We are evaluating a project that costs $670,000, has a life of 5 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 59,000 units per year. Price per unit is $44, variable cost per unit is $25, and fixed costs are $760,000 per year. The tax rate is 23 percent, and we require a 16 percent return on this project. Suppose the projections given for the price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent. Calculate the best case and worst case NPV figures.

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 6%. The probability distribution of the risky funds is as follows: Expected Return Standard Deviation Stock fund (S) 21 % 28 % Bond fund (B) 12 18 The correlation between the fund returns is 0.09. You require that your portfolio yield an expected return of 13%, and that it be efficient, on the best feasible CAL. a. What is the standard deviation of your portfolio? (Round your answer to 2 decimal places.) b. What is the proportion invested in the T-bill fund and each of the two risky funds? (Round your answers to 2 decimal places.)

Why do some managers have difficulties in delegating authority? Why do you think this problem might be more pronounced in small businesses?

You are considering two projects with the following cash flows:

Which one of the following statements is true concerning the two projects given a positive discount rate?

Tim wants to buy an apartment that costs $2,225,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1 year CMT. There are no caps. The index was 1% at the time of origination. Tim also had to pay 1 point for this loan. Suppose the index rate will remain 1% for the life of the loan.

Compute the annualized IRR for this loan assuming Tim will prepay in 5 years.

IC6-3

Towers Inc. (TI) is a leader in delivering communications technology that powers global commerce and secures the world's most critical information. Its shares trade on the Canadian and U.S. national stock exchanges. The company had been experiencing unprecedented growth, but then, in 2015, industry demand for the company's services and products declined dramatically due to an industry realignment, an economic downturn, and a tightening in global capital and product markets. By the end of 2017, the industry stabilized and the company began to enter a turnaround period after significant downsizing.

In 2017, employee morale was very low because of all the downsizing. Many employees were being actively recruited away from TI. Management decided to set up bonus programs for employees who stayed to see the company through the difficult times and back to profitability. Under one plan, every employee would receive a bonus in the first quarter that the company achieved enough profit to cover the bonus costs. In order to help achieve profitability, the CFO met with the managers of his divisions and established profitability targets and what he referred to as “roadmaps” that showed how these targets could be achieved. The roadmaps included statements that the profits could only be achieved through the release from the statement of financial position of excess provisions (that is, provisions for obsolete inventory and bad debts). The provisions had been overprovided for in earlier years in an effort to “manage” profits.

In 2018, the company came under scrutiny from the securities regulators. The government notified it of a criminal investigation into alleged accounting irregularities. In addition, there were several class-action lawsuits outstanding against the company by shareholders alleging that TI had provided misleading information to them in the financial statements for 2016 and 2017. Once news of this was released, credit-rating agencies significantly downgraded their ratings of TI's securities. As a result of this negative activity, the company had not released its financial statements for 2018 and was now in breach of stock exchange requirements to file financial statements. Although the stock exchanges had not done so, they now had the power to delist TI's shares.

The controller of TI must now finalize the financial statements and has come across the following information.

• 1.During the year, the company signed contracts to sell optical products, which include software. Before year end, the company shipped out what it called an “interim product solution”—in other words, the optical product ordered by the company was not yet ready in its final form so the company shipped a beta or draft version of it. This interim product would be followed shortly by the final version. Revenues were recognized upon shipment of the interim product solution, as it was felt that the final version just needed minor refinements. The customers generally paid more than half of what was owed under the contract when they received the interim product solution. It was rare for customers to back out of this type of contract for any reason.
• 2.In 2017, TI had purchased a subsidiary of DEF Inc. and agreed to pay additional future consideration for the purchase (the consideration would take the form of additional TI shares). The additional consideration was a function of the profitability of the subsidiary. The more profitable the subsidiary, the more shares that TI would issue as consideration. Given that TI's shares are highly volatile, TI and DEF agreed that the number of shares to be issued should be based on the average price per share in the three months prior to the future issuance date of the shares. So far, the subsidiary has been performing above expectations.
• 3.By the end of 2018, TI was still restructuring to streamline its core operations and activities. Part of the restructuring included abandoning its voice-over-fibre operations. The operations would be closed down in early 2019, and this would involve workforce reductions and abandonment of plant and equipment.

Instructions

Adopt the role of controller and analyze the financial reporting issues.

The Metchosin Corporation has two different bonds currently outstanding. Bond M has a face value of $50,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $1,600 every six months over the subsequent eight years, and finally pays $1,900 every six months over the last six years. Bond N also has a face value of $50,000 and a maturity of 20 years; it makes no coupon payments over the life of the bond. The required return on both these bonds is 10% compounded semiannually, what is the current price of bond M and bond N? (Do not round intermediate calculations. Round the final answers to 2 decimal places.)

We learned that share value maximization is the ultimate goal of a firm in the

market economy? How does this seemingly selfish goal benefit the entire society?

Please answer this question in a essay format!

Morris Corporation has the following information on its balance sheets: Cash = $40, accounts receivable = $30, inventories = $100, net fixed assets = $500, accounts payable = $20, accruals = $10, short-term debt (matures in less than a year) = $25, long-term debt = $200, and total common equity = $415. Its income statement reports: Sales = $820, costs of goods sold (excluding depreciation) = $450, depreciation = $50, interest expense = $20, and tax rate = 40%. Calculate the following ratios: Net profit margin , operating profit margin , basic earning power ratio and return on total assets and return on common equity

assume the Canadian dollar spot rate is 1.18c$/us$, the swiss spot rate is 1.29CHF/us$ and the market cross rate is 1.11 chf/c$ a. calculate the implied cross-rate of CHF/c$ b calculate the triangular arbitrage profit, assume you have us$1000 to work with

Junk bonds: JC Penney has a CCC- rated corporate bond outstanding. There are 4 years remaining to maturity. The bond has a 5.75% coupon and closed at 85.372. Find the bond’s yield to maturity.

PRESENT VALUE OF AN ANNUITY

Find the present values of these ordinary annuities. Discounting occurs once a year. Round your answers to the nearest cent.

1. $600 per year for 16 years at 12%.

   $  

2. $300 per year for 8 years at 6%.

   $  

3. $900 per year for 16 years at 0%.

   $  

   Rework previous parts assuming that they are annuities due. Round your answers to the nearest cent.

4. $600 per year for 16 years at 12%.

   $  

5. $300 per year for 8 years at 6%.

   $  

6. $900 per year for 16 years at 0%.

   $  

The most recently issued 4-week T-Bill is quoted at a discount of 1.91.

a. What is the price of this T-Bill?

b. What is the bond-equivalent yield? Assume 4 weeks is 30 days, and the par value is $10,000. Express your answers rounded to two decimal places.