Yes They May, Inc. has a bond issue outstanding with a $1,000 par value and a maturity of 17 years. The bonds have an annual coupon rate of 14.0% with semi-annual coupon payments. The current market price for the bonds is $922. The bonds may be called in 4 years for 114.0% of par. What is the quoted annual yield-to-maturity for the bonds?

QQQ Corp. needs you to compute the cost of capital of an investment opportunity. QQQ has compiled the following information from public companies that in are same industry as the investment opportunity. Assuming that the project will be financed with only equity, what is the project’s cost of capital? Enter your answer as a percent, do not include the % sign. Round your final answer to two decimals.

XYZ corp. is considering investing in a new machine. The new machine cost will $10,000 installed. Depreciation expense will be $1000 per year for the next five years. At the end of the fifth year XYZ expects to sell the machine for $6000. XYZ will also sell its old equipment today that has a book value of $3000 for $3000. In five years, the old machine will be fully depreciated and have a salvage value of zero. Additionally, XYZ Corp expects that the new machine will increase its EBIT by $2000 in each of the next five years. Assuming that XYZ’s tax rate is 21% and the new machines WACC is 15%, what is the projects NPV. Round your final answer to two decimals.

CURRENT ASSETS INVESTMENT POLICY

Rentz Corporation is investigating the optimal level of current assets for the coming year. Management expects sales to increase to approximately $2 million as a result of an asset expansion presently being undertaken. Fixed assets total $1 million, and the firm plans to maintain a 45% debt-to-assets ratio. Rentz's interest rate is currently 9% on both short-term and long-term debt (which the firm uses in its permanent structure). Three alternatives regarding the projected current assets level are under consideration: (1) a restricted policy where current assets would be only 45% of projected sales, (2) a moderate policy where current assets would be 50% of sales, and (3) a relaxed policy where current assets would be 60% of sales. Earnings before interest and taxes should be 14% of total sales, and the federal-plus-state tax rate is 40%.

1. What is the expected return on equity under each current assets level? Round your answers to two decimal places.
   

   Restricted policy		%
   Moderate policy		%
   Relaxed policy		%

2. 
   
3. In this problem, we assume that expected sales are independent of the current assets investment policy. Is this a valid assumption?
   1. Yes, the current asset policies followed by the firm mainly influence the level of fixed assets.
   2. No, this assumption would probably not be valid in a real world situation. A firm's current asset policies may have a significant effect on sales.
   3. Yes, this assumption would probably be valid in a real world situation. A firm's current asset policies have no significant effect on sales.
   4. Yes, sales are controlled only by the degree of marketing effort the firm uses, irrespective of the current asset policies it employs.
   5. Yes, the current asset policies followed by the firm mainly influence the level of long-term debt used by the firm.
   
   -Select-IIIIIIIVVItem 4
4. 
   
5. How would the firm's risk be affected by the different policies?
   
   The input in the box below will not be graded, but may be reviewed and considered by your instructor.
   

REGRESSION AND RECEIVABLES

Edwards Industries has $400 million in sales. The company expects that its sales will increase 14% this year. Edwards' CFO uses a simple linear regression to forecast the company's receivables level for a given level of projected sales. On the basis of recent history, the estimated relationship between receivables and sales (in millions of dollars) is as follows:

Receivables = $13.50 + 0.13(Sales)

1. Given the estimated sales forecast and the estimated relationship between receivables and sales, what are your forecasts of the company's year-end balance for receivables? Enter your answer in millions. For example, an answer of $25,000,000 should be entered as 25. Round your answer to two decimal places.
   $ million
2. 
   
3. What are your forecasts of the company's year-end days sales outstanding (DSO) ratio? Assume that DSO is calculated on the basis of a 365-days year. Do not round intermediate calculations. Round your answer to two decimal places.

CASH CONVERSION CYCLE

Parramore Corp has $11 million of sales, $2 million of inventories, $2 million of receivables, and $1 million of payables. Its cost of goods sold is 65% of sales, and it finances working capital with bank loans at an 8% rate. Assume 365 days in year for your calculations. Do not round intermediate steps.

1. What is Parramore's cash conversion cycle (CCC)? Do not round intermediate calculations. Round your answer to two decimal places.
     days
2. 
   
3. If Parramore could lower its inventories and receivables by 12% each and increase its payables by 12%, all without affecting sales or cost of goods sold, what would be the new CCC? Do not round intermediate calculations. Round your answer to two decimal places.
     days
4. 
   
5. How much cash would be freed up, if Parramore could lower its inventories and receivables by 12% each and increase its payables by 12%, all without affecting sales or cost of goods sold? Do not round intermediate calculations. Round your answer to the nearest cent. Write out your answer completely. For Example, 13.2 million should be entered as 13,200,000.
   $
6. 
   
7. By how much would pretax profits change, if Parramore could lower its inventories and receivables by 12% each and increase its payables by 12%, all without affecting sales or cost of goods sold? Do not round intermediate calculations. Round your answer to the nearest cent. Write out your answer completely. For Example, 13.2 million should be entered as 13,200,000.
   $

Max Laboratories is evaluating three independent projects. Project 1: Dog Treats, Project 2: Dog Food, and Project 3: Dog Toys. WAAC is 10%

1. Calculate Payback Period, NPV, IRR, and MIRR for all projects.

Which project(s) should the firm accept? Explain in detail the reasons for your recomendation.

2. Max Labs Inc. current portfolio of products has a 10% IRR and a 10% standard deviation. The correlation coefficients with the firm portfolio are 0.5 (r=0.5) for both, Dog Treats and Dog Food; zero correlation with Dog Toys (r=0).

A) Calculate the effect of each of the projects on the overall risk of the firm (standard deviation) and on the Coefficient of Variation (CV). To calculate the combined IRR and std. deviations, consider that the weight of each project is 20% of the total portfolio.

B) What is your opinion on Max Labs' coefficient of variation and total risk before and after undertaking each project.

Explain why cost management and cost allocation is important information for a healthcare manager?

Q2 Unilever PLC and Burberry Group PLC both have their ordinary shares listed on the London Stock Exchange (LSE). a) At closing on one particular date during the assessment period, write down each company’s current share price (as listed on the LSE) and state their beta. Further, state the date you have used and the source of your information. [2 marks] b) Explain the conclusions you would draw from the two companies’ betas. [2 marks] [Total 4 marks]

Joe plans to deposit $200 at the end of each month into a bank account for a period of 2 years, after which he plans to deposit $300 at the end of each month into the same account for another 3 years. If the bank pays interest at the rate of 3.5%/year compounded monthly, how much will Joe have in his account by the end of 5 years? (Assume that no withdrawals are made during the 5-year period.)

Who are the main actors in the US capital markets and why do they choose to operate there?

What are the four categories of the tasks performed by the financial management department? In what ways does the financial management department contribute to the strategic planning process? Please provide an example to support your answer.

Prokter and Gramble​ (PKGR) has historically maintained a​ debt-equity ratio of approximately 0.18. Its current stock price is $51 per​ share, with 2.6 billion shares outstanding. The firm enjoys very stable demand for its​ products, and consequently it has a low equity beta of 0.45 and can borrow at 4.6​%, just 20 basis points over the​ risk-free rate of 4.4​%. The expected return of the market is 9.5​%, and​ PKGR's tax rate is 30​%.

a. This​ year, PKGR is expected to have free cash flows of $6.1 billion. What constant expected growth rate of free cash flow is consistent with its current stock​ price?

b. PKGR believes it can increase debt without any serious risk of distress or other costs. With a higher​ debt-equity ratio of 0.45​, it believes its borrowing costs will rise only slightly to 4.9​%. If PKGR announces that it will raise its​ debt-equity ratio to 0.45 through a leveraged​ recap, determine the increase or decrease in the stock price that would result from the anticipated tax savings.

if you were a hospital administrator which side of the aisle would you prefer to work on - cost management or cost allocation side? Please explain and cite your response.

Liquidation

At the time it defaulted on its interest payments and filed for bankruptcy, the McDaniel Mining Company had the balance sheet shown below (in thousands of dollars). The court, after trying unsuccessfully to reorganize the firm, decided that the only recourse was liquidation under Chapter 7. Sale of the fixed assets, which were pledged as collateral to the mortgage bondholders, brought in $410,000, while the current assets were sold for another $250,000. Thus, the total proceeds from the liquidation sale were $660,000. The trustee's costs amounted to $30,000; no single worker was due more than the maximum allowable wages per worker; and there were no unfunded pension plan liabilities.

1. How much will McDaniel's shareholders receive from the liquidation? Write out your answer completely. For example, 5 thousand dollar should be entered as 5,000. Round your answer to the nearest dollar. If no entry is required, enter "0".

   $  

2. How much will the first mortgage bondholders receive from collateralized assets? Will they receive their full claim? If not, how much is their remaining claim? Write out your answer completely. For example, 5 thousand dollar should be entered as 5,000. Round your answers to the nearest dollar. If no entry is required, enter "0".

   The first mortgage bondholders will receive $   from collateralized assets that -Select-isis notItem 3 equal to their full claim. Therefore, the first mortgage holders have $   in unsatisfied claims.

3. How much will the second mortgage bondholders receive from collateralized assets? Will they receive their full claim? If not, how much is their remaining claim? Write out your answer completely. For example, 5 thousand dollar should be entered as 5,000. Round your answers to the nearest dollar. If no entry is required, enter "0".

   The second mortgage bondholders will receive $   from collateralized assets that -Select-isis notItem 6 equal to their full claim. Therefore, the second mortgage holders have $   in unsatisfied claims.

4. How much will the other priority claimants (in addition to the mortgage bondholders) receive from the liquidation? Write out your answer completely. For example, 5 thousand dollar should be entered as 5,000. Round your answers to the nearest dollar.

   Remainging primary claimants	Amount
   Trustee's expenses	$
   Workers' wages due	$
   Governments' taxes due	$
   Total	$

5. How much will the remaining general creditors receive from the distribution before subordination adjustment? Do not round intermediate calculations. Write out your answer completely. For example, 5 thousand dollar should be entered as 5,000. Round your answers to the nearest dollar.

   Account	Amount Received before subordination adjustment
   Accounts payable		$
   Notes payable		$
   Second mortgage bonds		$
   Debentures		$
   Subordinated debentures		$
   Total		$

   How much will the remaining general creditors receive after subordination? Do not round intermediate calculations. Write out your answer completely. For example, 5 thousand dollar should be entered as 5,000. Round your answers to the nearest dollar. If no entry is required, enter "0".

   Account	Amount Received after subordination adjustment
   Accounts payable		$
   Notes payable		$
   Second mortgage bonds		$
   Debentures		$
   Subordinated debentures		$
   Total		$

   How much in total will the second mortgage holders receive (include the amount received from collateral)? Do not round intermediate calculations. Write out your answer completely. For example, 5 thousand dollar should be entered as 5,000. Round your answer to the nearest dollar.

   $