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Finance

Calculating ROR and Incremental ROR in the Given Cases

Solutions are provided for the problems given below. 1. Consider the following data for three alternatives A, B and C Year A B C (A-B) (A-C) (C-B) 0 -3200 -1600 -2400 -1600 -800 -800 1 800 380 700

Rate of growth of wages subject to Social Security taxes

Suppose the real rate of growth of wages subject to Social Security taxes is expected to average 1% per year during the next 40 years. Assume that the Social Security tax rate remains constant, and prove that the average return on Social Security taxes paid into the Social Security trust fund will also be 1%. Why can workers wit

Calculating the Periodic Payments for Given Cases

1. What equal (uniform) series of payments must be put into a sinking fund to accumulate \$65000 in 15 years at 15% compounded annually when payments are annual? 2. What annual equal payment series is necessary to repay a series of 10 end-of-year payments that begins at \$6000 and decreases at a rate of \$200 a year with 12% in

Adjusted Gross Income Compared to Taxable Income

Contrast adjusted gross income to taxable income. Also, address the impact of inflation on tax rates

Compute the Net Present Value (NPV)

An alternative requires \$12000 to be paid at the end of year 1, year 2, and year 3. All values are in constant dollars. Using the tables in the chapter, compute the NPV of this alternative. Round intermediate calculations to two decimal places.

Financial & Managerial Accounting problem.

A condensed balance sheet for Bradford Corporation Prepared at the end of the year appears as follows: Assets Liabilities & Stockholders' Equity Cash........................................... \$ 95,000 Notes payable (due in Accounts receivable............... 155,000 6 months)........................... \$ 40,000

Forecasting as an Efficient Business Practice

In your opinion why do you think forecasting is an efficient business practice?

Cost Benefit Analysis for New Irrigation

A cost-benefit analysis of a new irrigation project indicates that the net benefits = Benefit - Cost (B-C) of the project in each year will be \$20 million. This project will yield benefits for 10 years. Calculate the present value of benefits minus costs when the social rate of discount is 10%. Does the program merit approval? H

Balance Sheet, Net working capital and debt ratio

a. How does this balance sheet differ from the ones presented in Table 4.1 and 4.5 below? b. What is Green Valley's net working capital for 2007? c. What is Green Valley's debt ratio? How does it compare with the debt ratios for Sunnyvale and BestCare? Please see the attached file.

Economics - Revenue

A bridge over the Coosa River currently has no tolls and an average passage of 880 cars per day. State government wants to place a toll on the bridge with the objective of raising the most revenue. Government surveys indicate that a toll of \$7.00 or more will induce all drivers to take a nearby, alternate route. What's the optim

Three Forms of Business Organizations in the USA

Problem 1 Discuss the three forms of business organization in the United States. Problem 2 Suppose the real risk-free rate, r*, is 2% and investors expect inflation to be 4% next year, 5% the following year, and 7% per year thereafter. Assume the MRP is zero for Year 1 and increases by 0.1% each year. Compute the quoted, o

Harnischfeger Corporation

Harvard Business Case: 9-186-160 August 21, 1997 Harnischfeger Corporation 1. Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements. 2. What is the effect of the depreciation accounting method change on the reported income in 1984? How will this change affe

document to account for losses, damaged goods, and stolen inventory

Create a financial statement or document that a business might use to account for losses, damaged goods, and stolen inventory. How does it work?

Calculate variable cost variances

Please see attached. Calculate variable cost variances-explain results. The standards for one case of liquid weed killer are: Direct materials 7 lbs. @ \$9/lb. Direct labor 4.3 hrs. @ \$19.2/hr. Variable overhead (based on machine hours) 1.4 hrs. @ \$ 6.6/hr. During the week ended August 6, the f

Cash flow

Use the attached file to answer teh following questions: 19. What would be the net cash flows from operating activities for 5-Cat if they prepared an indirect method statement of cash flows? A. \$10,810 B. (\$13,190) C. (\$47,710) D. \$85,000 20. What would be the end result of an indirect method statement of cash fl

Calculate Profits of a Call Option

Suppose you buy one SPX call option with a strike of 1400 and write one SPX put option with a strike of 1400. What are the payoffs at maturity to this position for S& P 500 Index levels of 1300, 1350, 1400, 1450, and 1500?

Your portfolio allocates equal amounts to three stocks

Your portfolio allocates equal amounts to three stocks. All three stocks have the same mean annual return of 16%. Annual return standard deviations for these three stocks are 30%, 40%, and 50%. The return correlations among all three stocks are zero. What is the smallest expected loss for your portfolio in the coming year with a

calculating stock prices using DDM and CAPM

So say a share of stock sells for \$53 today. The beta of the stock is 1.2, and the expected return on the market is 12%. The stock is expected to pay a dividend of \$1.10 in one year. If the risk- free rate is 5.5%, what will the share price be in one year?

Incremental Credit Policy

In order to increase sales from their present annual \$35million, ABC Company, a retailer, is considering more liberal credit standards. Currently, the firm has an average collection period of 30 days. It believes that with increasingly liberal credit standards, the following will result:

Yield to Maturity Comparison

Suppose you buy a 7.5 percent coupon bond today for \$1,080. The bond has 15 years to maturity. What rate of return do you expect to earn on your investment? Two years from now, the YTM on your bond has increased by 2 percent, and you decide to sell. What price will your bond sell for? What is the realized yield on your investmen

When a not-for-profit facility receives a contribution from a member of the community, the cost of capital is inconsequential when deciding how to use this contribution, because it is, in effect, free money.

Comment of the following statement. When a not-for-profit facility receives a contribution from a member of the community, the cost of capital is inconsequential when deciding how to use this contribution, because it is, in effect, free money.

Mergers I

ExxonMobil recently bought XTO energy. Analyze the reasons for and against the merger, and to assess the actual performance of the consolidated company against the pre-merger expectations using and cite outside references.

Future value

Future value If I invest \$9,000 today how do I calculate how much I will have in 2years at 9% ? and in 7 years at 12%? Also calculating if offered \$95 today or 30,000 in 50 years if discounted at 12% which would i choose? how to figure that.

Northern Sludge: Capital Structure

The common stock and debt of Northern Sludge are valued at \$50 million and \$30 million, respectively. Investors currently require a 16% return on the common stock and an 8% return on the debt. If Northern Sludge issues an additional \$10 million of common stock and uses this money to retire debt, what happens to the expected retu

Find the firm's value under different assumptions.

You are evaluating the potential purchase of a small business currently generating \$42,500 of after-tax cash flow (D=42,500). On the basis of a review of similar-risk investment opportunities, you must earn an 18% rate of return on the proposed purchase. Because you are relatively uncertain about future cash flows, you decide to

Projects true NPV

Look at the cash flows for projects F and G. The cost of capital was assumed to be 10%. Assume that the forecasted cash flows for the projects of this type are overstated by 8% on average. That is the forecast for each cash flow from each project should be reduced by 8%. But a lazy financial manager unwilling to take the time to

This post addresses a partnership loss allocation.

Bonny and Klyde entered into a partnership agreement and contributed the following amounts to the partnership. Bonny gave \$65,000 cash to the new startup, and Klyde gave \$35,000 cash. The partnership agreement states that income and losses are distributed based on their beginning capital balances. At the end of the first qua

LIFO valuation method

Ramirez Room & Interiors keeps a separate inventory account for antique brass coat hooks that can be attached to the rear of a door. If the following transactions occurred during the first quarter of 2012, what would be the quantity and inventory value of coat hooks at the end of the quarter using the LIFO valuation method? D

unearned revenue for Martinville Moonfish

1.) Last year the Martinville Moonfish, a not-so professional minor league football team sold \$61,200 worth of season tickets for all seventeen games to willing fans. The \$61,200 received for tickets to games that haven't been provided yet would be considered: Answer 1. Pre-season Revenues (included with normal sales reve

This post addresses the best cost allocation method.

In 2009 Shanks/Tumbler Industrial Expansion Enterprises (STIEE) was acquired as a transport company for nikel mines in Arizona, for \$1.4 million cash by John Shanks and Glen Tumbler. This funding acquired trucks/forklifts that were almost new but leftover from the previous transport company that declared bankruptcy, land that is