Sadik Industries must install $1 million of new machinery in its Texas plant. It can obtain a bank loan for 100% of the required amount. Alternatively, a Texas investment banking firm that represents a group of investors believes that it can arrange for a lease financing plan. Assume that these facts apply:

1. The equipment falls in the MACRS 3-year class.
2. Estimated maintenance expenses are $54,000 per year.
3. The firm's tax rate is 32%.
4. If the money is borrowed, the bank loan will be at a rate of 13%, amortized in six equal installments at the end of each year.
5. The tentative lease terms call for payments of $280,000 at the end of each year for 3 years. The lease is a guideline lease.
6. Under the proposed lease terms, the lessee must pay for insurance, property taxes, and maintenance.
7. Sadik must use the equipment if it is to continue in business, so it will almost certainly want to acquire the property at the end of the lease. If it does, then under the lease terms it can purchase the machinery at its fair market value at Year 3. The best estimate of this market value is $160,000, but it could be much higher or lower under certain circumstances. If purchased at Year 3, the used equipment would fall into the MACRS 3-year class. Sadik would actually be able to make the purchase on the last day of the year (i.e., slightly before Year 3), so Sadik would get to take the first depreciation expense at Year 3 (the remaining depreciation expenses would be at Year 4 through Year 6). On the time line, Sadik would show the cost of the used equipment at Year 3 and its depreciation expenses starting at Year 3.

The annual sales for​ Salco, Inc. were $ 4.46 million last year. The​ firm's end-of-year balance sheet was as​ follows:  Salco's income statement for the year was as​ follows:

a. Calculate​ Salco's total asset​ turnover, operating profit​ margin, and operating return on assets. b. Salco plans to renovate one of its plants and the renovation will require an added investment in plant and equipment of $ 1.09 million. The firm will maintain its present debt ratio of 50 percent when financing the new investment and expects sales to remain constant. The operating profit margin will rise to 13.9 percent. What will be the new operating return on assets ratio​ (i.e., net operating income divided by total ​assets) for Salco after the​ plant's renovation?

c. Given that the plant renovation in part ​(b​) occurs and​ Salco's interest expense rises by $ 53,000 per​ year, what will be the return earned on the common​ stockholders' investment? Compare this rate of return with that earned before the renovation. Based on this​ comparison, did the renovation have a favorable effect on the profitability of the​ firm?

Balance sheet

Income statement

Consider the following two projects:

Year                            Cash Flow (ABC)       Cash Flow (XYZ)

0                                 −$23,000                    −$23,000

1                                        10,490                 12,000

2                                        10,900                 9,360   

3                                        10,500                 10,400

Instructions:

I. Using company cost of capital 15%, calculate the following investment criteria for both projects:

1.         Payback period

2.         Internal Rate of Return (IRR)

3.         Profitability Index (PI)

4.         Net Present Value (NPV)

II. If projects A and B are independent, which one(s) will you choose? Why?

III. If projects A and B are mutually exclusive, which one will you choose? Why?

a no-load fund charges a 112b-1 fee of 1% and maintains an expense ratio of 0.75%. Assumes the securities in which the fund invests an increase in value by 6% per year. How much will an investment of $1000 grow to after 5 years? a. $1,231.35 b. $1,263.72 c. $1,195.33 d.$1,300.53

For this week choose a news article from a well-known news source about why it interests you and why it is related to financial accounting

Salty Pawz was established using Wanda’s personal funds, since originally she sold her products only to friends and family and was able to pay for everything as she went along. Now that the business is growing, she knows she cannot finance the expansion out of her own pocket, so she is considering taking out a loan. She has no experience with financial institutions other than the basics such as managing her personal bank accounts, a credit card, a mortgage, and a car loan, all of which are with the local Credit Union.

Explain to Wanda how the monetary system works. In particular, describe the various financial institutions she could approach to seek funding.

Explain the financial institutions and markets appropriate for Salty Pawz needs.

Describe available loan options and processes required for Salty Pawz to obtain funds to expand.

Identify your recommendation for the best loan option based on Salty Pawz needs and goals.

The Wiley Oakley Co. has just gone public. Under a firm commitment agreement, the company received $21.05 for each of the 6.59 million shares sold. The initial offering price was $22.90 per share, and the stock rose to $29.41 per share in the first few minutes of trading. The company paid $909,000 in legal and other direct costs and $184,000 in indirect costs.
  
What is the net amount raised? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
   
Net amount raised            $
  
What are the total direct costs? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Direct costs            $
  
What are the total indirect costs? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Indirect costs            $
  
What are the total costs? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)

Total costs            $
  
What was the flotation cost as a percentage of funds raised? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
  
Flotation cost percentage             %

Daily Enterprises is purchasing a $9.5 million machine. It will cost $53,000 to transport and install the machine. The machine has a depreciable life of five years and will have no salvage value. The machine will generate incremental revenues of $3.9 million per year along with incremental costs of $1.5 million per year. If​ Daily's marginal tax rate is 35%​, what are the incremental earnings​ (net income) associated with the new​ machine?

write one page paper about profit margin & Annual Revenue Across 5-10 years , Annual Growth , & forecasts of Domino's Pizza.

Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $6.0 million. The equipment will be depreciated straight - line over 6 years to a value of zero, but, in fact, it can be sold after 6 years for $511,000. The firm believes that working capital at each date must be maintained at a level of 10% of next year’s forecast sales. The firm estimates production costs equal to $1.80 per trap and believes that the traps can be sold for $7 each. Sales forecasts are given in the following table. The project will come to an end in 6 years, when the trap becomes technologically obsolete. The firm’s tax bracket is 35%, and the required rate of return on the project is 8%.

Suppose the firm can cut its requirements for working capital in half by using better inventory control systems. By how much will this increase project NPV? (Enter your answer in millions rounded to 4 decimal places.)

Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $38,000 and will be depreciated according to the 3-year MACRS schedule. It will be sold for scrap metal after 3 years for $9,500. The grill will have no effect on revenues but will save Johnny’s $19,000 in energy expenses per year. The tax rate is 30%. Use the MACRS depreciation schedule.

a. What are the operating cash flows in each year? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b. What are the total cash flows in each year? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

c. Assuming the discount rate is 12%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

you take out a 250,000 30 year mortgage with monthly payments and a rate of 4% monthly compounded what is the mortgage monthly payment

The failure of Frannie Mae and Freddie Mac can be attributed to several weaknesses within the internal environment ranging from procedures and system failures to human capacity and ethical issues.

Identify five areas of Risks that the bank failed to mitigate adequately that could have contributed to the crisis at the bank in 2008.

Present one argument for each risk you identified above to demonstrate why the poor management of that risk contributed to the demise of that financial institution.

Provide one sound recommendation for each risk that you identified above that could. have helped to mitigate or prevent the financial failure

Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $6.0 million. The equipment will be depreciated straight - line over 6 years to a value of zero, but, in fact, it can be sold after 6 years for $511,000. The firm believes that working capital at each date must be maintained at a level of 10% of next year’s forecast sales. The firm estimates production costs equal to $1.80 per trap and believes that the traps can be sold for $7 each. Sales forecasts are given in the following table. The project will come to an end in 6 years, when the trap becomes technologically obsolete. The firm’s tax bracket is 35%, and the required rate of return on the project is 8%.

Suppose the firm can cut its requirements for working capital in half by using better inventory control systems. By how much will this increase project NPV? (Enter your answer in millions rounded to 4 decimal places.)

Here are book- and market-value balance sheet the United Frypan Company (figures in $ millions): Book-Value Balance Sheet Net working capital $ 40 Debt $ 30 Long-term assets 60 Equity 70 $ 100 $ 100 Market-Value Balance Sheet Net working capital $ 40 Debt $ 30 Long-term assets 195 Equity 205 $ 235 $ 235 Assume that MM’s theory holds except for taxes. There is no growth, and the $30 of debt is expected to be permanent. Assume a 21% corporate tax rate. b. What is United Frypan’s after-tax WACC if rDebt = 7.0% and rEquity = 16.0%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. Now suppose that Congress passes a law that eliminates the deductibility of interest for tax purposes after a grace period of 5 years. What will be the new value of the firm, other things equal? Assume a borrowing rate of 7.0%. (Do not round intermediate calculations. Enter your answer in million rounded to 2 decimal places.)