Explain the financial Manager's critical areas of decision-making. Under each area of critical decision-making, identify two

questions the manager must ask him/herself and answer in the process of decision-making.

ou must evaluate a proposal to buy a new milling machine. The base price is $104,000, and shipping and installation costs would add another $18,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $36,400. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The machine would require a $8,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $60,000 per year. The marginal tax rate is 35%, and the WACC is 9%. Also, the firm spent $4,500 last year investigating the feasibility of using the machine.

1. How should the $4,500 spent last year be handled?
   1. Last year's expenditure should be treated as a terminal cash flow and dealt with at the end of the project's life. Hence, it should not be included in the initial investment outlay.
   2. Last year's expenditure is considered an opportunity cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.
   3. Last year's expenditure is considered a sunk cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.
   4. The cost of research is an incremental cash flow and should be included in the analysis.
   5. Only the tax effect of the research expenses should be included in the analysis.
   
   -Select-IIIIIIIVV
   
2. What is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the Year 0 project cash flow? Enter your answer as a positive value. Round your answer to the nearest cent.
   $  
   
3. What are the project's annual cash flows during Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest cent.
   Year 1: $  
   Year 2: $  
   Year 3: $  
   
4. Should the machine be purchased?
   -Select-YesNo

A pair of white shoe costs $20 today, and will cost $31 one year from today. The same pair of shoe currently costs 275 pesos today, and will cost 856 pesos one year from today. If there are no arbitrages, how many dollars will you get for a peso one year from today?

18. Marble Campground is considering adding a driving range to its facility. The range would cost $60,000, would be depreciated on a straight-line basis over its 6-year life, and would have a zero salvage value. The anticipated revenue from the project is $46,000 a year with $10,000 variable cost. The fixed cost would be $6,000. The project will require $6,000 of net working capital each year, which is recoverable at the end of the project. What is the internal rate of return on this project at a tax rate of 20 percent?
a. 30.62 percent
b. 32.74 percent
c. 38.42 percent
d. 26.17 percent

19. A project required the initial investment of $750,000 on its equipment. It will be depreciated to the book value of $0 after six years. However, the equipment can be sold for $100,000 at the end of the six years. What is the after-tax gain by selling the equipment at the end of the six years if the tax rate is 20%?
a. $75,000
b. $37,000
c. $80,000
d. $53,300

Purpose of Assignment The purpose of this assignment is to allow the students to become familiar with and practice the measurement of Net Present Value (NPV), payback, and Weighted Average Cost of Capital (WACC) using Microsoft Excel. Assignment Steps Resources: Microsoft® Excel®, Capital Budgeting Decision Models Template, Calculate the following problems using Microsoft® Excel®: Calculate the NPV for each project and determine which project should be accepted.

Project A Project B Project C Project D Inital Outlay (105,000.000) (99,000.00) (110,000.00) (85,000.00) Inflow year 1 53,000.00 51,000.00 25,000.00 45,000.00 Inflow year 2 50,000.00 47,000.00 55,000.00 50,000.00 Inflow year 3 48,000.00 41,000.00 15,000.00 30,000.00 Inflow year 4 30,000.00 52,000.00 21,000.00 62,000.00 Inflow year 5 35,000.00 40,000.00 35,000.00 68,000.00 Rate 7% 10% 13% 18%

Your company is considering three independent projects. Given the following cash flow information, calculate the payback period for each. If your company requires a three-year payback before an investment can be accepted, which project(s) would be accepted?

Project D Project E Project F Cost 205,000.00 179,000.00 110,000.00 Inflow year 53,000.00 51,000.00 25,000.00 Inflow year 2 50,000.00 87,000.00 55,000.00 Inflow year 3 48,000.00 41,000.00 21,000.00 Inflow year 4 30,000.00 52,000.00 9,000.00 Inflow year 5 24,000.00 40,000.00 35,000.00 Using market value and book value (separately), find the adjusted WACC, using 30% tax rate. Component Balance Sheet Value Market Value Cost of Capital Debt 5,000,000.00 6,850,000.00 8% Preferred Stock 4,000,000.00 2,200,00.00 10% Common Stock 2,000,000.00 5,600,000.00 13%

Assume that you are working as an Accounts Manager in AB ACCESS LIMITED, a company engaged in providing supervision services for construction projects. The management of the company is concerned about cash flow of the business and have asked you to prepare a statement of cash flow showing how much cash flow occurred in the operating, investing and financing activities of the business during the financial period ended 30 June 2018.

Companies use strategic plans as a course of action for success. What components would you consider necessary for creating a strategic plan? What ethical considerations should you include in the strategic plan? Why?

1. “U.S. Treasury and Agency Securities.” =181,248,000

Use this amount and assume these investments are recorded at face value. Now, assume the following characteristics and calculate the duration of these investments. Explain the meaning of duration and your duration calculation.

• 2.50% Coupon Rate
• Coupons Paid Semi-Annually
• 7 years to maturity
• For YTM=1.85

What investments should you have in your 401k? If you don't have a 401k (or 403b), what are your options? Everyone has their own unique situation but the goal is the same: satisfying choices in retirement. Share your challenges and solutions.

Calculate the duration for the 25-year, 9% coupon bond with semiannual coupon payments. The bond is purchased when the YTM is 7%. Calculate the duration by using nonExcel equation. Calculate the duration by using Excel Duration function

7. Bond 1 and Bond 2 both have a face value of $1,000. Bond 1 pays a 5% coupon (annual payments) while Bond 2 is a zero coupon bond. On November 30, 2014 (immediately after the annual coupon payment), Bond 1 had exactly 20 years to maturity, while Bond 2 had 15 years to maturity. The yield to maturity for each bond was 10% on November 30, 2014, and was 8% on November 30, 2015.

A. What was the price of each bond on November 30, 2014?

B. What was the duration of each bond on November 30, 2014?

C. What was the price of each bond on November 30, 2015?

D. What was the one-year return on each bond if the bond was purchased on November 31, 2014 (immediately after the coupon was paid) and was sold on November 31, 2015 (immediately after the coupon was received)?

E. Which bond was more “sensitive” to this interest rate change, and why? In your answer to this question, address the following items:

• Based upon “time to maturity,” which bond should be more sensitive to the interest rate change? • Based upon the relative size of the coupon payments, which bond should be more sensitive to the interest rate change?

write two pages reflection paper on financial management that covered in your class ( Analysis of Financial statements, Time value of money, Bonds valuation and interest rate, Risk , Return and CAPM, Corporate Valuation and Stock Valuation, The cost of capital, and The Basics of Capital Budgeting )

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 5.8%. The probability distribution of the risky funds is as follows:

The correlation between the fund returns is 0.18.

Solve numerically for the proportions of each asset and for the expected return and standard deviation of the optimal risky portfolio. (Do not round intermediate calculations and round your final answers to 2 decimal places. Omit the "%" sign in your response.)

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 5.8%. The probability distribution of the risky funds is as follows:

The correlation between the fund returns is 0.18.

Solve numerically for the proportions of each asset and for the expected return and standard deviation of the optimal risky portfolio. (Do not round intermediate calculations and round your final answers to 2 decimal places. Omit the "%" sign in your response.)