Use the following tables to complete the critical thinking assignment.

Best Buy Co., Inc.

Income Statement

Best Buy Co., Inc.

Balance Sheet

Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission.

Option #1: Ratio Analysis and Interpretation

Using the attached financial statements for Best Buy Co., Inc. complete the financial statement analysis and ratio analysis by answering the questions below.

a. Calculate average collection period, total asset turnover, inventory turnover, and days in inventory.

b. Assess the activity of the firm, using your calculations in part a, over the four year period.

c. Calculate the gross profit margin, operating margin, and net profit margin.

d. Assess the profitability of the firm, using your calculations in part c, over the four year period.

A mail-order firm processes 6,000 checks per month. Of these, 70 percent are for $50 and 30 percent are for $82. The $50 checks are delayed three days on average; the $82 checks are delayed four days on average. Assume 30 days per month.

a-1. What is the average daily collection float? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

a-2. How do you interpret your answer?

b-1. What is the weighted average delay? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

b-2. Calculate the average daily float. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

c. How much should the firm be willing to pay to eliminate the float? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

d. If the interest rate is 6 percent per year, calculate the daily cost of the float. (Use 365 days a year. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

e. How much should the firm be willing to pay to reduce the weighted average float by 2 days? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

A 20-year maturity $1,000 par value 9% coupon bond paying coupons annually is callable in five years at a call price of $1,050. The bond currently sells at a yield to maturity of 8%. What is the yield to call?

please show full steps of the work. thank you!!!

Define the most important capital budgeting techniques. name at least two (2) capital budgeting techniques (e.g., NPV, IRR, Payback Period, etc.) that you used to arrive investment decision.

WACC Estimation

The following table gives the balance sheet for Travellers Inn Inc. (TII), a company that was formed by merging a number of regional motel chains.

The following facts also apply to TII:

1. Short-term debt consists of bank loans that currently cost 9%, with interest payable quarterly. These loans are used to finance receivables and inventories on a seasonal basis, so bank loans are zero in the off-season.
2. The long-term debt consists of 20-year, semiannual payment mortgage bonds with a coupon rate of 9%. Currently, these bonds provide a yield to investors of r_d = 12%. If new bonds were sold, they would have a 12% yield to maturity.
3. TII's perpetual preferred stock has a $100 par value, pays a quarterly dividend of $2.50, and has a yield to investors of 9%. New perpetual preferred stock would have to provide the same yield to investors, and the company would incur a 5% flotation cost to sell it.
4. The company has 4 million shares of common stock outstanding. P₀ = $20, but the stock has recently traded in price the range from $17 to $23. D₀ = $1 and EPS₀ = $2. ROE based on average equity was 24% in the most recent year, but management expects to increase this return on equity to 32%; however, security analysts and investors generally are not aware of management's optimism in this regard.
5. Betas, as reported by security analysts, range from 1.3 to 1.7; the T-bond rate is 9%; and RP_M is estimated by various brokerage houses to be in the range from 4.5% to 5.5%. Some brokerage house analysts reports forecasted dividend growth rates in the range of 10% to 15% over the foreseeable future.
6. TII's financial vice president recently polled some pension fund investment managers who hold TII's securities regarding what minimum rate of return on TII's common would make them willing to buy the common rather than TII bonds, given that the bonds yielded 12%. The responses suggested a risk premium over TII bonds of 4 to 6 percentage points.
7. TII is in the 30% federal-plus-state tax bracket.
8. TII's principal investment banker predicts a decline in interest rates, with r_d falling to 10% and the T-bond rate to 7%, although the bank acknowledges that an increase in the expected inflation rate could lead to an increase rather than a decrease in interest rates.

Assume that you were recently hired by TII as a financial analyst and that your boss, the treasurer, has asked you to estimate the company's WACC under the assumption that no new equity will be issued. Your cost of capital should be appropriate for use in evaluating projects that are in the same risk class as the assets TII now operates.

1. What are the market value weights for long-term debt, preferred stock, and common stock in Travellers' capital structure? Do not round intermediate calculations. Round your answers to two decimal places.

. You are given the following information for Watson Power Co. Assume the company’s tax rate is 40 percent. Debt: 8,000 6.2 percent coupon bonds outstanding, $1,000 par value, 10 years to maturity, selling for 110 percent of par; the bonds make semiannual payments. Common stock: 300,000 shares outstanding, selling for $50 per share; the beta is 1.08. Preferred stock: 12,000 shares of 7 percent preferred stock outstanding, currently selling for $70 per share. Market: 8 percent market risk premium and 4.2 percent risk-free rate. What is the company's WACC? Please do this step by step. Thank you!

Assume that you are nearing graduation and that you have applied for a job with a local bank. As part of the bank’s evaluation process, you have been asked to take an examination that covers several financial analysis techniques. The first section of the test addresses time value of money analysis. See how you would do by answering the following questions: Questions: (1) What is the future value of an initial $100 after three years if it is invested in an account paying 10% annual interest? (2) What is the present value of $100 to be received in three years if the appropriate interest rate is 10% per year? What is the difference between an ordinary annuity and an annuity due? What type of annuity is shown in the following cash flow time line? How would you change it to the other type of annuity? (1) What is the future value of a 3-year ordinary annuity of $100 if the appropriate interest rate is 10%? (2) What is the present value of the annuity? (3) What would the future and present values be if the annuity were an annuity due? (1) Define the stated, or quoted, or simple, rate, (rSIMPLE), annual percentage rate (APR), the periodic rate (rPER), and the effective annual rate (rEAR). (2) What is the effective annual rate for a simple rate of 10%, compounded semiannually? Compounded quarterly? Compounded daily? (1) Construct an amortization schedule for a $1,000 loan that has a 10%annual interest rate that is repaid in three equal installments.  

Multiple Choice

• yes; The NPV is $314,960.00

• yes; The NPV is $370,509.74

• no; The NPV is $272,189.10

• yes; The NPV is $244,189.10

• yes; The NPV is $97,042.85

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Which one of the following is a correct statement concerning the excess return?

• The lower the average rate of return, the greater the excess return.

• The lower the volatility of returns, the greater the expected excess return.

• The excess return is not affected by the volatility of returns.

• The excess return is not correlated to the average rate of return.

• The greater the volatility of returns, the greater the expected excess return.