : 20)

4. (TCO G) The ABC Corporation’s budgeted monthly sales are $4,000. In the first month, 40% of its customers pay and take the 3% discount.
The remaining 60% pay in the month following the sale and don’t receive a discount.
ABC’s bad debts are very small and are excluded from this analysis.
Purchases for next month’s sales are constant each month at $2,000. Other payments for wages, rent, and taxes are constant at $500 per month.
Construct a single month’s cash budget with the information given. What is the average cash gain or (loss) during a typical month for the ABC Corporation? (Points : 20)

5. (TCO G) Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm’s investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.
Last year’s sales = S0 $300 Last year’s accounts payable $50
Sales growth rate = g 40% Last year’s notes payable $15
Last year’s total assets = A0* $500 Last year’s accruals $20
Last year’s profit margin = PM 20% Initial payout ratio 10%

a. $31.9
b. $33.6
c. $35.3
d. $37.0
e. $38.9 (Points : 30)

Week 8 : Final Week – Final Exam Page 2

1. (TCO H) The Dewey Corporation has the following data, in thousands. Assuming a 365-day year, what is the firm’s cash conversion cycle?
Annual sales =
Annual cost of goods sold =
Inventory =
Accounts receivable =
Accounts payable = $45,000
$31,500
$4,000
$2,000
$2,400

a. 25 days
b. 28 days
c. 31 days
d. 35 days
e. 38 days (Points : 30)

2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)
a. 20.11%
b. 21.17%
c. 22.28%
d. 23.45%
e. 24.63%
(Points : 30)

3. (TCO E) You were hired as a consultant to the Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of common from retained earnings is 11.25%, and the tax rate is 40%. The firm will not be issuing any new common stock. What is Quigley’s WACC?
a. 8.15%
b. 8.48%
c. 8.82%
d. 9.17%
e. 9.54%
(Points : 30)

4. (TCO B) Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments).
Year: 1 2
Free cash flow: -$50 $100
a. $1,456
b. $1,529
c. $1,606
d. $1,686
e. $1,770
(Points : 35)

5. (TCO G) Based on the corporate valuation model, the value of a company’s operations is $1,200 million. The company’s balance sheet shows $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments that are unrelated to operations. The balance sheet also shows $90 million in accounts payable, $120 million in notes payable, $300 million in long-term debt, $50 million in preferred stock, $180 million in retained earnings, and $800 million in total common equity. If the company has 30 million shares of stock outstanding, what is the best estimate of the stock’s price per share?
a. $24.90
b. $27.67
c. $30.43
d. $33.48
e. $36.82
(Points : 35)

6. Sapp Trucking’s balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%. This debt currently has a market value of $50 million. The balance sheet also shows that the company has 10 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $65 million. The current stock price is $22.50 per share; stockholders’ required return, rs, is 14.00%; and the firm’s tax rate is 40%. The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. What is the difference between these two WACCs?

7. based on the corporate valuation model, bernile Inc’s value of operation is $750 million. Its balance sheet shows $50 million of short-term investments that are unrelated to operations, $100 million of accounts payable, $100 million of notes payable, $200 million of long term debt, $40 million of common stock (par plus pain -in – capital), and $160 million of retained earnings. What is the best estimate for the firm’s value of equity, in millions

Set 4

Question 1. 1. (TCO A) Which of the following statements is NOT correct? (Points : 5)
The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends.
The corporate valuation model discounts free cash flows by the required return on equity.
The corporate valuation model can be used to find the value of a division.
An important step in applying the corporate valuation model is forecasting the firm’s pro forma financial statements.
Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon, or terminal, value.

Question 2. 2. (TCO F) Which of the following statements is correct? (Points : 5)
One advantage of the NPV over the IRR is that NPV takes account of cash flows over a project’s full life, whereas IRR does not.
One advantage of the NPV over the IRR is that NPV assumes that cash flows will be reinvested at the WACC, whereas IRR assumes that cash flows are reinvested at the IRR. The NPV assumption is generally more appropriate.
One advantage of the NPV over the MIRR method is that NPV takes account of cash flows over a project’s full life, whereas MIRR does not.
One advantage of the NPV over the MIRR method is that NPV discounts cash flows, whereas the MIRR is based on undiscounted cash flows.
Since cash flows under the IRR and MIRR are both discounted at the same rate (the WACC), these two methods always rank mutually exclusive projects in the same order.

Question 3. 3. (TCO D) The Ackert Company’s last dividend was $1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever. The firm’s required return (rs) is 12.0%. What is the best estimate of the current stock price?
a. $37.05
b. $38.16
c. $39.30
d. $40.48
e. $41.70
(Points : 20)

4. (TCO D) The Ramirez Company’s last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price?
a. $41.58
b. $42.64
c. $43.71
d. $44.80
e. $45.92
(Points : 20)

Question 5. 4. (TCO G) The Chadmark Corporation’s budgeted monthly sales are $3,000. In the first month, 40% of its customers pay and take the 2% discount.
The remaining 60% pay in the month following the sale and don’t receive a discount.
Chadmark’s bad debts are very small and are excluded from this analysis. Purchases for next month’s sales are constant each month at $1,500.
Other payments for wages, rent, and taxes are constant at $700 per month. Construct a single month’s cash budget with the information given.
What is the average cash gain or (loss) during a typical month for the Chadmark Corporation?
(Points : 20)

Question 5. 5. (TCO G) Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions.
Last year’s sales = S0 $350 Last year’s accounts payable $40
Sales growth rate = g 30% Last year’s notes payable $50
Last year’s total assets = A0* $500 Last year’s accruals $30
Last year’s profit margin = PM 5% Target payout ratio 60%

a. $102.8
b. $108.2
c. $113.9
d. $119.9
e. $125.9 (Points : 30)

Time Remaining:

Page: 1 2

Final Exam Page 2

Question 1. 1. (TCO H) Your consulting firm was recently hired to improve the performance of Shin-Soenen Inc, which is highly profitable but has been experiencing cash shortages due to its high growth rate. As one part of your analysis, you want to determine the firm’s cash conversion cycle. Using the following information and a 365-day year, what is the firm’s present cash conversion cycle?
Average inventory =
Annual sales =
Annual cost of goods sold =
Average accounts receivable =
Average accounts payable = $75,000
$600,000
$360,000
$160,000
$25,000

a. 120.6 days
b. 126.9 days
c. 133.6 days
d. 140.6 days
e. 148.0 days (Points : 30)

Question 2. 2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)
a. 20.11%
b. 21.17%
c. 22.28%
d. 23.45%
e. 24.63%
(Points : 30)

Question 3. 3. (TCO E) Daves Inc. recently hired you as a consultant to estimate the company’s WACC. You have obtained the following information. (1) The firm’s noncallable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,050.00. (2) The company’s tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.20. (4) The target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of common stock, and it does not expect to issue any new shares. What is its WACC?
a. 7.16%
b. 7.54%
c. 7.93%
d. 8.35%
e. 8.79%
(Points : 30)

Question 4. 4. (TCO B) Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments).
Year: 1 2
Free cash flow: -$50 $100
a. $1,456
b. $1,529
c. $1,606
d. $1,686
e. $1,770
(Points : 35)

5. (TCO G) Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm’s investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.
Last year’s sales = S0 $300 Last year’s accounts payable $50
Sales growth rate = g 40% Last year’s notes payable $15
Last year’s total assets = A0* $500 Last year’s accruals $20
Last year’s profit margin = PM 20% Initial payout ratio 10%

a. $31.9
b. $33.6
c. $35.3
d. $37.0
e. $38.9 (Points : 30)

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GSCM 334 Mtls Resource & Cap Pln wLab Week 8 Final Exam_A+ Solution

GSCM 334 Mtls Resource & Cap Pln wLab Week 8 Final Exam_A+ Solution

GSCM 334 Mtls Resource & Cap Pln wLab Week 8 Final Exam_A+ Solution

GSCM 334 Mtls Resource & Cap Pln wLab Week 8 Final Exam_A+ Solution

GSCM 334 Mtls Resource & Cap Pln wLab Week 8 Final Exam_A+ Solution

BSGSCM 334 Mtls Resource & Cap Pln wLab Week 8 Final Exam_A+ Solution

Set 1:

1. (TCO 1) Operations managers aspire that all of their decisions are (Points : 5)
redundant.
minor in nature.
informed.
quantitative.
None of the above

2. (TCO 1) Transformation includes all of the following, except (Points : 5)
assembling.
teaching.
staffing.
farming.
consulting.

3. (TCO 1) When a vendor restocks the shelves in a supermarket every Monday morning, this is an example of (Points : 5)
safety stock replenishment.
economic order quantities.
reorder points.
fixed order interval.
blanket ordering.

4. (TCOs 3 & 6) The basic EOQ model’s assumptions include all of the following, except (Points : 5)
annual demand requirements are known and constant.
lead time does not vary.
each order is received in a single delivery.
quantity discounts are available.
All of the above are necessary assumptions.

5. (TCOs 3 & 6) Which of the following costs related to order size is nonlinear? (Points : 5)
Interest
Insurance
Taxes
Receiving
Space

6. (TCO 2) Dependent demand is most closely described as (Points : 5)
demand generated by suppliers.
estimates of demand using regression analysis of independent variables.
derived demand.
demands placed on suppliers by their customers.
net material requirements.

7. (TCO 2) Which of the following was an enabling factor in the development and application of MRP along with the recognition of the difference between independent and dependent demand? (Points : 5)
Computers
Development of the EOQ model
Inventory control systems
Blanket purchase orders
The Internet

8. (TCO 2) When an MRP system is continuously updated to account for changes, the process is called (Points : 5)
regenerative system.
batch-type system.
Plossl-Wright system.
net-change system.
gross-change system.

9. (TCOs 4, 5, & 6) Which of the following is MRP’s output? (Points : 5)
Gross requirements
Net requirements
A schedule of requirements for all parts and end items
Inventory reorder points
Economic order quantities and reorder points

10. (TCOs 4, 5, & 6) The MRP approach that is used for components or subassemblies to compensate for variations in lead times is called (Points : 5)
pegging.
safety stock.
increased order sizes.
safety time.
low-level coding.

11. (TCOs 4, 5, & 6) A lead time service level of 90 percent implies which of the following? (Points : 5)
Approximately 10 percent of demand during lead time will be satisfied.
Approximately 10 percent of inventory will be used during lead time.
The probability is 90 percent that demand during lead time will exactly equal the amount on-hand at the beginning of lead time.
The probability is 90 percent that demand during lead time will not exceed the amount on-hand at the beginning of lead time.
None of the above

12. (TCOs 5, 7, & 9) Which of the following compares known and expected capacity requirements with projected capacity availability? (Points : 5)
Planned releases
Load reports
Lot sizing
Work loading
Time fencing

13. (TCOs 5, 7, & 9) Bunny Helpers, Inc. has just received an order for 100 Deluxe Easter Baskets, which must be ready for delivery at the start of Week 6. An MRP planner has prepared the following table showing product structure, lead times (orders are lot-for-lot), and quantities on hand:
Deluxe Easter Basket BOM Lead Time On-Hand
Deluxe Easter Basket 1 week 10
Dark Chocolate Truffles (2 per) 2 weeks 30
Carved Chocolate Eggs (4 per) 1 week 50

Each Deluxe Basket contains two dark chocolate truffles and four carved chocolate eggs; additionally, one box of Alka-Seltzer is included for those who overindulge.

Given the following information, how many dark chocolate eggs should be ordered? (Points : 5)
310
450
500
550
600

14. (TCO 11, 12, 13, & 14) Given a product mix, scheduling difficulties, quality factors, and so on, the maximum expected output is (Points : 5)
utilization.
design capacity.
efficiency.
effective capacity.
available capacity.

15. (TCOs 11, 12, 13, & 14) Given the following information, determine utilization.
Effective capacity = 20 units per day
Design capacity = 60 units per day
Actual output = 15 units per day (Points : 5)
1/4
1/3
1/2
3/4
None of these

16. (TCOs 10, 15, & 16) In an assignment method problem, it takes Abe 3 hours to build a birdhouse and 4 hours for a doghouse, while Betty takes 4 hours for a birdhouse and 3 hours for a doghouse. What is the reduced cost (in hours) of assigning Abe to build the doghouse? (Points : 5)
0 hours
1 hour
2 hours
3 hours
4 hours

17. (TCOs 10, 15, & 16) Based on the cost information given in the table below, which set of job-machine pairs reflects the minimum cost solution using the assignment method?
Machine
A B C
Job 1 $0 0 0
2 3 6 4
3 2 4 0
(Points : 5)
1-B, 2-A, 3-C
1-A, 2-B, 3-C
1-C, 2-A, 3-B
1-B, 2-C, 3-A
1-C, 2-B, 3-A

Page 2

1. (TCO 1) A company has found that introducing one additional worker enables a process improvement that reduces processing time for each unit so that output is increased by 25% with less material. Under the old process, five workers could produce 60 units per hour. Labor costs are $12/hour, and material input was previously $16/unit. For the new process, material is now $10/unit. Overhead is charged at 1.6 times direct labor cost. Finished units sell for $31 each. What increase in productivity is associated with the process improvement? (Points : 30)

2. (TCOs 3 & 6) For a stock item, you are given the following information:
Order quantity = 300, = 20 units, desired lead-time service level = .86

(A) Find the expected number of units short per cycle.
(B) Find the annual service level. (Points : 30)

2. (TCO 2) For the product tree below, how many Cs are needed if 17 Ps are needed and on-hand inventory consists of 10 As, 15 Bs, 20 Cs, 12 Ms, and 5 Ns? Show your work.

(Points : 30)

4. (TCOs 4, 5, & 6) Given the tree below, develop a material requirements plan for end-item P and its components. Assume that all lead times are one week and that lot-for-lot ordering is used, except for Item F, which is ordered in multiples of 400 units.

One hundred units of P should be available at the start of Week 4 and at the start of Week 8. Beginning inventories are: 20 P, 100 A, and 200 F.
Scheduled receipts are 800 F at the start of Week 1.

(Points : 30)

5. (TCOs 5, 7, & 9) Can both small and large organizations implement centralized purchasing, or is that a function of organization size? Explain your answer. (Points : 25)

6. (TCOs 11, 12, 13, & 14) How many cords of wood would the owner of Dry Firewood have to split with a new machine to make a profit of $30,000 if this hydraulic wood splitter sells for $50,000? It will cost an additional $100 per cord to purchase and split wood with this machine. He can sell each cord of split wood for $125. Show your work. (Points : 30)

7. (TCOs 10, 15, & 16) Evaluate the following statement: “Lean concepts include large lots to take advantage of the economies of scale.” Explain your reasoning. (Points : 20)

8. (TCOs 8 & 9) When developing an MPS, time buckets are used. What are they? Elaborate on their varieties and the reasons for them. (Points : 20)

Set 2:

1. (TCO 1) Operations managers aspire that all of their decisions are (Points : 5)
redundant.
minor in nature.
informed.
quantitative.
None of the above

2. (TCO 1) In the control process, measurements taken at various points in the transformation process are called (Points : 5)
plans.
directions.
controls.
feedback.
budgets.

3. (TCO 1) When manufacturing work is subcontracted or performed in other countries, it is (Points : 5)
downsized.
outsourced.
internationalization.
vertical integration.
entrepreneurial.

4. (TCOs 3 & 6) The basic EOQ model’s assumptions include all of the following, except (Points : 5)
annual demand requirements are known and constant.
lead time does not vary.
each order is received in a single delivery.
quantity discounts are available.
All of the above are necessary assumptions.

5. (TCOs 3 & 6) The amount contained in the second bin in a two-bin inventory system is equal to the (Points : 5)
ROP.
EOQ.
amount in the first bin.
optimum stocking level.
safety stock.

6. (TCO 2) All of the following statements are true about ERP implementation, except (Points : 5)
it needs cross-functional teams.
it takes just a few weeks to install.
it requires intensive training.
it requires high funding for both initial cost and maintenance.
it needs frequent upgrades after installation.

7. (TCO 2) The time periods employed in master schedule’s planning horizons are called (Points : 5)
pegging.
lead times.
stacked lead times.
time buckets.
firm, fixed, and frozen.

8. (TCO 2) When an MRP system is periodically updated to account for all changes that have occurred within a given time interval, the process is called (Points : 5)
pegging.
planned order release.
net change.
regenerative.
exception report.

9. (TCOs 4, 5, & 6) Which of the following is MRP’s output? (Points : 5)
Gross requirements
Net requirements
A schedule of requirements for all parts and end items
Inventory reorder points
Economic order quantities and reorder points

10. (TCOs 4, 5, & 6) The lot-sizing method that does not attempt to balance ordering (or setup) and holding costs is called (Points : 5)
economic order quantity.
economic run size.
lot-for-lot.
part period.
All of the above

11. (TCOs 4, 5, & 6) Choosing how many to order or make is known as (Points : 5)
quantity determination.
package sizing.
lot sizing.
grouping.
aggregation.

12. (TCOs 5, 7, & 9) The dynamic store of information on the status of each item by time period (e.g., scheduled receipts, lead time, lot size), which is an input to the MRP, is the(Points : 5)
master production schedule.
bill of materials.
inventory records.
assembly time chart.
net requirements chart.

13. (TCOs 5, 7, & 9) What will be the quantity of the first planned receipt if net requirements for component J are as follows: 60 units in Week 2, 40 units in Week 3, and 60 units in Week 5? A fixed-period, two-period lot-sizing method is used. (Points : 5)
60 units
120 units
180 units
Cannot be determined
None of the above

14. (TCOs 11, 12, 13, & 14) Which of the following is a basic question in capacity planning? (Points : 5)
What kind is needed?
How much is needed?
When is it needed?
All of the above
None of the above

15. (TCOs 11, 12, 13, & 14) When developing capacity alternatives, all but which of the following is advisable? (Points : 5)
Design structured, rigid systems.
Take a big-picture approach to capacity changes.
Prepare to deal with capacity in chunks.
Attempt to smooth out capacity requirements.
Identify the optimal operating level.

16. (TCOs 10, 15, & 16) Scheduling pertains to (Points : 5)
hiring workers.
process selection.
buying machinery.
timing the use of specific resources.
determining the lowest cost.

17. (TCOs 10, 15, & 16) Based on the cost information given in the table below, which set of job-machine pairs reflects the minimum cost solution using the assignment method?
Machine
A B C
Job 1 $0 0 0
2 3 6 4
3 2 4 0
(Points : 5)
1-B, 2-A, 3-C
1-A, 2-B, 3-C
1-C, 2-A, 3-B
1-B, 2-C, 3-A
1-C, 2-B, 3-A

(TCO 1) Below is shown the weekly output of a fabrication process and data for labor and material inputs. Note the following:

– Standard selling price is $125 per unit.
– Overhead is charged weekly at the rate of $1,500 plus .5 times direct labor cost.
– Hourly wage is $16 in a 40-hour week.
– Material cost is $10 per foot.

Week Output # Workers Material (ft)
1 392 5 2790
2 408 6 2790

What is the average multifactor productivity?

2. TCOs 3 & 6) If instantaneous replenishment is assumed when given the same demand, setup/ordering costs, and carrying costs, then the EOQ calculated using incremental replenishment will be _____.
Illustrate using a numeric example.

3. For the product tree below, how many Cs will be needed if 17 Ps are needed and no on-hand inventory exists for any items? Show your work.

4. Develop a material requirements plan that will lead to 400 units of Product P being available at the start of Week 7 when given the following information:

5. In supplier partnerships, state the key characteristic of the products or services of business organizations forming strategic partnerships, and explain why. (Points : 25)

6. (TCOs 11, 12, 13, & 14) How many rosebushes would the owner of a rose nursery have to produce and sell in order to make a profit of $6,000 if she spends $6,000 to acquire the licensing rights to grow a new variety of rosebush? She could sell the new rosebushes for $6 each. The per-unit variable cost would be $3. Show your work. (Points : 30)

7. (TCOs 10, 15,& 16) Compare and contrast kanban and CONWIP. (Points : 20)

8. (TCOs 8 & 9) MPS planners use what is referred to as time fences? What are they, and why are they used? (Points : 20)

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GSCM 429_Prod Activity Ctrl Week_8_Final Exam week_Final Exam_Set 1 and 2_Complete_Answer

GSCM 429_Prod Activity Ctrl Week_8_Final Exam week_Final Exam_Set 1 and 2_Complete_Answer

GSCM 429_Prod Activity Ctrl Week_8_Final Exam week_Final Exam_Set 1 and 2_Complete_Answer

GSCM 429_Prod Activity Ctrl Week_8_Final Exam week_Final Exam_Set 1 and 2_Complete_Answer

GSCM 429_Prod Activity Ctrl Week_8_Final Exam week_Final Exam_Set 1 and 2_Complete_Answer

GSCM 429_Prod Activity Ctrl Week_8_Final Exam week_Final Exam_Set 1 and 2_Complete_Answer

1. The two different approaches to load work centers in job-shop scheduling are
load charts and schedule charts.
Gantt charts and assignment method.
infinite loading and finite loading.
linear programming and makespan.
None of the above

2. The priority rule where jobs are processed according to the smallest ratio of due date to processing time is
CR.
EEDD.
FCFS.
S/O.
SPT.

3. A scheduling rule used for sequencing jobs through two work centers is
the critical ratio rule.
the Johnson’s rule.
the slack per operation rule.
the shortest processing time rule.
the Pareto rule.

4. The owner and operator of the local franchise of Handyman, Inc., has four jobs to do today, shown in the order they were received:

Job Processing Time (hrs) Due (hrs from now)
————————————————————————————————-
W 4 4
X 3 5
Y 2 2
Z 1 1

If he uses the first-come, first-served (FCFS) priority rule to schedule these jobs, what will be the average completion time?
7.5 hours
5 hours
3 hours
2.5 hours
2 hours

5. The ultimate goal of JIT operations is to have
no in-process inventories.
cross-trained workers capable of handling every process.
a smooth, rapid flow of materials through the system.
no setup times.
All of the above

6. Building up an inventory of standard parts or modules instead of immediately producing the finished end items is the essence of
delayed differentiation.
kanban.
autonomation.
andon.
matrix management.

7. A kanban card is used to signal that (Points : 5)
work is needed at the work center.
work is ready to be moved to the next station.
a worker has run out of parts needed for further processing.
a machine has broken down and needs immediate attention.
a machine is ready for preventive maintenance.

8. The type of processing system that is used for highly standardized products is
continuous.
intermittent.
project.
batch.
unit.

1. The priority rule, which will sequence jobs in the order they are received, is _____.
EDD
LIFO
SPT
CR
FCFS

2. In an assignment method problem, if it takes Abe 3 hours to build a birdhouse and 4 hours for a doghouse, and Betty takes 4 hours for a birdhouse and 3 hours for a doghouse, what is the reduced cost (in hours) of assigning Betty to build the doghouse?
0 hours
1 hour
2 hours
3 hours
4 hours

3. A major difference between manufacturing and service systems in terms of scheduling is
variability in arrival and service rates.
processing cost per unit.
the number of units to be processed.
length of processing time.
output rate.

4. Scheduling in service systems may involve scheduling which of the following?

The workforce
The equipment
A and B
Customers
All of the above

5. The owner and operator of the local franchise of Handyman, Inc., has four jobs to do today, shown in the order they were received:

Job Processing Time (hrs) Due (hrs from now)
————————————————————————————————-
W 4 4
X 3 5
Y 2 2
Z 1 1

If he uses the earliest due date first (EDD) priority rule to schedule these jobs, what will be the average job tardiness?
0 hours
1.5 hours
1.75 hours
2 hours
2.25 hours

6. Building up an inventory of standard parts or modules instead of immediately producing the finished end items is the essence of (Points : 5)
delayed differentiation.
kanban.
autonomation.
andon.
matrix management.

7. With regard to suppliers, JIT systems typically require
delivery of large lots at regular intervals.
buyer inspection of goods and materials.
multiple sources from which to purchase.
long-term relationships and commitments.
the lowest price possible.

8. Which of the following is characteristic of the JIT philosophy?
Inventories are an asset.
Lot sizes are optimized by formula.
Vendors are co-workers, essentially other departments of our organization.
Queues are a necessary investment.
All of the above

9. In make-to-stock systems, fluctuations in sales volume are managed through which of the following?
Order backlog
Finished goods inventory
WIP or FG inventory
All of the above
None of the above

10. In an MRP master schedule, the planning horizon is often separated into a series of times periods called
pegging.
lead times.
stacked lead times.
time buckets.
firm, fixed, and frozen.

1.Does cellular manufacturing apply best to repetitive, high-volume product or nonrepetitive, low-volume product? Explain and give an example.

2. Validate or invalidate the statement that although inventories are maintained, the goal of lean operations is to maintain a minimum of safety stock.

3. Elaborate on the statement: “The output of the system cannot exceed the output of the bottleneck operation(s).”

4. Differentiate between infinite loading and finite loading as two major approaches used to load work centers.

5. Explain why batch process helps maximize worker efficiency.

6. Refer to the following data for jobs waiting to be processed at a single work center (jobs are shown in order of arrival):

Job Processing Time (days) Due Date (days from now)
——————————————————————————————————
A 2 2
B 5 6
C 6 10
D 3 4
E 4 8

What is the schedule sequence using the first-come, first-served (FCFS) priority rule?

7. Respond to the question: “Which is better, MRP or JIT?”

8. The design of the MPC system is influenced by some key features of market demand and product design. Name the key features that will lead to a make-to-stock system and explain the rationale.

9. Market requirements drive the choice of the shop floor system approach. Describe and explain the type of market requirements that would be suitable for an MRP-based system, along the lines of product design, product variety, and product volume per period, product mix changes, and delivery schedule changes.

10. Manufacturing strategy also drives the choice of shop floor system. Describe and explain the strategies that lend themselves to a JIT-based system, from the perspective of WIP, changeover cost, and process choice.

1. Explain how cellular manufacturing represents a flexible manufacturing system.

2. State the four building blocks of lean operations, and explain how fast and simple are the two common threads that run through them.

3. Elaborate on the statement: “The output of the system cannot exceed the output of the bottleneck operation(s).

4. Differentiate between infinite loading and finite loading as two major approaches used to load work centers.

5. The theory of constraints has a goal of maximizing flow through the entire system.

6. Refer to the following data for jobs waiting to be processed at a single work center (jobs are shown in order of arrival):

Job Processing Time (days) Due Date (days from now)
——————————————————————————————————
A 2 2
B 5 6
C 6 10
D 3 4
E 4 8

What is the average completion time for the first-come, first-served (FCFS) priority rule schedule? Average job tardiness? Average number of jobs at the center?

7. Respond to the question: “Which is better, MRP or JIT?

8. The design of the MPC system is influenced by some key features of market demand and product design. Name the key features that will lead to an assemble-to-order system and explain the rationale.

9. Market requirements drive the choice of the shop floor system approach. Describe and explain the type of market requirements that would be suitable for an MRP-based system, along the lines of product design, product variety, product volume per period, product mix changes, and delivery schedule changes.

10. Manufacturing strategy also drives the choice of shop floor system. Describe and explain the strategies that lend themselves to a JIT-based system, from the perspective of WIP, changeover cost, and process choice.

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