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# Finance

### Calculating Margin of Safety

Swimkids is a swimsuit manufacturer. They sell swim suits at a selling price is \$30 per unit. Swimkids variable costs are \$18 per unit. Fixed costs are \$86,500. Swimkids expects sales of \$265,300 next year. What is Swimkids's margin of safety?

### Kraft: Capital Budgeting

Every company has capital projects. Identify one new acquisition your company may need. What are some issues you are going to have in estimating the cash flow for your new acquisition? Might this be caused from the initial investment and problems in getting it funded? Issues you might raise may include risks, costs, politics

### Manufacturing Costs and Breaking Even

U.S. Telephone Cellular sells phones for \$100. The unit variable cost per phone is \$50 plus a selling commission of 10% (based on the unit sales price per phone). Fixed manufacturing costs total \$1,300 per month, while fixed selling and administrative costs total \$2,320. How many phones must be sold to achieve the break even poi

### Relationship of Variable Cost and Incremental Profit

Bubba's Steakhouse has budgeted the following costs for a month in which 1,600 steak dinners will be produced and sold: Materials, \$4,080; hourly labor (variable), \$5,200; rent (fixed), \$1,650; depreciation, \$790; and other fixed costs, \$460. Each steak dinner sells for \$13.30 each. How much would Shula's profit increase if 10 m

### Allocation Cost Based on Activity Based Costing

A law firm uses activity-based pricing. The company's activity pools are as follows: Cost Pool Annual Estimated Cost Cost Driver Annual Driver Quantity Consultation: 200,000 Number of Consultations: 100 consultations Administrative Costs: 150,000 Admin Labor Hours: 10,000 labor hours Client Service: 99,000 Numb

The Manassas Company has 55 obsolete keyboards that are carried in inventory at a cost of \$9,600. If these keyboards are upgraded at a cost of \$7,400, they could be sold for \$19,300. Alternatively, the keyboards could be sold "as is" for \$8,900. What is the net advantage or disadvantage of reworking the keyboards?

### Importance of time value of money to individuals

1. Why is the time value of money important for an individual to understand in regard to their private life? What can an individual do with this information?

### IBM Current Ratios, Quick Ratios, and Debt to Equity Ratios

1. Identify two publicly traded corporations in the same industry and compare and contrast their current ratios, quick ratios, and debt to equity ratios. Explain what these ratios mean and how they help understand the differences between the two companies.

### TVM, Solve for PMT, Annual Percentage Rate, and Add on Interest

See the attached file. 1. Using the simple interest method, find the monthly payments on a \$2,300 installment loan if the funds are borrowed for 18 months at an annual interest rate of 12%. Use financial calculator to answer the question. Round the answer to the nearest cent. a. \$ ??? per month b. How much interest wi

### Computation average tax rate

Average corporate tax rates. a. Calculate the tax liability, after-tax earnings, and average tax rates for the following levels of corporate earnings before taxes: \$12,100, \$81,700, \$299,000, \$1.4 million, \$9.8 million, and \$19.7 million. b. Plot the average tax rates (measured on the y-axis) against the pretax income levels

### Time Value of money using excel

In the attachment below are questions I am having a hard time figuring out. Can you show your work (formulas) so that I understand how you came to the answers?

### Creating a Macro

For this example, we will assume we are reconciling March 2009 sales. 1) Type 3/12/2009 into cell I16 of the Listings worksheet and press ENTER. This entry records the date of the sale of this item. 2) Select row 16 by clicking its row number heading. This is the row we will transfer to the SALES spreadsheet. 3) S

### GAAP Vs. IFRS Treatment of Leases

Compare the difference between GAAP and IFRS treatment of leases.

### Net Present Value: Probability, Tax, Debt, Capital, and Equity

1. Possible net present values and associated probabilities for a new investment are as follows: NPV -1020 -800 80 450 550 800 Probability .15 .30 .20 .10 .10 .15 What is the expected value______________, median,______________ and mode _________________? 2. You have been given the job of

### Computing the Maximum Price to Pay for a Merger Candidate

(Cash for Stock Merger) This problem requires that you integrate the material learned in prior chapters. You have been given the job of evaluating the following merger candidate. You have collected the following cash flow estimates for the acquisition candidate for the proposed merger (in millions): Year 1 2 3

### Stock return, variance and standard deviation

The last four years of returns for a stock are as follows: Year 1: -4.5% Year 2: +27.7% Year 3: +11.9% Year 4: +4.2% a. What is the average annual return? b. What is the variance of the stock's returns? c. What is the standard deviation of the stock's returns? NOTE: Notice that the average return and standard deviati

### Value of warrants

1. A company has warrants on the market that allows people who own it to buy 1 share price at cost \$25. a. Calculate the value of the security warrants of the organization if the common shares are sold each at the following rates: (1) \$ 20, (2) \$ 25, (3) \$ 30), (4) \$ 100. (NOTE: The value of executing a warrant is the differ

### Computing the Expected Net Present Value

Athens Development Corporation is considering a new product that will be sensitive to both economic conditions and competitor response. The product manager has decided to focus on three economic conditions: weak economy, normal economy, and strong economy. Competitors either will or will not respond with a competitive product,

### Transfer pricing issues and measures for performance evaluations

Explain how important transfer pricing issues are for measuring performance and in the business world. Give an example to illustrate the issues.

### Financial vs Managerial Accounting

How is the concept of "cost of goods sold" different from "contribution margin"?

### Finance True/False

True or False The major role played by earnings announcements in the valuation of a business (or project) is that earnings announcements are used to revise or refine your forecast of future cash flows. True or False The difference between the yield to maturity and the yield to call is that yield to maturity is the presumed

### Deprecation using MARCS

You place a commercial building into service on February 28th, 2012 costing \$2,220,000. What is the depreciation expense allowed by the IRS for this building for tax years 2012? And 2013?

### Net Working Capital Calculations

You are opening your own business and estimate the following expenses and revenues: Year 1 Year 2 Year 3 Revenues \$900,000 \$1,300,000 \$1,100,000 Cost of goods sold \$550,000 \$800,000 \$700,000 Accounts payable as a

### Calculating the Present and Future Value

1. How much will you have at the end of 22 years if put \$8680 per year at the end of each year into a saving account earning 1.6% annually? 2. How much do you need to invest today to have \$89,000 at the end of 19 years if you can earn 6.5% annually?

### Capital project analysis

Able Corporation has Project A with the following cash flows and a 8.7% cost of money: Numbers in parentheses are outflows. Both Year 0 and Year 3 cash flows are outflows. Year 0 1 2 3 4 5 6 Cash flow \$(312,000) \$ 95,000 \$120,000 \$(260,000) \$ 230,000 \$260,000 \$180,000 Please calculate the net present value __

### Calculation of Operating Income and Net Incomes

Given the following information: Total assets: \$250,000 Debt (12% interest rate): \$150,000 Equity: \$40,000 Variable cost of production: \$150 per unit Fixed cost of production: \$50,000 Units sold: 1000 Sales price: \$210 per unit

### Finding EAC values for given proposals

An office prints 200,000 pages per year. The Dell brand printer costs \$1100 and will produce a total of 600,000 copies before it wears out (3 year life). The Cannon brand machine costs \$1,800 and will produce 1,000,000 copies in its 5 year life. Maintenance and material costs are \$.05 a page for the Dell machine and \$.03 with Ca

### Approaches of Transfer Prices

Describe and evaluate the various approaches for setting transfer prices. How can the use of different approaches between the selling and buying divisions be reconciled? You should choose examples from your own experience or find appropriate cases on the Web that you can discuss. Credit will be given for references you make t

### Return on Equity and Price Earnings Ratio

For this assignment, you will use your newly acquired knowledge of the Price-earnings Ratio and the DuPont Model to perform an equity analysis for The ABC firm for the years 2012 and 2013. The following financial information is available for your use: - Revenue: \$130,500,000 (2012); \$202,560,000 (2013). - Net Income: \$22,740

### Present and Future value, NPV, IRR, Profitability index, Ranking of projects

Question 1: Future value of annuity problem. You deposit \$8,000 into a retirement account at the end of the next 12 years earning 10% interest, what is the future value of your retirement after 12 years? ----------- Question 2: Part 1) Using a 4.4% discount rate, calculate the Net Present Value, Payback, Profitability Ind