ABC Co. has an average collection period of 40 days for its accounts receivable. If total credit sales for the year were $5,200,000, what is the balance in accounts receivable at year-end? Assume a 360-day calendar year. (Do not round intermediate calculations. Round your answer to the nearest dollar amount.)

What is the difference between the conversion value and conversion premium?

1. Bonomo Corporation’s bonds have 4 years remaining to maturity. Interest is paid annually in arrears. The bonds have a par value of $1,000, and a coupon interest rate of 4.5%. (a) What is the bonds’ yield-to-maturity at a current price of $916? (b) What is the bonds’ yield-to-maturity at a current price of $1022? (c) Would you pay $916 for one of Bonomo’s bonds if you thought that the appropriate rate of interest (i.e., your expected rate of return) was 6%? (d) Why, or why not?

What is a good response to discussion below:

The crowdfunding site I chose to use is Indiegogo. This crowd fund uses reward-based crowdfunding. This involves raising funds for a new startup or organization that offers a product or service. Indiegogo focuses on project-based crowdfunding. I thought this was a great variation of crowdfunding because it introduces you to groundbreaking products and allows you to be involved in helping them take flight. You get the opportunity to support entrepreneurs and new technology from its beginning stages of development. I find it really cool to have the option to be a part of spring boarding some type of product people may want. Movies have even been included with Indiegogo, one is Super Troopers 2! Indiegogo charges a 5% platform fee and the payment processing fees range from 2.9%-3.9%. Since Indiegogo features project-based fundraising it is different then some other platform options which are designed for nonprofit fundraising. Indiegogo’s platform doesn’t allow you to keep raising money as your organization grows because of this project-based platform. By contributing on a project in Indiegogo you receive “perks” based on your contributions. The crowdfunding project I decided to choose was Midea: The window air conditioner, reinvented. I thought this was a cool idea especially considering all the window units in Pittsburgh. The AC unit is faster, and efficient. It saves 35% more energy than the traditional window ac and also allows you to still open your window. The U-shaped design blocks noise out and makes if faster and easier to set up as well. Midea is currently in the production of turning their prototype into the final product. $329 for the price of a 12k BTU unit isn’t too shabby either considering its not too far off from traditional pricing.

1. Bay Inc. just paid its first annual dividend of $0.60 a share. The firm plans to increase the dividend by 3 percent per year indefinitely. What is the firm's cost of equity if the current stock price is $12 a share?

   		7.94 percent
   		9.16 percent
   		6.11 percent
   		8.15 percent

QUESTION 19

1. Eucalyptus Company is financed by $4 million in debt, $1 million in preferred stocks, and $5 million in common stocks. The pre-tax cost of debt is 6%, the cost of preferred stock is 8%, and the cost of equity is 14%. Calculate the weighted average cost of capital. Assume 20% tax rate.

   		9.72%
   		6.29%
   		7.26%
   		8.60%

1. Gutweed Co. is considering a project with an initial cost of $4 million. The project will produce cash inflows of $1.5 million a year for five years. The firm has a weighted average cost of capital of 9%. Assume that the project has an average risk level as the whole firm. What is the net present value of the project?

   		$1.83 million
   		$3.22 million
   		$0.92 million
   		$2.41 million

Given the following data for a stock: beta = 1.2; risk-free rate = 3%; market rate of return = 13%; and expected rate of return on the stock = 17%. Then the stock is:

1. A stock records the following returns over the last 6 months.

1. What are the arithmetic returns for the stocks?
2. What are the geometric returns for the stocks?
3. What are the variances for the stocks?
4. What are the standard deviations for the stocks?
5. Compute the coefficient of variation of stocks.
6. Which stock would you choose? Why?

Beta is defined as:

the ratio of the variance of market returns to the covariance of returns on a security with the market

the inverse of the slope of the security regression line

a measure of volatility of a security's returns relative to the returns of a broad-based market portfolio of securities.

all of the above

Caspian Sea Drinks is considering the purchase of a plum juicer – the PJX5. There is no planned increase in production. The PJX5 will reduce costs by squeezing more juice from each plum and doing so in a more efficient manner. Mr. Bensen gave Derek the following information. What is the IRR of the PJX5?

a. The PJX5 will cost $2.30 million fully installed and has a 10 year life. It will be depreciated to a book value of $222,654.00 and sold for that amount in year 10.

b. The Engineering Department spent $27,692.00 researching the various juicers.

c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $22,087.00.

d. The PJX5 will reduce operating costs by $376,622.00 per year.

e. CSD’s marginal tax rate is 37.00%.

f. CSD is 68.00% equity-financed.

g. CSD’s 11.00-year, semi-annual pay, 5.43% coupon bond sells for $966.00.

h. CSD’s stock currently has a market value of $23.93 and Mr. Bensen believes the market estimates that dividends will grow at 2.47% forever. Next year’s dividend is projected to be $1.70.

Ting Lu is doing a valuation of the Mako Corporation. Mako has a 10% weighted average cost of capital and a 30% income tax rate. Ting has forecasted the information in the table below to compute Mako’s free cash flow to the firm. Ting assumes that the FCFF that he estimates for year 4 will grow at 3% forever.

Based on this information, what is the intrinsic value of the Mako Corporation?

Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $26.00 million. The plant and equipment will be depreciated over 10 years to a book value of $2.00 million, and sold for that amount in year 10. Net working capital will increase by $1.34 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $8.77 million per year and cost $2.11 million per year over the 10-year life of the project. Marketing estimates 20.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 23.00%. The WACC is 15.00%. Find the NPV (net present value).

What is international monetary cooperation and how is it important to international trade today?

Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $24.00 million. The plant and equipment will be depreciated over 10 years to a book value of $1.00 million, and sold for that amount in year 10. Net working capital will increase by $1.26 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $9.02 million per year and cost $1.54 million per year over the 10-year life of the project. Marketing estimates 18.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 23.00%. The WACC is 13.00%. Find the IRR (internal rate of return)

Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $27.00 million. The plant and equipment will be depreciated over 10 years to a book value of $1.00 million, and sold for that amount in year 10. Net working capital will increase by $1.22 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $8.89 million per year and cost $2.09 million per year over the 10-year life of the project. Marketing estimates 19.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 34.00%. The WACC is 14.00%. Find the NPV (net present value).