The Hart Mountain Company has recently discovered a new type of kitty litter which is extremely absorbent. The company expects to enjoy an unusually high growth rate (25 percent) for two years while it has exclusive rights to the raw material used to make the kitty litter. For the next two years (years 3 and 4), the company pr
If D0=$2.00 , g (which is constant) = 6%, and P0 = $40, what is the stocks expected total return for the coming year?
Bando Company has a $300,000 balance in Accounts Receivable and a $4,000 debit balance in Allowance for Doubtful Accounts. Credit sales for the period totaled $1,800,000. What is the amount of the bad debt adjusting entry if Bando uses a percentage of credit sales basis (at 2%) or a percentage of receivables basis (at 10%)?
The Hatfield Health Club has asked you to review aspects of its financial condition, specifically its break even point and its use of leverage. Management has supplied you with the following company information, along with corresponding data for the industry. Hatfield Industry Price per Unit
1. The ____________ provides a financial summary of the firm's operating results during a specified period. a) Statement of cash flows b) Statement of retained earnings c) Balance sheet d) Income statement 2. When calculating the proportion of revenue that finds its way into profits, it is often appropriate to add back d
For a given change in prevailing interest rates, which security will change more in value, a T-bill or a 30 year government bond? Why?
The yield on a corporate bond is 10%, and it is currently selling at par. The marginal tax rate is 20%. A par value municipal bond with a coupon rate of 8.50% is available, Which security is a better buy? Also If the municipal bond rate is 4.25% and the corporate bond rate is 6.25%, what is the marginal tax rate, assuming inves
6. Assume the bid rate of a New Zealand dollar is $.33 while the ask rate is $.335 at Bank X. Assume the bid rate of the New Zealand dollar is $.32 while the ask rate is $.325 at Bank Y. Given this information, what would be your gain if you use $1,000,000 and execute locational arbitrage? That is, how much will you end up with
You need $28,974 at the end of 10 years, and your only investment outlet is an 8 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, you make an initial investment at the beginning of the first year. A. What single payment could be made at the beginning of the first year to achiev
Determine the amount of money in a savings account at the end of five years, given the initial deposit of $5,000 and a 12 percent annual interest rate when interest is compounded (a) annually (b) semiannually, and (c) quarterly
Friedman Steel Company will pay a dividend of $1.50 per share in the next 12 months (D1). The required rate of return (Ke) is 10 percent and the constant growth rate is 5 percent. 1. Compute P0. (For parts b, c, and d in this problem all variables remain the same except the one specifically changed. Each question is independ
North Pole Cruise Lines issued preferred stock many years ago. It carries a fixed dividend of $6 per share. With the passage of time, yields have soared from the original 6 percent to 14 percent (yield is the same as required rate of return). What was the original issue price? What is the current value of this preferred stock?If
An electrical retailer offers you two payment options: 1. a lump sum payment in 10 years from today 2. A payment of $500 in 5 years followed by $1000 in 15 years You can earn 6%pa on any savings over the next 15 years a) What is the maximum amount you would pay for Option A? b) You are now offered a 3rd option - pay $85
Q10-2 Two investors are evaluating AT&T's stock for possible purchase. They agree on the expected value of D and also on the expected future dividend growth rate. Further, they agree on the riskiness of the stock. However, one investor normally holds stock for 2 years, while the other normally holds stocks for 10 years. On
1. In 2003, David Corp. acquired 15,000 shares of its own $1 par value common stock at $18 per share. In 2004, David issued 10,000 of these shares at $25 per share. David uses the cost method to account for its treasury stock transactions. What accounts and what amounts should David credit in 2004 to re
16. How are stock issuance costs and direct consolidation costs treated in a business combination which is accounted for as a purchase, when the subsidiary will retain its incorporation? A) Stock issuance costs are a part of the acquisition costs, and the direct consolidation costs are a reduction to additional paid-in capital
Dombers Co. and Munn Corp. engaged in a business combination. In accounting for the combination, goodwill of $400,000 was recognized. What is the maximum period over which the goodwill can be amortized? A 0 years B 10 years C 20 years D 30 years E 40 years
For the following list of costs, indicate by the appropriate letter which category of activities each cost applies to: unit level (U), batch level (B), product line (P), or facility support (F): 1. Machine fine-tuning adjustment cost (required after the production of each unit) 2. Salary of vice president of finance 3. Mach
The company sells shovels for $27.75 each. The variable cost per shovel is $14.25. The company's monthly fixed costs are $2,538. Compute the number of shovels the company must sell to break even.
9. What is the basic C-V-P equation? What is a more detailed version of this equation? 10. What is the contribution margin, and why is it important for managers to know the contribution margins of their products? 11. How much will profits increase for every unit sold over the break-even point? 12. What is the maj
BEP problem involving two new concepts: (1) depreciation, and (2) contribution margin. Depreciation should be deducted from fixed costs when determining the BEP, and the term "contribution margin" is defined as price-variable cost. Calloway Cab Company determines its break-even strictly on the basis of cash expenditures rela
What is Net Working Capital? How is this related to the cash conversion cycle? Describe what each component of the cash conversion cycle means (inventory period, receivables period and payable period).
I am trying to find some healthcare management associations I may be able to join. I want to explore various healthcare professional organizations in finance, auditing, compliance, or other related entities, which would increase my knowledge in the listed areas through membership. I also want to identify the purpose of the organ
Financial ratios are important to the understanding of the financial health of a company. You and your colleagues work for a financial services firm. You are discussing the merits of the various financial ratios. Identify four financial ratios and state what they tell you about a firm and why it's important to understand wha
In 1958 the average tuition for one year at an Ivy League school was $1,800. Thirty years later, the average cost was $13,700. What was the growth rate in tuition over the 30-year period? a. 12% b. 9% c. 6% d. 7% e. 8%
Cash Budget for Higgins and Griffin Financial Planners Higgins and Griffin Financial Planners have forecasted revenue for the first six months of 2005 as shown on the following table: Month Nov. 2004 Dec-04 Jan-05 Feb Mar Apr May June Revenue $48,000.00 $45,000.00 $25,000.00 $27,000.00 $30,000.00 $38,000.00 $40,000.00
8.7 Consider the following information for a big-screen television distributor: Sales price per TV = $1,500 Variable costs per TV = $1,100 Fixed costs per year = $120,000 Depreciation per year = $20,000 Tax rate = 35% How many units must the distributor sell in a given year to break even (in terms of accounting profit)?
7.5 Benson Enterprises is evaluating alternative uses for a three-story manufacturing and warehousing building that it has purchased for $225,000. The company can continue to rent the building to the present occupants for $12,000 per year. The present occupants have indicated an interest in staying in the building for at leas
Cleanburn Coal Co. purchased coal-leasing land that contains 800,000 tons of coal for $21,700,000. Soil test by geologist cost $35,250 for the purchased land, but test at other sites that yielded negative results cost $116,250. Clearburn uses the full-cost method for exploration cost (ie., the company's total exploration and tes
Pemberton Corp. purchased a machine costing $300,000 that had an estimate useful life of six years and residual value of $18,000. The machine is expected to produce 3,525,000 units during its useful life, as follow: YEAR UNITS 1