PPG Industries is considering the purchase of a new machine to produce outdoor paint. Machine A costs $3,150,000 and will last for six years. Variable costs are 37 percent of sales, and fixed costs are $290,000 per year. Machine B costs $5,377,000 and will last for nine years. Variable costs for this machine are 32 percent of sales and fixed costs are $210,000 per year. The sales for each machine will be $11.8 million per year. The required return is 10 percent, and the tax rate is 23 percent. Both machines will be depreciated on a straight-line basis to 0 over the duration of the project (machine A over 6 years; machine B – 9 years.). Both machines will be worthless at the end of the project. The company plans to replace the machine when it wears out. Based on costs, which machine should the company choose and why? Please use excel if possible

Route Canal Shipping Company has the following schedule for aging of accounts receivable:

a. Calculate the percentage of amount due for each month.

b. If the firm had $1,512,000 in credit sales over the four-month period, compute the average collection period. Average daily credit sales should be based on a 120-day period.

c. If the firm likes to see its bills collected in 36 days, should it be satisfied with the average collection period?

• Yes

• No

d. Disregarding your answer to part c and considering the aging schedule for accounts receivable, should the company be satisfied?

• Yes

• No

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 8%. The probability distribution of the risky funds is as follows:

The correlation between the fund returns is 0.09.

a-1. What are the investment proportions in the minimum-variance portfolio of the two risky funds. (Do not round intermediate calculations. Enter your answers as decimals rounded to 4 places.)

a-2. What is the expected value and standard deviation of its rate of return? (Do not round intermediate calculations. Enter your answers as decimals rounded to 4 places.)

PLEASE SHOW ALL WORK INCLUDING ALGEBRA STEPS WHEN SOLVING Ws EQUATION THANK YOU

Given the various industries we examined (i.e. agriculture, tobacco, banks, pharmaceuticals, etc.), which industries do you suspect have the highest betas? Which ones have the lowest betas? Provide an economic explanation for your reason. Hint: Talk about the business operations of each industry and how demand for their products/services is affected during up- and down-markets.

1. Fill in the table below for the indifference curve that corresponds to a Utility = 0.05 and an investor risk aversions of A=3 and A=4.  

You have been given the following return​ data:

               Expected Return      
Year   Asset A   Asset B   Asset C
2021          7%       8%           2%
2022          9%       6%           4%
2023          11%      4%   6%
2024          13%      2%           8%

on three assets-​A, ​B, and C over the period 2021--2024

Using these​ assets, you have isolated three investment​ alternatives:

Alternative   Investment          
1   100%   of asset A      
2   50%      of asset A and 50% of asset B
3   50%      of asset A and 50% of asset C

a. Calculate the average portfolio return for each of the three alternatives.

b. Calculate the standard deviation of returns for each of the three alternatives.

c. On the basis of your findings in parts a and b​, which of the three investment alternatives would you​ recommend? Why?

Consider the following securities: Risky security: E(R) = 10% and standard deviation= 20. Risk-free
security: Rf = 5%. You want to construct a portfolio combining the risky security
and the risk-free security such that you get an expected return of 15%.
(a) What weights would you need to put in the risky and the risk-free securities to
earn a 15%?
(b) What is the standard deviation of this portfolio? What is the reward-to-
variability ratio?
(c) Draw the capital allocation line (CAL). Label the points and the axes clearly.
(d) Now, suppose that instead of one risky security and one risk-free security, you
can invest in two risky securities. Security 1: E(R1) = 10% and standard deviation₁ = 20%.
Security 2: E(R2) = 6% and standard deviation₂ = 10% with p= 0:3. What weights would you
need to place in the two risky securities to earn a 15% expected return? What
is the standard deviation of this portfolio?
(e) Find the expected return and the standard deviation of the minimum-variance
portfolio (MVP) on the investment opportunity set.

Century Roofing is thinking of opening a new warehouse, and the key data are shown below. The company owns the building that would be used, and it could sell it for $100,000 after taxes if it decides not to open the new warehouse. The equipment for the project would be depreciated by the straight-line method over the project's 3-year life, after which it would be worth nothing and thus it would have a zero salvage value. No new working capital would be required, and revenues and other operating costs would be constant over the project's 3-year life. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.)

A firm can lease a truck for 4 years at a cost of $41,000 annually. It can instead buy a truck at a cost of $91,000, with annual maintenance expenses of $21,000. The truck will be sold at the end of 4 years for $31,000. a. Calculate present value if the discount rate is 10%

Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly.

1) Assume that a $1,000,000 par value, semiannual coupon US Treasury note with four years to maturity has a coupon rate of 4%. The yield to maturity (YTM) of the bond is 7.70%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:

a) $874,669.10

b) $551,041.53

c) $743,468.74

d) $1,049,602.92

Based on your calculations and understanding of semiannual coupon bonds, complete the following statement:

2) When valuing a semiannual coupon bond, the time period variable(N) used to calculate the price of a bond reflects the number of (4-month, 8-month, 6-month, 12-month) periods remaining in the bond’s life.

Assume that Valley Forge Hospital has only the following three payer groups:

Payer Number of admission Average Revenue per Admission Variable Cost per Admission

PennCare 1,000 5,000 3,000

Medicare 4,000 4,500 4,000

Commercial 8,000 7,000 2,500

The hospitals fixed costs are $38 million

a. What is the hospital's net income?

b. Assume that half of the 100,000 covered lives in the commercial payer group will be moved into a capitated plan. All utilizations and cost data remain the same. What PMPM rate will the hospital have to charge to retain its Part a net income?

c. What overall net income would be produced if the admission rate of the capitated group were reduced from the commercial level by 10 percent?

d. Assuming that the utilization reduction also occurs, what overall net income would be produced if the variable cost per admission for the capitated group were lowered to $2,200?