30. Borzosh hires Hasso ( a professional painter) to paint her house. They agree on the type of paint to be used, date to paint the house, but they never agree on a price. Once Hasso completes the job, assuming price was never discussed:

a. she will be paid a reasonable price, under a theory of implied contract;

b. she will be paid a reasonable price, based upon a quasi- contract theory;

c. she will be unable to collect, since there was no signed contract;

d. she will not be able to recover the cost, since there was never an agreement.

31. If the subject matter of the offer is destroyed before the offer is accepted, the offer is considered terminated by operation of law.

(T or F)

32. Landis places an advertisement to sell her car. The ad will be construed to be:

a. an offer;

b. an invitation to negotiate;

c. an option;

d. irrelevant.

33. A covenant not to compete is valid provided it is reasonable as to duration and_____.

a. subject matter;

b. consideration;

c. geographic scope;

d. remedy for breach.

34. A contract entered into by a person who has been adjudicated to be mentally incompetent is:

a. valid, if the person was lucid at the time they agreed to the contract;

b. voidable;

c. absolutely void;

d. none of the above.

35. McCulloch did a favor for Tsymbal last year. When Tsymbal sees McCulloch this year, she promises to pay her $300 to show her appreciation. This is an enforceable promise.

( T or F )

36. Glanville purchases a new car for $50,000. When he leaves class, his car will not start. He shouts “the first person who gives me 10 bucks can have this car.” Scott hears this, and immediately gives him ten dollars. Scott is now the owner of the car.

( T or F )

Business class

13. Avdeyeva is the owner of a commercial building in Vancouver, which has an ordinance requiring non skid material on steps leading into such buildings. A visitor is injured when he falls on the step on a wet day. If the step did not have the non skid material required by the ordinance, the Negligence per se doctrine will apply. (T F)

14. A court will follow the strict liability standard for an injury if:

a. the injury was a foreseeable consequence of the Defendant’s actions;

b. the Plaintiff was intoxicated;

c. the Defendant was a merchant;

d. the Defendant was involved in abnormally dangerous activity.

15. In a negligence case, the most commonly awarded damages are______________damages.

a. compensatory;

b. punitive;

c. nominal;

d. none of the above.

16. Before a person can obtain copyright protection for a work of art they have created, they must file a copyright with the U.S. Copyright Office.(T F)

17. A patent can only be issued by the:

a. parties to a transaction;

b. United States Patent and Trademark Office.

c. United States Copyright Office;

d. the state office of Patent and Trademark.

Describe and describe the stock corporation. in your response set forth the manner in which a corporation is created as well as the advantages of conducting business in a corporation format. Finally, list and describe the three levels of the corporate hierarchy.

And describe the difference between par value and no par value stock.

Business class

3. Interrogatories, Depositions, Requests for Production of Documents are all forms of:

            a. discovery;

            b. pleadings;

            c. alternative dispute resolution(ADR);

            d. jury instructions.

4. A party asks the court to make a ruling by making a ______________.

            a. motion;

            b. subpoena;

            c. petition;

            d. summons.

5. The testimony of a witness or party is taken during this proceeding:

            a. hearing;

            b. investiture;

            c. interrogatory;

            d. deposition.

6. When Plaintiff’s attorney proves that his/her client is entitled to recovery if no defense is offered, the attorney has established what?

            a. a prima facie case.

            b. a default;

            c. grounds for appeal;

            d. conditional liability.

7. The jury’s decision, announced in court after deliberation, is known as the:

            a. judgment;

            b. verdict;

            c. sentence;

            d. jury’s decision.

8. When the victim of a defamatory statement is a public figure:

            a. the elements of the tort of defamation are exactly the same;

            b. the public figure has no right to sue for defamation;

            c. the public figure can only sue business or political enemies or defamation;

d. the public figure is also required to prove actual malice; that is, the Defendant made the defamatory statement knowing the statement was false.

The Harris Company is the lessee on a four-year lease with the following payments at the end of each year:

Year 1:	$	11,000
Year 2:	$	16,000
Year 3:	$	21,000
Year 4:	$	26,000

An appropriate discount rate is 7 percentage, yielding a present value of $61,233.


a-1. If the lease is an operating lease, what will be the initial value of the right-of-use asset?

a-2. If the lease is an operating lease, what will be the initial value of the lease liability?

a-3. If the lease is an operating lease, what will be the lease expense shown on the income statement at the end of year 1?

a-4. If the lease is an operating lease, what will be the interest expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter “0” wherever required.)

a-5. If the lease is an operating lease, what will be the amortization expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter “0” wherever required.)

b-1. If the lease is a finance lease, what will be the initial value of the right-of-use asset?

b-2. If the lease is a finance lease, what will be the initial value of the lease liability?

b-3. If the lease is a finance lease, what will be the lease expense shown on the income statement at the end of year 1? (Leave no cells blank – be certain to enter “0” wherever required.)

b-4. If the lease is a finance lease, what will be the interest expense shown on the income statement at the end of year 1? (Round your answer to the nearest dollar amount.)

b-5. If the lease is a finance lease, what will be the amortization expense shown on the income statement at the end of year 1? (Round your answer to the nearest dollar amount.)

1. The process for the cost of debt assumes the times interest earned is a good proxy for measuring credit risk, what other financial variable if any should be considered? Does this assumption limit the results? ( each time the level of debt changes. Will this occur and does this limit the applicability of your results?
2. The base level of interest rates, the risk free rate, changes over time. Is this important in calculating the optimal level. Since the estimate is based on the current environment does it matter if this changes?
3. The beta may change over time, does keeping it constant limit your results or is that an acceptable assumption?

Brees Industries is considering going public but is unsure of a fair offering price for the company. Before hiring an investment banker to assist in making the public offering, managers at Brees have decided to make their own estimate of the firm’s common stock value. The firm’s CFO has gathered data for performing the valuating using the free cash flow valuation model. The firm’s weighted average cost of capital is 10%, and it has $800,000 of debt at market value and $600,000 of preferred stock at its assumed market value. The estimated free cash flows over the next 4 year, 2020 through 2023, are given below. Beyond 2017 to infinity, the firm expects its free cash flow to grow by 3% annually.
2020 RM 100000
2021 RM 200000
2022 RM 310000
2023 RM 450000

A) estimate the value of the entire company using the free cash flow valuation model?

b) using finding in part a, find the common stock value?

c) if the firm plan to issue 100,000 shares of common stock, what is the estimated value per share?

Tyson Iron Works is about to go public. It currently has aftertax earnings of $5,300,000, and 3,700,000 shares are owned by the present stockholders. The new public issue will represent 700,000 new shares. The new shares will be priced to the public at $20 per share with a 5 percent spread on the offering price. There will also be $190,000 in out-of-pocket costs to the corporation

Compute the earnings per share immediately after the stock issue. (Do not round intermediate calculations and round your answer to 2 decimal places.)

Determine what rate of return must be earned on the net proceeds to the corporation so there will not be a dilution in earnings per share during the year of going public. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Determine what rate of return must be earned on the proceeds to the corporation so there will be a 15 percent increase in earnings per share during the year of going public. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Nancy would like to accumulate $10,000 by the end of 3 years from now to buy a sports car from her friend, Jim. She has $2,500 now and would like to save equal annual end-of-year deposits to pay for the car. How much should she deposit at the end of each year in an account paying 8 percent interest to buy the car?

Mullet Technologies is considering whether or not to refund a $225 million, 14% coupon, 30-year bond issue that was sold 5 years ago. It is amortizing $9 million of flotation costs on the 14% bonds over the issue's 30-year life. Mullet's investment banks have indicated that the company could sell a new 25-year issue at an interest rate of 9% in today's market. Neither they nor Mullet's management anticipate that interest rates will fall below 9% any time soon, but there is a chance that rates will increase.

A call premium of 11% would be required to retire the old bonds, and flotation costs on the new issue would amount to $3 million. Mullet's marginal federal-plus-state tax rate is 40%. The new bonds would be issued 1 month before the old bonds are called, with the proceeds being invested in short-term government securities returning 7% annually during the interim period.

1. Conduct a complete bond refunding analysis. What is the bond refunding's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.  

2. What factors would influence Mullet's decision to refund now rather than later?

Which of the current asset management category, as a finance manager would you focus on and why?

Jaylin makes a 25-year loan of 150,000 to Susan. Susan needs to repay this loan by level end of year payments R. Jaylin will replace her capital via a savings account which offers annual effective interest rate 6% and earn an APY of 4%. Find R.

After a careful evaluation of investment alternatives and​ opportunities, Masters School Supplies has developed a​ CAPM-type relationship linking a risk index to the required return​ (RADR), as shown in the table

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The firm is considering two mutually exclusive​ projects, A and B. Following are the data the firm has been able to gather about the projects.

	Project A	Project B
Initial investment ​(CF 0CF0​)	$ 22 comma 000$22,000	$ 30 comma 000$30,000
Project life	77 years	77 years
Annual cash inflow ​(CF nbspCF ​)	$ 6 comma 000$6,000	$ 10 comma 900$10,900
Risk index	0.60.6	1.61.6

All the​ firm's cash flows for each project have already been adjusted for taxes.

a. Evaluate the projects using ​risk-adjusted discount

rates.

b. Discuss your findings in part

​(a​),

and recommend the preferred project.

a. The net present value for project A is

​$______

  ​(Round to the nearest​ cent.)

Risk index	Required return​ (RADR)
0.0	7.1 %7.1% ​(risk-free rate, Upper R Subscript Upper FRF​)
0.2	8.0
0.4	8.9
0.6	9.8
0.8	10.7
1.0	11.6
1.2	12.5
1.4	13.4
1.6	14.3
1.8	15.2
2.0	16.1

Study the information below and answer the questions that follow:

Information
Zakiv Limited is considering investing in a project. The following information/data is available
for the project:

Annual profits (loss): R	R
Year 1	(38 000)
Year 2	40 000
Year 3	(7 000)
Year 4	25 000
Year 5	34 000
Initial Cash Investment	300 000
Expected useful life 5 years	5 years
Scrap Value	20 000

The company estimates that its cost of capital is 10%.
Required:
3.1 Calculate the Accounting Rate of Return for the project.
3.2 Calculate the Net Present Value for the project.

How does change in risk impacts return and firm's value.