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Queta Johnson is about to open a new business Chocolate Nirvana Answer

Queta Johnson is about to open a new business Chocolate Nirvana Answer

Queta Johnson is about to open a new business Chocolate Nirvana Answer

Queta Johnson is about to open a new business – Chocolate Nirvana. It will be a small chocolate specialties store. She plans on selling a limited number of hand-made molded candies, some of which are holiday specific and others that are of a more generic nature, as well as carrying a line of top-end candy bars. The majority of her sales will come from walk-in customers which will all be on a cash only basis. In addition, she will also sell direct to two local businesses, on account, with terms 1/10,n/30. She anticipates working full-time at the store and needing the help of four part-time employees. She uses a perpetual FIFO (First-in, First-Out) method to account for her inventory. So, every time you record a sale of merchandise, whether on account or for cash, you must also figure out the cost of the goods while recording the sale in the inventory subsidiary.

The purpose of this practice set is to allow you the chance to see how each of the separate components we have worked on this semester fit together. As you complete the set, you may find it necessary to look back at what we learned in various chapters to help remember exactly what to do.

Instructions

1. Record the transactions for Chocolate Nirvana found on the enclosed forms in one of the journals provided:
Cash Payments – any time you spend money
Cash Receipts – any time you receive money
Purchase – any time you purchase something on account
Sales – any time you sell something on account
General – only transactions that do NOT fit into one of the previous journals

Chocolate Nirvana uses Accounts Receivable, Accounts Payable, and Merchandise Inventory Subsidiary Ledgers as well as a check book
Remember to post to the subsidiary ledgers any time those accounts are used

The first work you will be doing will be do determine which journal each form belongs in. Each form will only go into one journal. If we can post it into one of the special journals, we will. If it does not belong in a special journal – that is the only time we will use the general journal for our transactions. This will be fairly rare. Pay attention to the words used on the forms. If it indicates that we have received money – FOR ANY REASON – we will record that in the Cash Receipts Journal. If it indicates that we need to write out a check – FOR ANY REASON – it must go into the Cash Payments Journal. If we sell something on account then it would go into the Sales Journal. And if we buy something on account or we receive a service on account, then it would go into the Purchases Journal. If it is a sales return, a purchase return, or the payroll entries it must go into the General Journal.
As we record the information from the forms into the journals we need to watch the columns where we record the information. If we record something in the Cash Receipts or the Cash Payments Journals, then we will have to affect cash. Any number we put in the Cash debit column from Cash Receipts we will also put into the check book as a deposit. Any number we put in the Cash credit column from Cash Payments we will also put into the check book as a check we write out. If we affect Accounts Receivable, Accounts Payable, or Merchandise Inventory in any of the special journals OR in the general journal, we must ALSO take that amount into that subsidiary ledger. If we debited it in the journal we will debit it in the subsidiary; if we credited it in the journal we will credit it in the subsidiary. If we purchased the merchandise inventory we will show it as a purchase in the inventory sheets, if we sold it we will show it under the cost of goods sold section – we will determine our cost for the sale by applying the FIFO rules and determining our cost in the goods we sold.

Payroll – record the payroll as instructed first into their employee earnings records, then transfer the information into the payroll register and after totaling the payroll register use that information to prepare a general journal entry. Specific data for each individual regarding their pay rate, status and number of allowances can be found on their earnings record sheets. Specific rates to be used for social security, medicare, and the unemployment amounts can be found down in the next section. Prepare the journal entries based off what we were taught in the textbook. You will need to debit the salary expense account for total gross wages and credit each of the things we withheld (as summarized on the payroll register). However you must credit Payroll Checking Account for the net pay because this business uses a separate checking account for normal checks and payroll checks.
When you are asked to transfer enough funds to cover payroll, you will debit the Payroll Checking account for the same amount you credited in the first payroll entry in the general journal (net pay) but now it will be in the Cash Payments Journal. This will give you a debit and a credit and will result in a zero balance (and nothing recorded in the Wages Payable account yet).
Keep in mind that after recording the general journal entry to record the actual payroll you must also prepare a journal entry to record the payroll tax expense for the business. Chocolate Nirvana is responsible for matching the Social Security and Medicare amounts withheld from its employees and also must pay in for Federal and State Unemployment. This means that when it comes time to post into the ledger you will have two identical amounts in the Social Security account and two identical amounts in the Medicare account. This entry was shown in the textbook so please follow the format we saw there. The following rates apply:
Social Security 6.2%, on the first $110,000 earned each year by each employee
Medicare 1.45%
FUTA .8%, on the first $7,000 earned each year by each employee
SUTA 9%, on the first $12,000 earned each year by each employee
We will NOT actually write out the individual payroll checks
Hint: If you are asked to write out a check to cover more than one thing you must take more than one line so that you properly record the affect to each account.
To this point you should NOT have anything recorded in the General Ledger. Wait until you have your journals completed, TOTALED, and corrected, before putting anything into the general ledger.

2. After completing all journals, TOTAL THEM and write the totals below the last number in the column, compare to the check figures, and post to the general ledger. For any journal column with the name of a specific account in the column heading you will post only the total from that column into that account in the general ledger. Journal columns shown as “Other” in the heading need to be posted individually into the general ledger. As you post remember that you have to use the post reference numbers. In the ledger you fill in the journal abbreviation and page number where you get your data and in the journal you put the ledger account number where you posted it. Cash Receipts is CR; Cash Payments is CP; Purchases is P; Sales is S; and General Journal is J. In the journal to show that you posted it into a subsidiary ledger you put a check mark.

3. Prepare an unadjusted trial balance. After getting your numbers to match the check figure transfer the information into the first columns of the worksheet.

4. Prepare month end adjusting entries based on the following data:

a) Record accrued interest on the long term note for 3 days – $16.77

b) Depreciation – calculate depreciation for JUST the month of October based on the following information:
Store Equipment – 5 year life, $2000 salvage value, purchased October 10, use straight line depreciation
Office Equipment – 5 year life, $200 salvage value, purchased October 10, use straight line depreciation

c) Record entry for expired insurance

d) Currently there are $75 worth of office supplies on hand

e) Currently there are $125 worth of store supplies on hand

f) Record entry amount of advertising expired for the period just ended

g) Record wages earned, but unpaid, on Oct 31 of $275

Adjusting entries need to be recorded in the general journal, posted into the general ledger (remember to indicate Adjusting Entry in the Item column), and added to the worksheet.

5. Complete the worksheet, schedule of accounts receivable/payable, Income Statement, Statement of Owners’ Equity, and Balance Sheet. Add any accounts not already found on the worksheet as needed to complete your adjusting entries.
The schedule of accounts receivable and schedule of accounts payable are prepared by listing every business owing us money at the end of the month and totaling them and listing every business we owe money to at the end of the month and totalling them. We use the two subsidiary ledgers to get this information.
Prepare the Income Statement using the Multiple step format and the Balance Sheet using the classified format. The Notes Payable – current balance on the Balance Sheet should be $15,000 and the Notest Payable – noncurrent balance on the Balance Sheet should be $13,750.

6. Prepare closing entries, post to the ledger, and prepare a post-closing trial balance
The easiest way to prepare your closing entries would be to use your completed worksheet. Close the credit amounts in the Income Statement column into income summary for the first entry. Close the debit amounts from the Income Statement columns into Income Summary for the second entry. Close the difference between the two income summary amounts (should equal net income) in to the Capital account in the third entry. Finally, close the drawing account into the capital account in the fourth entry. These entries are done in the General Journal and then posted into the General Ledger. Be sure to indicate Closing entry in the Item column. You will then prepare the post-closing trial balance by going through the ledger and listing every account that still has a balance and listing the balance (as either a debit or a credit – based on what it is in the ledger).

(Have you made sure that your balances in your subsidiary ledgers match their controlling accounts in the general ledger? Does the net income from your work sheet match the net income you reported on your Income Statement?)

In the Exhibit section you will find:
Chart of Account
Tax Withholding Chart
Check Figures

In the Forms section you will find:
The transactions forms you need to record in the various journals

In the Journals section you will find:
Sales Journal – begin with invoice 1001
Purchases Journal
Cash Receipts Journal – begin with invoice 101
Cash Payments Journal – begin with check 1001
General Journal (ONLY transactions that CANNOT go into one of the special journals)

In the Ledgers section you will find:
Accounts Receivable Subsidiary Ledger
Accounts Payable Subsidiary Ledger
Merchandise Inventory Subsidiary Ledger
General Ledger

In the Checkbook section you will find:
Checkbook – begin with check 1001

In the Payroll section you will find:
Individual Earnings Records
Payroll Register – Begin with check 101 (assign to employees in order – do not actually write out checks to the employees)

In the Financial Statement section you will find:
Unadjusted Trial Balance
Work Sheet
Schedule of Accounts Receivable
Schedule of Accounts Payable
Income Statement (Multiple Step format)
Statement of Owners’ Equity
Balance Sheet (Classified format)
Post Closing Trial Balance

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Queta Johnson is about to open a new business Chocolate Nirvana Answer

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FIN 515 Managerial Finance Final Exam Complete A+ Answer

FIN 515 Managerial Finance Final Exam Complete A+ Answer

FIN 515 Managerial Finance Final Exam Complete A+ Answer

1. (TCO A) In the United States, which of the following types of organization has the greatest revenue in total?
a. Sole proprietorship
b. C corporation
c. S corporation
d. Limited partnership

Question 2. (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 3. (TCO A) Sole proprietorships have all of the following advantages except ?
a. easy to set up.
b. single taxation of income.
c. limited liability.
d. ownership and control are not separated.

Question 4. (TCO B) Which of the following would cause the present value of an annuity to decrease?
a. Reducing the number of payments.
b. Increasing the number of payments.
c. Decreasing the interest rate.
d. Decreasing the liquidity of the payments.

Question 5. (TCO B) In a TVM calculation, if incoming cash flows are positive, outgoing cash flows must be
a. positive.
b. negative.
c. either positive or negative. It really doesn’t matter.
d. stated in time units that are different from the time units in which the interest rates are stated.

Question 6. 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 7. (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?

8. If you were a manager of a company, which of the three right side components of the DuPont Identity would you want to increase and which would you want to decrease, other things being equal? Give a specific example for how to do that for each of the three.

9. (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

10. A stock pays an annual dividend of $2.50 and that dividend is not expected to change. Similar stocks pay a return of 10%. What is P0?

11. A stock has just paid a dividend and has declared an annual dividend of $2.00 to be paid one year from today. The dividend is expected to grow at a 5% annual rate. The return on equity for similar stocks is 12%. What is P0?

12. A bond has 5 years to maturity and has a YTM of 8%. Its par value is $1,000. Its semiannual coupons are $50. What is the bonds current market price?

13. A bond currently sells for $1,000 and has a par of $1,000. It was issued two years ago and had a maturity of 10 years. The coupon rate is 7% and the interest payments are made semiannually. What is its YTM?

14. A company has 10 million shares outstanding trading for $7 per share. It also has $300 million in outstanding debt. If its equity cost of capital is 15%, and its debt cost of capital is 9%, and its effective corporate tax rate is 40%, what is its weighted average cost of capital?

15. Name and describe the three functions of managerial finance. For each, give an example other than those used in the text and lecture.

16. Explain thoroughly how stock portfolios affect the risk to an investor.

17. What is the Cash Conversion Cycle (CCC)? Name the components of the CCC and explain why the CCC is important to business.

18. A company has the opportunity to do any of the projects for which the net cash flows per year are shown below. The company has a cost of capital of 12%. Which should the company do and why? You must use at least two capital budgeting methods. Show your work.
Year A B C
0 -300 -100 -300
1 100 -50 100
2 100 100 100
3 100 100 100
4 100 100 100
5 100 100 100
6 100 100 100
7 -100 -200 0

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FIN 515 Managerial Finance Final Exam Complete A+ Answer

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Suppose your bank account will be worth $4,200.00 in one year Answer

Suppose your bank account will be worth $4,200.00 in one year Answer

Suppose your bank account will be worth $4,200.00 in one year Answer

1. Suppose your bank account will be worth $4,200.00 in one year. The interest rate (discount rate) that the bank pays is 5%. What is the present value of your bank account today?
2. Suppose you have two bank accounts, one called Account A and another Account B. Account A will be worth $3,800.00 in one year. Account B will be worth $6,500.00 in two years. Both accounts earn 5% interest. What is the present value of each of these accounts? What is the combined present value of the two accounts?
3. Suppose you just inherited an oil well. This oil well is believed to have three years worth of oil left before it dries up. Here is how much income this oil well is projected to bring you each year for the next three years:
Year 1: $125,000
Year 2: $258,000
Year 3: $310,000
Compute the present value of this stream of income using a discount rate of 7%. Remember, you are calculating the present value for a whole stream of income, i.e. the total value of receiving all three payments (how much you would pay right now to receive these three payments in the future). Your answer should be one number – the present value for this oil well at a 7% discount rate.

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Suppose your bank account will be worth $4,200.00 in one year Answer

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Howard Corporation has two production departments Answer

Howard Corporation has two production departments Answer

Howard Corporation has two production departments Answer

1. Howard Corporation has two production departments. Curing has 12,000 units in process at the beginning of the period, three-fourths complete. During the period, 45,000 units were received from Crushing, 48,000 units were transferred to Finished Goods, and 9,000 units were in process at the end of the period, 2/3 complete.

Cost information was as follows:
Cost of beginning work in process:
Cost in Crushing $21,640
Cost in Curing:
Materials 8,810
Labor 1,190
Factory overhead 2,420
Costs during the month:
Cost of goods received from Crushing $ 85,520
Cost in Curing:
Materials 53,830
Labor 10,690
Factory overhead 17,560
Total costs to be accounted for $201,660
a. Determine the unit cost for the month in Curing.
b. Determine the total cost of the products transferred to finished goods.
c. Determine the total cost of the ending work in process inventory.

2.Information for Chaucer, Ltd. in July for the Prep Department, the first stage of the production cycle, is as follows:
Conversion
Materials Costs
Beginning work in process $8,100 $6,200
Costs added during July 23,400 13,400
Total costs $31,500 $19,600
Goods completed 60,000 units
Ending work in process 15,000 units
Material costs are added at the beginning of the process.
The ending work in process is two-thirds complete as to conversion costs. How would the total costs accounted for be distributed using the average cost method?

3.Company processes pork into three products—chops, bacon, and sausage. Production and selling price data follow:
Chops 100,000 lbs. $5.00/lb.
Bacon 210,000 lbs. $4.00/lb.
Sausage 410,000 lbs. $2.00/lb.
Pork is processed in the Processing Department. From the split-off point, bacon is smoked, sliced, and packaged in the Bacon Department. The cost incurred for these processes was $100,000. In addition, sausage was ground and formed into patties in the Sausage Department after the split-off. This process cost $60,000.
a. If joint processing costs were $1,500,000, calculate the total cost of each product using the adjusted sales value method.
b. Prepare the journal entries to (1) record the joint processing and movement of product out of the Processing Department after the split off, and (2) record the additional processing and completion of the bacon and sausage.

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Howard Corporation has two production departments Answer

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Premier Products, Inc. manufactures tennis rackets Answer

Premier Products, Inc. manufactures tennis rackets Answer

Premier Products, Inc. manufactures tennis rackets Answer

Premier Products, Inc. manufactures tennis rackets. Premier Products has grown extensively over the past two years. While the company has been very profitable, President Mark Harrison is concerned with its ability to cost products accurately. Some products appear to be very profitable while others, which should be showing a profit, seem to be losing money. The production manager is convinced that his production processes are as efficient as any in the industry, and he is unable to explain the apparent high cost of producing some of the products.
Harrison agreed with his production manager and is convinced that the cost accounting system is at fault. He has hired Tom Arnold, a management consultant, to analyze the firm’s costing system. Arnold has documented the existing costing system. It is a very simple system that uses a single allocation rate for all overhead costs. The overhead rate for the year is determined by adding together the budgeted variable and fixed overhead costs and dividing this sum by the number of budgeted labor hours. The standard cost of a product is found by multiplying the number of direct labor hours required to manufacture that product by the overhead rate and adding this quantity to the direct labor and material costs.
Arnold is convinced that the company’s costing system is partially to blame for some of the firm’s problems. He has assembled data for four of Premier’s products. He has put together the actual costs required for each of these products in Table A. These costs will serve as the benchmark against which the results of different allocation schemes can be evaluated.

Of course, in real life we could never start out with accurate actual costs – accurate actual costs would be the end result that we would attempt to determine. But we provide this information as a learning aid to help you to clearly understand the key issues. Table A is as follows:

PRODUCT A B C D
Material $15.00 $5.00 $10.00 $5.00
+ Labor 30 5 15 10
+Variable OH 15 7.5 5 7.5
#NAME? $60.00 $17.50 $30.00 $22.50
Fixed overhead $10,000 $10,000 $12,500 $12,500
Units produced 1,000 1,000 1,000 1,000
Unit fixed cost $10.00 $10.00 $12.50 $12.50
Total unit cost $70.00 $27.50 $42.50 $35.00

The manufacturing processes for these products are structured such that the same labor and equipment can be used to produce products A and B but cannot be used to manufacture products C and D. Similarly, the labor and equipment used to manufacture products C and D cannot be used for A and B.

The company has the capacity to produce:
(1) 1,000 units of product A and 1,000 units of product B, or
(2) 2,000 units of product A, or
(3) 2,000 units of product B; or

(4) Any linear combination of products A and B.

The same is true for products C and D. The company has the capacity to produce:
(1) 1,000 units of product C and 1,000 units of product D, or
(2) 2,000 units of product C, or
(3) 2,000 units of product D; or
(4) Any linear combination of products C and D.

Product Labor hrs per unit Variable Ohd/unit Number of units Total labor hrs Total var ohd
A 6 $15.00 1,000 6,000 $15,000
B 1 7.5 1,000 1,000 7,500
C 3 5 1,000 3,000 5,000
D 2 7.5 1,000 2,000 7,500
Total 4,000 12,000 $35,000

The allocation rate is:

Variable overhead $35,000
Fixed overhead 45,000
Total overhead costs $80,000
Labor hours 12,000
Allocation rate per hour $6.67

Using this allocation rate, Arnold calculated the standard cost for the four products.

PRODUCT A B C D
Material $15.00 $5.00 $10.00 $5.00
+ Labor 30 5 15 10
+Allocated cost 40 6.67 20 13.33
Total unit cost $85.00 $16.67 $45.00 $28.33

The selling prices for the four products are:

A B C D
$98.00 $38.50 $59.50 $49.00

Premier is considering a policy that would discontinue a product if its mark-on is under 25%. The mark-on is calculated by taking the selling price, subtracting the product’s standard cost, and dividing by the standard cost. Harrison is concerned that if the firm’s costing system does not provide accurate cost estimates, products will be dropped that should be retained. Arnold calculated that the mark-on for each product using the correct product costs in Table A is 40%.
TABLE B

PRODUCT A B C D
Selling price $98.00 $38.50 $59.50 $49.00
Unit cost $70.00 $27.50 $42.50 $35.00
Profit $28.00 $11.00 $17.00 $14.00
Mark-on percentage 40% (28/70) 40% (11/27.50) 40% (17/42.50) 40% (14/35)

Arnold then calculated the mark-on for the four products using the standard cost for each product based on allocating the overhead costs using direct labor hours.

PRODUCT A B C D
Selling price $98.00 $38.50 $59.50 $49.00
Unit cost $85.00 $16.67 $45.00 $28.33
Profit $13.00 $21.83 $14.50 $20.67
Mark-on percentage 15% 131% 32% 73%

Under the policy of dropping products with mark-ons under 25%, product A would be dropped. Arnold recalculates the allocation rate assuming product A is dropped and the manufacturing capacity is shifted to produce an additional 1,000 units of product B.

Product Labor hrs per unit Variable Ohd/unit Number of units Total labor hrs Total var ohd
B 1 7.5 2,000 2,000 $15,000
C 3 5 1,000 3,000 5,000
D 2 7.5 1,000 2,000 7,500
Total 4,000 7,000 $27,500

The new allocation rate is:

Variable overhead $27,500
Fixed overhead 45,000
Total overhead costs $72,500
Labor hours 7,000
Allocation rate per hour $10.36

QUESTIONS

1. If Premier maintains its rule about dropping products with a mark-on below 25%, which additional products, if any, will it drop?

2. If you decide to drop additional product(s), recalculate the allocation rate for the new product mix. Keep repeating Question 1 until you reach a conclusion. What is that conclusion? Is there a pattern emerging in the order in which products are being dropped?

3. The firm allocates only variable product costs to each product based on direct labor hours. What is the contribution margin for each product? Which product or products should the company produce if it wants to maximize the contribution margin for all of the products it produces? What would be the impact on profits? How accurate is this method of allocating costs? If Premier stopped producing some products in its product line of tennis rackets, what might happen to the demand for the surviving products?

NOTE: A product’s contribution margin is its selling price minus its variable cost per unit.

4. What would happen if the firm modified its costing system so that all variable costs were traced to the product accurately, but fixed costs were allocated using the existing system? Compute the cost for each product using this allocation process. What would be the impact on profits? How accurate is this method of allocating costs?

5. What would happen if the firm modified its costing system so that it contained two cost pools, one containing the overhead costs associated with Products A and B and the other overhead costs associated with Products C and D, and then allocated these overhead pools on the basis of direct labor hours? Compute the cost for each product using this allocation process. What would be the impact on profits? How accurate is this method of allocating costs?

6. Under what conditions would direct labor hours accurately allocate Premier’s indirect costs to its four products? What are the characteristics of a cost accounting system that accurately allocates a company’s fixed and variable indirect costs to its products?

7. Tom Arnold was hired to find accurate costs and a method of allocating that allows decisions to improve profitability. Compare the profits and accuracy of all cost allocation schemes based on Tom Arnold’s initial reason for being hired.

8. Do the company costing systems cause a problem?

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Premier Products, Inc. manufactures tennis rackets Answer

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Ziba, Inc. has provided the following information regarding one of their products for the years Answer

Ziba, Inc. has provided the following information regarding one of their products for the years Answer

Ziba, Inc. has provided the following information regarding one of their products for the years Answer

“Problem 2. Ziba, Inc. has provided the following information regarding one of their products for the years 1986 through 2010. 1. Sales in $1,000,000 (Y) 2. Advertising in $1,000 (X1) 3. Price in $100 (X2) 4. Competitor’s Price in $100 (X3) 5. Time (X4), where 1986 = 1. The data file “Regression and Correlation Data-V10” is located in Assessment 6 folder. Refer to that data file and perform the following analyses and fully explain your results. a. Run a correlation analysis and explain your results. Be sure to discuss the concept of multicollinearity. b. Run a regression analysis relating sales (Y) and all of the independent variables [Advertising (X1) through Time (X4).] Is the regression model significant? Explain how you arrived at your answer. c. Which variables are significant and which are not? Explain how you arrived at your answer. d. Drop the variable(s) that at 95% confidence were not significant in part “b” and run a new regression analysis. Write your estimated regression equation. e. What is the value of R-square you found in part “d”? Fully explain the meaning of the R-square that you found. f. Use the model of part “d” and forecast sales for 2011 through 2013, assuming the company is planning to increase the price by 4% annually in years 2011 through 2013. Show your computations and write your answers below. Year Your Sales forecasts 2011 2012 2013 Year Sales (Y) Advertising (X1) Price (X2) Competitor’s Price (X3) Time (X4) 1986 1578 400 21.00 20 1 1987 1678 580 21.19 22 2 1988 1800 678 23.10 19 3 1989 1850 776 23.30 21 4 1990 1900 874 25.40 21 5 1991 1950 972 25.63 21 6 1992 2000 1070 27.94 20 7 1993 2050 1168 28.19 22 8 1994 2100 1220 30.72 24 9 1995 2456 1272 31.00 18 10 1996 2812 1324 33.79 21 11 1997 3168 1376 34.10 23 12 1998 3524 1379 37.16 23 13 1999 3880 1382 37.50 17 14 2000 3900 1385 40.87 18 15 2001 3920 1388 41.24 16 16 2002 3940 1391 44.95 25 17 2003 3960 1399 45.36 26 18 2004 3980 1407 49.44 28 19 2005 4000 1415 49.88 18 20 2006 4020 1423 54.37 24 21 2007 4040 1460 54.86 23 22 2008 4060 1497 59.80 24 23 2009 4080 1534 60.34 21 24 2010 4100 1571 65.77 23 25”

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Ziba, Inc. has provided the following information regarding one of their products for the years Answer

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Company HTA had a free cash flow for the firm (FCFF) of $1,500,000 last year Answer

Company HTA had a free cash flow for the firm (FCFF) of $1,500,000 last year Answer

Company HTA had a free cash flow for the firm (FCFF) of $1,500,000 last year Answer

4) Company HTA had a free cash flow for the firm (FCFF) of $1,500,000 last year. It is expected the FCFF will keep a sustainable growth rate of 5%. The company has 2 million common shares outstanding. In addition, the following information has been gathered: Capital structure: D/E=0.2:0.8, Market value of Debt: VD =$5,000,000; Required return on equity: kE =15% Cost of debt before tax =6%, Tax rate: tc =25%; Determine the fair value of HTA stock.

5) Company JUK has a ROE of 25% and the company will not pay any dividend for the next 3 years. It is estimated that the company will pay $2 dividend per share after three years and then to level off to 5% per year forever.
The company has a beta of 2. Assume the risk-free interest rate is 4%, and the market risk premium is 8%.
1. What is your estimate of the fair price of a share of the stock?

2. If the market price of a share is equal to this intrinsic value, what is the P/E ratio?

3. What do you expect its price to be 1 year from now? Is the implied capital gain consistent with your estimate of the dividend yield and the market capitalization rate?

6.MicroSense, Inc., paid $2 dividends per share last year. It is estimated that the company’s ROEs will be 12% and 10%, respectively, next two years. The plowback rate in next two years will be 0.6. It is expected that the dividends will grow at a sustainable rate of 3% per year after two years. Assume that the expected return on the market is 8%, the risk-free rate is 4%, and the beta of the stock is 1.4. What is the fair price of the stock?

7. An analyst uses the constant growth model to evaluate a company with the following data for a company:
Leverage ratio (asset/equity): 1.8
Total asset turnover: 1.5
Current ratio: 1.8
Net profit margin: 8%
Dividend payout ratio: 40%
Earnings per share in the past year: $0.85
The required rate on equity: 15%
Based on an analysis, the growth rate of the company will drop by 25 percent per year in the next two years and then keep it afterward. Assume that the company will keep its dividend policy unchanged.
1. Determine the growth rate of the company for each of next three years.

2. Use the multi-period DDM to estimate the intrinsic value of the company’s stock.

3. Suppose after one year, everything else will be unchanged but the required rate on equity will decrease to 14%. What would be your holding period return for the year?

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Company HTA had a free cash flow for the firm (FCFF) of $1,500,000 last year Answer

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Problems 10-2A, 10-3A 10-4A_11-3A, 11-4A_12-1A_Accounting book Warren. Reeve. Duchac Answer

Problems 10-2A, 10-3A 10-4A_11-3A, 11-4A_12-1A_Accounting book Warren. Reeve. Duchac Answer

Problems 10-2A, 10-3A 10-4A_11-3A, 11-4A_12-1A_Accounting book Warren. Reeve. Duchac Answer

Problems 10-2A, 10-3A 10-4A_11-3A, 11-4A_12-1A_Accounting book Warren. Reeve. Duchac Answer

Accounting (Warren. Reeve. Duchac) 25th edition as follows:
Problems 10-2A, 10-3A 10-4A from Chapter 10 (Fixed Assets and Intangible Assets) all on Page 485.
Problems 11-3A, 11-4A from Chapter 11 (Current Liabilities and Payroll) on pages 527 and 528.
Problem 12-1A from Chapter 12 (Accounting for Partnerships and Limited Liability Companies) on page 571/572.

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Problems 10-2A, 10-3A 10-4A_11-3A, 11-4A_12-1A_Accounting book Warren. Reeve. Duchac

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HydroTech Corp stock was $50 per share a year ago Excel Answer

HydroTech Corp stock was $50 per share a year ago Excel Answer

HydroTech Corp stock was $50 per share a year ago Excel Answer

 

11. (4 points) A particular security’s default risk premium is 6 percent. For all securities, the inflation risk premium is 3 percent and the real interest rate is 2.5 percent. The security’s liquidity risk premium is 1 percent and maturity risk premium is 2 percent. The security has no special covenants. What is the security’s equilibrium rate of return?       

“12. (4 points) Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows:

1R1 = 3.0%, E(2R1) = 4.0%, E(3R1) = 12.0%, E(4R1) = 14.0%,

Using the unbiased expectations theory, what is the current (long-term) rate for four-year-maturity Treasury securities (1R4)? ”      
3. (4 points) HydroTech Corp stock was $50 per share a year ago when it was purchased. Since then, it paid a $4 per share dividend. The stock price is currently $45. If you owned 500 shares of HydroTech, what was your percent return?       

24. (4 points) Portfolio Return Year-to-date, Company X had earned a -3 percent return. During the same time period, Company Y earned 12 percent and Company Z earned 7 percent. If you have a portfolio made up of 50 percent Company X, 30 percent Company Y, and 20 percent Company Z, what is your portfolio return?       

“5. (8 points) You hold the positions in the table below.
COMPANY PRICE # SHARES BETA
Goodmonth $25.00 120 1.5
Icestone $20.00 150 2.5
Bridgerock $40.00 100 – 1.0
A. What is the beta of your portfolio? ”      
B. If you expect the market to earn 14 percent and the risk-free rate is 4 percent, what is the required return of the portfolio?

6. (4 points) TAB Inc. has a $1,000 (face value), 10 year bond issue selling for $1,184 that pays an annual coupon of 8.5 percent. What would be TAB’s before-tax component cost of debt?       
7. (4 points) Team Sports has 6 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 200 thousand bonds ($1,000 par). If the common shares are selling for $24.50 per share, the preferred share are selling for $20 per share, and the bonds are selling for 65 percent of par, what would be the weight used for equity in the computation of Team’s WACC?       
8. (4 points) Suppose that TipsNToes, Inc.’s capital structure features 40 percent equity, 60 percent debt, and that its before-tax cost of debt is 9 percent, while its cost of equity is 15 percent. If the appropriate weighted average tax rate is 25 percent, what will be TipsNToes’s WACC?       
10. (7 points) Your company has spent $500,000 on research to develop a new computer game. The firm is planning to spend $100,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $5,000. The machine has an expected life of 3 years, a $100,000 estimated resale value, and falls under the MACRS 5-Year class life. Revenue from the new game is expected to be $500,000 per year, with costs of $200,000 per year. The firm has a tax rate of 35 percent, an opportunity cost of capital of 10 percent, and it expects net working capital to increase by $100,000 at the beginning of the project. What will be the net cash flow for year one of this project?       

“21. (4 points) Compute the NPV for Project Y and accept or reject the project with the cash flows shown below if the appropriate cost of capital is 10 percent.

TIME: 0 1 2 3 4 5
CASH FLOW: -1000 -2,000 3,000 0 1,000 2,500″      

“12. (5 points) Compute the Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 10 percent and the maximum allowable payback is 5 years.

TIME: 0 1 2 3 4 5
CASH FLOW: – 75 – 75 0 100 75 90″      

“13. (4 points) Compute the IRR statistic for Project X and note whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 10 percent.

TIME: 0 1 2 3 4 5
CASH FLOW: – 75 – 75 0 100 75 90″      
“14. (8 points) Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively.

TIME: 0 1 2 3
Project A CF: $ – 10,000 $ 10,000 $ 30,000 $ 3,000
Project B CF: $ – 30,000 $ 10,000 $ 20,000 $ 50,000

Use the Profitability Index (PI) decision rule to evaluate these projects; what is the PI for each project, and which one(s) should it be accepted or rejected? ”      

 

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Hydrotech Corp

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Final Project Management accounting and finance practices McDonald Answer

Final Project Management accounting and finance practices McDonald Answer

Final Project Management accounting and finance practices McDonald Answer

This week you will be starting work on your Final Project for this module. The purpose of the Final Project is to apply the concepts and techniques of the module to the analysis of real-world situations or problems. Students are expected to use diverse sources of information and to carry out an original analysis rather than summarise or rehash existing work. Students are encouraged to use situations and data from their own experience where possible. Your task for Week 5 is to prepare and hand in a Project Proposal that includes the nature of the project, the sources of information you plan to use, and the most important concepts and techniques to be applied. You will receive feedback on the proposal from the Instructor in Week 6, which will give you time to make adjustments. For this module, you are required to complete a course project that reveals mastery in application of the management accounting and finance concepts emphasised in the course. This involves reporting on a specific organisation within an industry and the management accounting and finance practices that affect the value of the chosen firm or industry. This project should be a formal business report that provides both specific processes and strategies involving budgeting, costing, capital decision making, capital acquisition, and cost of capital structure of the chosen firm. These processes and strategies are to be supported with management accounting concepts. For this project, you will select a company that you are familiar with or work for. If you have chosen a company to research for a previous module, you must inform the Instructor and send him or her the previously submitted work. The Instructor will then inform you whether or not you may reuse the same company. Your tasks are to: budgeting process and procedures for the organisation with regards techniques, uses for evaluation, differences between business units/divisions, etc. Analyse how the organisation collects, stores, and prepares management accounting information, particularly the use of a management accounting system (MAS) and how information is disseminated throughout the organisation. Evaluate the costing process and procedures of the organisation with respect to method or approach utilised. Assess the capital decision making process within the organisation with regards methods are utilised, how such methods are chosen, how projects are selected and managed, and what measures are employed to evaluate performance. Evaluate the criteria or mechanisms used by the organisation for deciding how best to acquire capital and analyse the capital structure of the company. Your Final Project should follow the given outline: Brief description of company Description of firm’s budgeting process Management accounting information system Costing process Capital decisions Capital acquisition and structure Conclusion Your Final Project should also include a section on how and where you obtained the information sources as well as the methodology used to perform any analysis. This project should follow a structured approach and should be prepared and presented as a professional business report.

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Final Project Management accounting and finance practices McDonald