Exercise 22-19 A partial trial balance of Kingbird Corporation is as follows on December 31, 2018. Dr. Cr. Supplies $2,500 Salaries and wages payable $1,500 Interest Receivable 5,400 Prepaid Insurance 90,600 Unearned Rent 0 Interest Payable 13,900 Additional adjusting data: 1. A physical count of supplies on hand on December 31, 2018, totaled $1,000. 2. Through oversight, the Salaries and Wages Payable account was not changed during 2018. Accrued salaries and wages on December 31, 2018, amounted to $4,000. 3. The Interest Receivable account was also left unchanged during 2018. Accrued interest on investments amounts to $4,800 on December 31, 2018. 4. The unexpired portions of the insurance policies totaled $59,200 as of December 31, 2018. 5. $29,500 was received on January 1, 2018, for the rent of a building for both 2018 and 2019. The entire amount was credited to rent revenue. 6. Depreciation on equipment for the year was erroneously recorded as $5,200 rather than the correct figure of $52,000. 7. A further review of depreciation calculations of prior years revealed that equipment depreciation of $7,900 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment.

Assuming that the books have not been closed, what are the adjusting entries necessary at December 31, 2018? (Ignore income tax considerations.)

Assuming that the books have been closed, what are the adjusting entries necessary at December 31, 2018? (Ignore income tax considerations.)

Pass the necessary adjusting entries for the following taking into account income tax effects (40% tax rate) and assuming that the books have been closed.

• How behaviors such as overconfidence, overoptimism, and confirmation bias can affect decision making.
• How framing effects can result in inconsistent and/or incorrect decisions.
• How the use of heuristics can lead to suboptimal financial decisions.

A number of investigations have been undertaken into the use of made by stake holders of the annual reports of companies in which they invested .several of these show that the annual report is regarded as an important source of information for making decisions on equity investment . Other studies indicate that the market price of the share in a company does not react in the short term to the publication of the company s annual report .How would you reconcile these findings with each other, and with the efficient markets hypothesis

Campbell Corporation is evaluating an extra dividend versus a share repurchase. In either case, $18,000 would be spent. Current earnings are $2.00 per share, and the stock currently sells for $50 per share. There are 4,000 shares outstanding. Ignore taxes and other imperfections.

a. Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth per share. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

b. What will the company's EPS and PE ratio be under the two different scenarios? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

1a. Given the following info on the zero rates (continuous compounding), compute the one-year forward rates (continuous compounding) and par rates (annual compounding)

1b. If the fixed rate of a 12x24 FRA is currently 2% in the market, is there any arbitrage opportunity? If yes, show how it can be done.

2. Given the following info, compute the zero rates (continuous compounding), the one-year forward rates (continuous compounding) and par rates (annual compounding). Coupons, if applicable, are paid once a year.

​(Calculating free cash flows​) You are considering new elliptical trainers and you feel you can sell 4000 of these per year for 5 years​ (after which time this project is expected to shut down when it is learned that being fit is​ unhealthy). The elliptical trainers would sell for ​$1800 each and have a variable cost of ​$900 each. The annual fixed costs associated with production would be ​$1200000. In​ addition, there would be a ​$7000000 initial expenditure associated with the purchase of new production equipment. It is assumed that this initial expenditure will be depreciated using the bonus depreciation method in year 1. This project will also require a​ one-time initial investment of ​$1500000 in net working capital associated with​ inventory, and​ working-capital investment will be recovered when the project is shut down.​ Finally, assume that the​ firm's marginal tax rate is 22 percent. a. What is the initial outlay associated with this​ project? b. What are the annual free cash flows associated with this project for years​ 1, and 2 through​ 4? c. What is the terminal cash flow in year 5 ​(that is, what is the free cash flow in year 5 plus any additional cash flows associated with the termination of the​ project)? d. What is the ​project's NPV given a required rate of return of 11 ​percent? a. What is the initial outlay associated with this​ project? ​$   ​(Round to the nearest​ dollar.) b. What is the free cash flows associated with this project for year​ 1? ​$   ​(Round to the nearest​ dollar.) What are the free cash flows associated with this project for years 2 through 4​ (note that the cash flows for years 2 through 4 are​ equal)? ​$   ​(Round to the nearest​ dollar.) c. What is the terminal cash flow in year 5 ​(that is, what is the free cash flow in year 5 plus any additional cash flows associated with the termination of the​ project)? ​$  ​(Round to the nearest​ dollar.) d. What is the ​project's NPV given a required rate of return of 11 ​percent? ​$   ​(Round to the nearest​ dollar.)

ABC Trading wants to raise equity to fund an acquisition of a small company (XYZ). ABC is considering two choices: (i) using an underwriting syndicate, (ii) a rights offering. The price of ABC stock is $60 and there are 250 million shares outstanding.

(a) If ABC agrees to pay 3% to an underwriter to issue the stock, what are the net proceeds to the company if it sells 20 million shares to the public for $60 each?

(b) ABC issues a rights offer to its existing stockholders that lets them purchase stock at the price of $58 each. (Note: stockholders will receive one right for each 12.5 shares they own, so only 20 million shares can be issued). What are the net proceeds to the company if it sells 20 million shares using the rights offering?

(c) What is the market value of the firm in (a), (b) (ignoring information effects)?

(d) What is the expected information effect from the company announcing it is issuing equity to fund acquisitions?

Compare and contrast the international bank services & products offered by any two universal banks(example :- Bank of America & HSBC Holdings) and decide which bank would be more preferred by international customers.

One year​ ago, your company purchased a machine used in manufacturing for $110000. You have learned that a new machine is available that offers many​ advantages; you can purchase it for $ 160000 today. It will be depreciated on a​ straight-line basis over ten​ years, after which it has no salvage value. You expect that the new machine will contribute EBITDA​ (earnings before​ interest, taxes,​ depreciation, and​ amortization) of $ 45000 per year for the next ten years. The current machine is expected to produce EBITDA of $25000 per year. The current machine is being depreciated on a​ straight-line basis over a useful life of 11​ years, after which it will have no salvage​ value, so depreciation expense for the current machine is $10000 per year. All other expenses of the two machines are identical. The market value today of the current machine is $50000. Your​ company's tax rate is 40 %​, and the opportunity cost of capital for this type of equipment is 10%. Is it profitable to replace the​ year-old machine?

Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.94 million and create incremental cash flows of $581,620.00 each year for the next five years. The cost of capital is 9.30%. What is the profitability index for the J-Mix 2000?

A stock has a \beta of 1, and the expected market return this year is 2.93%, and the current risk-free rate is 1.14%. The firm just recently released a dividend for $1.94 per share, and it expects that dividends will continue to grow at the sustainable growth rate for the future. Given that firm equity was $508,500.00 last year, and that the firm had Net Income of $7,876.63 and dividends were $6,222.53. What is the price per share of the stock? (tolerance is 0.1, round to 2 decimals, do not enter $ symbol)

Sora Industries has 70 million outstanding​ shares,$121 million in​ debt, $56 million in​ cash, and the following projected free cash flow for the next four years

a. Suppose​ Sora's revenue and free cash flow are expected to grow at a 3.3% rate beyond year 4. If​ Sora's weighted average cost of capital is 12.0%​, what is the value of​ Sora's stock based on this​ information?

b.​ Sora's cost of goods sold was assumed to be​ 67% of sales. If its cost of goods sold is actually​ 70% of​ sales, how would the estimate of the​ stock's value​ change?

c. ​Let's return to the assumptions of part ​(a​) and suppose Sora can maintain its cost of goods sold at​ 67% of sales.​ However, now suppose Sora reduces its​ selling, general, and administrative expenses from​ 20% of sales to​ 16% of sales. What stock price would you estimate​ now? (Assume no other​ expenses, except​ taxes, are​ affected.)

d. ​Sora's net working capital needs were estimated to be​ 18% of sales​ (which is their current level in year​ 0). If Sora can reduce this requirement to​ 12% of sales starting in year​ 1, but all other assumptions remain as in part ​(a​), what stock price do you estimate for​ Sora?

​(Hint​:This change will have the largest impact on​ Sora's free cash flow in year​ 1.)

Does the concept of social responsibility have a role in finance? Briefly, describe its role in your own words.