St trucking just signed a $3.8 million contract. The contract calls for a payment of $1.1 million today, $1.3 million one year from today, and $1.4 million two years from today. What is the contract worth today at a discount rate of 8.0 percent? Please show how to work this problem in excel.

Time value of money calculations can be solved using a mathematical equation, a financial calculator, or a spreadsheet. Which of the following equations can be used to solve for the future value of an ordinary annuity?

PMT x {[(1 + r)nn – 1]/r}

PMT x {1 – [1/(1 + r)nn]}/r

PMT x {[(1 + r)nn – 1]/r} x (1 + r)

FV/(1 + r)n

1. Consider two investments:
   1. Invest $1000 and receive $110 at the end of each month for the next 10 months.
   2. Invest $1200 and receives $130 at the end of each month for the next 10 months.

If this were your money, and you want to earn at least 12% interest on your money, which investment would you make, if any? What nominal interest rate do you earn on each investment?

(show all equations)

Environmental Cost Report Verde Company reported operating costs of $27,000,000 as of December 31, 2015, with the following environmental costs: Testing for contamination $ 405,000 Inspecting products 378,000 Treating toxic waste 1,053,000 Obtaining ISO 14001 certification 756,000 Designing processes 378,000 Cleaning up oil spills 1,836,000 Maintaining pollution equipment 297,000 Cleaning up contaminated soil 3,429,000 Required: Hide 1. Prepare an environmental cost report, classifying costs by quality category and expressing each as a percentage of total operating costs. Round percentages to two decimal places, if rounding is required. For example, 5.79% would be entered as "5.79". Verde Company Environmental Cost Report For the Year Ended December 31, 2015 Environmental Cost Total Environmental Cost Percentage of Operating Costs Prevention costs: Obtaining ISO 14001 certification $ Designing processes $ % Detection costs: Testing for contamination $ Inspecting products % Internal failure costs: Treating toxic waste $ Maintaining pollution equipment % External failure costs: Cleaning up oil spills $ Cleaning up contaminated soil % Total quality costs $ %

Projects A and B have first costs of $5000 and $9000, respectively. Project A has net annual benefits of $2500 during each of its 5-year useful life, after which it can be replaced identically. Project B has net annual benefits of $3300 during each year of its 10-year life.  Use Present Worth analysis, an interest rate of 30% per year, and a 10-year analysis period to determine which project to select. Please provide the present worth of the best alternative.

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XYZ Corp has total assets of $1,000,000 and a debt ratio of 30%. Currently it has sales of $2,500,000, total fixed costs of $1,000,000, and EBIT of $50,000. If XYZ pays 6% interest on debt, what is XYZ's ROE? Group of answer choices 1.7% 2.5% 6.0% 8.3% 9.8%

Tax Rate Not provided in question, but most likely the new corporate flat-tax rate of 21%.

The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Guthrie Enterprises needs someone to supply it with 153,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost $1,930,000 to install the equipment necessary to start production; you’ll depreciate this cost straight-line to zero over the project’s life. You estimate that in five years this equipment can be salvaged for $163,000. Your fixed production costs will be $278,000 per year, and your variable production costs should be $10.70 per carton. You also need an initial investment in net working capital of $143,000. The tax rate is 23 percent and you require a return of 10 percent on your investment. Assume that the price per carton is $17.30.

Provide a real world example of a large government agency that has had a major impact on society from a financial perspective (either positive or negative) and why?

350 words answer.

What is trademark dilution and give an example.

Design a Hypothetical Plan Vanilla Interest Rate Swap where there is a financial intermediary. Demonstrate how the swap has value to all parties (i.e., the fixed to floating, the floating to fixed and the financial intermediary). Determine the amount of benefit to each party in terms of annual interest rate savings, etc. Show the flow of funds at each interest payment date for all parties. Discuss the credit risk issues associated with such swaps. Indicate the risk should LIBOR increase and should LIBOR decrease. Discuss the criticisms against the comparative advantage argument.

I understand and have completed the interest rate swap but I am unsure how to answer the questions related to the swap.

The U.S. government has decided to decrease the corporate tax rate from 35% to 20% (for the record, I originally wrote this problem long before this actually happened). You have been tasked with re-estimating the remaining PV of a project’s cash flows. The project will operate for the next 4 years before shutting down. It will produce yearly revenue of $40k with yearly operating costs of $20k. The project utilizes some heavy machinery which has a current book value of $80k and is being depreciated on a straight-line basis by $15k per year for the remainder of the project. (IMPORTANT: This does not mean that you purchase the machine today for $80k. You bought the machine in the past when you started the project). The machinery will have a resell value of $30k at the completion of the project. The firm’s discount rate is 10%.

1. Show how much each of the project’s OCFs will change on a timeline once the tax rate is decreased.

4. Find the Discounted Payback period for the following projects.

The discount rate is 7%.

Initial Outlay 17,827

Year 1 5917

Year 2 5484

Year 3 5968

Year 4 8405

The U.S. government has decided to decrease the corporate tax rate from 35% to 20% (for the record, I originally wrote this problem long before this actually happened). You have been tasked with re-estimating the remaining PV of a project’s cash flows. The project will operate for the next 4 years before shutting down. It will produce yearly revenue of $40k with yearly operating costs of $20k. The project utilizes some heavy machinery which has a current book value of $80k and is being depreciated on a straight-line basis by $15k per year for the remainder of the project. (IMPORTANT: This does not mean that you purchase the machine today for $80k. You bought the machine in the past when you started the project). The machinery will have a resell value of $30k at the completion of the project. The firm’s discount rate is 10%.

2. Compute the after-tax salvage both before and after the tax change.

JK Manufacturing is considering a new product and is unsure about its price as well as the variable cost associated with it. JK's marketing department believes that the firm can sell the product for $500 per unit, but feels that if the initial market response is weak, the price may have to be 20% lower in order to be competitive with existing products. The firm's best estimates of its costs are fixed coists of $3.6 million and variable cost of $325 per unit. Concern exists with regard to the variable cost per unit due to currently volatile raw material and labor costs. Although the firm expects this cost to be about $325 per unit, it could be as much as 8% above that value. The firm expects to sell about 50,000 units per year.

a) Calculate the firm breakeven point (BEP) assuming its initial estimates are accurate.

b)Perform a sensitivity analysis by calculating the breakeven point for all combinations of the sale price per unit and variable cost per unit. (Hint: There are four combinations.)

c) In the best case, how many units will the firm need to sell to break even?

d) In the worst case, how many units will the firm need to sell to break even?

e) If each of the possible price/variable cost combinations is equally probable, what is the firm's expected breakeven point?

f)Based on your finding in part (e), should the firm go forward with the proposed new product? Explain why or why not.

You buy an annuity-immediate for $5000 that pays $200 quarterly for next 8 years. Calculate the nominal annual interest rate convertible half-yearly.