The TropicalFlowers Company is evaluating an asset that may increase sales by $120,000 every year for 4 years. There is no expected change in net operating working capital. The company's cost of capital is 6%. The proposed asset costs $400,000, will require $20,000 to modify for operations, and falls in the 3-year class MACRS for depreciation rates: .33, .45, .15, and .07 for years 1 through 4, respectively. At the end of the 4 years, it is expected that the asset may sell for $30,000. The company's tax rate is 21%. SHOW ALL WORK FOR FULL CREDIT.

a) What is the initial outlay for this project?

b) What are the operating cash flows in Years 1 through 4?

c) As part of the terminal cash flow in Year 4, what is the after-tax salvage value of the asset?

d) What is the net present value of this proposed asset investment? Should it be accepted or rejected?

Whitson Co. is looking for ways to shorten its cash conversion cycle. It has annual sales of $45,625,000, or $125,000 a day on a 365-day basis. The firm's cost of goods sold is 60% of sales. On average, the company has $7,500,000 in inventory, $5,750,000 in accounts receivable, and $2,750,000 in accounts payable. Its CFO has proposed new policies that would result in a 25% reduction in both average inventories and accounts receivable, and a 10% increase in average accounts payable. She also anticipates that these policies would reduce sales by 5%. What effect would these policies have on the company's cash conversion cycle?

Please Show Work

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 9 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively.

Use the discounted payback decision rule to evaluate these projects; which one(s) should it be accepted or rejected?

• accept both A and B

• accept A, reject B

• accept neither A nor B

• reject A, accept B

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 9 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively.

Use the PI decision rule to evaluate these projects; accept the project with the higher PI value.

• accept both A and B

• accept A, reject B

• accept neither A nor B

• reject A, accept B

Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 11 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively.

Use the payback decision rule to evaluate these projects; which one(s) should it be accepted or rejected?

• accept both A and B

• reject A, accept B

• accept A, reject B

• accept neither A nor B

What is the difference between ‘fiduciary money’ and ‘fiat money?’

What happened to gold in 1933/1934 in the US?

If the spot rate for Swiss Francs versus US Dollars is one SF equals 1.1 US $, and the annual interest rate on fixed rate one-year deposits of SF is 0.5% and for US$ is 2%, what is the nine-month forward rate for one dollar in terms of SF? Assuming the same interest rates, what is the 18-month forward rate for one SF in US$? Is this an indirect or direct rate? If the forward rate is an accurate predictor of exchange rates, in this case will the SF get stronger or weaker against the US dollar? What does this indicate about the market’s inflation expectations in Switzerland compared to the US?

Your division is considering two projects with the following cash flows (in millions):

1. What are the projects' NPVs assuming the WACC is 5%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.

   Project A:    $   million

   Project B:    $   million

   What are the projects' NPVs assuming the WACC is 10%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.

   Project A:  $   million

   Project B:  $   million

   What are the projects' NPVs assuming the WACC is 15%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.

   Project A:  $   million

   Project B:  $   million

2. What are the projects' IRRs assuming the WACC is 5%? Do not round intermediate calculations. Round your answer to two decimal places.

   Project A:    %

   Project B:    %

   What are the projects' IRRs assuming the WACC is 10%? Do not round intermediate calculations. Round your answer to two decimal places.

   Project A:    %

   Project B:    %

   What are the projects' IRRs assuming the WACC is 15%? Do not round intermediate calculations. Round your answer to two decimal places.

   Project A:    %

   Project B:    %

3. If the WACC was 5% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 7.81%.)

   -Select-Project AProject BNeither A nor BItem 13

   If the WACC was 10% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 7.81%.)

   -Select-Project AProject BNeither A nor BItem 14

   If the WACC was 15% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 7.81%.)

   -Select-Project AProject BNeither A nor B

11.10

Olsen Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate is 25%. Olsen must raise additional capital to fund its upcoming expansion. The firm will have $2 million of retained earnings with a cost of rs = 10%. New common stock in an amount up to $7 million would have a cost of re = 12.5%. Furthermore, Olsen can raise up to $4 million of debt at an interest rate of rd = 9% and an additional $4 million of debt at rd = 13%. The CFO estimates that a proposed expansion would require an investment of $3.6 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places.

***Please Explain how to get these answers without using excel****

Quad Enterprises is considering a new 3 year expansion project that requires an initial fixed asset investment of $2.592 million. the fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $201,600. The project requires an initial investment in net working capital of $288,000. The project is estimated to generate $2,304,000 in annual sales, with costs of $921,600. The tax rate is 23 percent and the required return on the project is 10 percent.

1) What is the projects Year 0 net cash flow?

A. $ -2,880,000

2) What is the projects Year 1 net cash flow?

A. $1,263,168

3) What is the projects Year 2 net cash flow?

A. $1,263,168

4) What is the projects Year 3 net cash flow?

A. $1,706,400

5) What is the NPV?

A. $594,319

Pizza di Joey operates several food trucks that provide hot food and beverages in the Washington DC area. The company has annual sales of $625,400. Cost of goods sold average 32 percent of sales and the profit margin is 4.5 percent. The average accounts receivable balance is $34,700. Assume 365 days per year.

a. On average, how long does it take the company to collect payment for its services?

b. What is the change in the Payables deferral period if the payables turnover has gone from an average of 10.50 times to 11.45 times per year?

c. What is the length of the company's cash conversion cycle after the change in the Payables deferral period if the inventory turnover is 22.20 times?

Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. Therefore, it is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 1.5 days.

Average number of payments per day 860

Average value of payment $ 810

Variable lockbox fee (per transaction) $ .15

Annual interest rate on money market securities 4.8 %

What is the NPV of the new lockbox system?

b. Suppose in addition to the variable charge that there is an annual fixed charge of $5,000 to be paid at the end of each year. What is the NPV now?

*Most answers from this on Chegg are wrong so I need the correct answer*

QUESTION 55

1. Which of the following is/are correct regarding the reasons an investor might consider investing in corporate bonds? (1) They have lower default risk than Treasuries. (2) They generally pay higher interest than Treasuries. (3) They generally offer some inflation protection via the semi-annual payment of coupons. (4) They offer higher security of principal than equities. (5) Convertible bonds may participate if the company’s shares rise in value.

   		a. 1, 2 and 3.
   		b. 2, 3 and 4.
   		c. 2 and 4.
   		d. 2, 4 and 5.

QUESTION 56

1. Which of the following would likely cause a bond to have a lower market value? (1) The issuer’s credit rating changed from A to AA. (2) The issuer’s credit rating changed from AA to A. (3) The YTM of comparable securities rose. (4) The YTM of comparable securities declined. (5) The bond included a call feature.

   		a. 1, 3 and 4.
   		b. 2 and 4.
   		c. 2, 3 and 5.
   		d. 2, 4 and 5.