McGilla Golf is evaluating a new line of golf clubs. The clubs will sell for $910 per set and have a variable cost of $405 per set. The company has spent $135,000 for a marketing study that determined the company will sell 46,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,600 sets of its high-priced clubs. The high-priced clubs sell at $1,410 and have variable costs of $540. The company also will increase sales of its cheap clubs by 11,200 sets. The cheap clubs sell for $405 and have variable costs of $135 per set. The fixed costs each year will be $9,200,000. The company has also spent $950,000 on research and development for the new clubs. The plant and equipment required will cost $28,000,000 and will be depreciated on a straight-line basis to a zero salvage value. The new clubs also will require an increase in net working capital of $2,260,000 that will be returned at the end of the project. The tax rate is 23 percent and the cost of capital is 14 percent.

Calculate the payback period. (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

Calculate the NPV. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Calculate the IRR. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

The Ironworks Pegs Corporation, facing a market that is requiring more and more of the square-type pegs as opposed to the round one, is considering a project to start producing square pegs to meet the expected growth in the market demand. In order to produce the new pegs, the company needs to replace an existing old machine that produces round pegs with a new one. The new machine costs $150,000 (including shipping and handling). The old machine has been fully depreciated and the new one would be depreciated on a straight-line basis over its estimated useful life of 15 years. If the decision is made to go ahead with the project the old machine will be sold for $10,000. Annual revenues are expected to be $132,000; cost of goods sold $41,000; operating costs (excluding depreciation) $35,000. The existing operating profit (EBIT) from the old machine is $5,000 per year (which is assumed to continue for the following ten years if the new project does not get the green light). The company estimates the actual productive life of the project at 10 years, after which the new machine would be sold for a salvage value of $80,000. The initial net working capital needed for the expanded operations is estimated at $25,000. The NWC will rise to $35,000 by the end of year one, then to $50,000 by the end of year two. No additional changes in NWC are expected for years three through eight. By the end of year 9, the NWC would be reduced to $30,000 (no theft, spoilage, or obsolescence is assumed to have occurred by the end of year ten). The way the company made all these estimates is by conducting a technical and economic feasibility study that cost $35,000. It also cost $15,000 to market-test the new widgets. The company’s marginal tax rate is 40%. The required rate of return on this investment is 15%.

1. Calculate the net initial investment needed for the new peg machine.

2. Calculate the expected after-tax salvage value of the new machine when the time comes for it to be sold.

3. Estimate all the relevant annual free cash flows and show them on a timeline using the Excel spreadsheet.

4. Use the six capital budgeting decision criteria to make a decision as to whether to go ahead with the project. Use the Excel finance functions. Assume a 6-year acceptable payback period.

Please give us one example from your research, work, or personal life using the concepts of present value, future value and discounting cash flows and applying it to bond valuation and pricing.

Dividend policy of a company may affect dividend signalling when?

I would like to propose my company (Airbnb) to penetrate to another country by piloting in Istanbul, Turkey.

Potential Competitors

Identify companies that:

• have business activities similar (or related) to the business opportunity you are proposing; and
• operate in the country that you are considering for your international business enterprise.

Competitive Advantages

Discuss the competitive advantages of these companies. (For example, some companies may gain a competitive advantage as a result of access to raw materials, others may gain an advantage through the use of technology for production and distribution or as a result of a well-known brand name.)

Based on the country (or countries) you are analyzing for your global business enterprise, research information related to the following areas:

Government and Politics

Describe the type of government and recent political developments that could influence the economic and business environment of the country. (For example, various events in recent years in the Middle East have contributed to uncertainty when doing business with some countries.)

Formal Trade Barriers

Identify formal trade barriers (tariffs and other taxes, foreign exchange controls, ownership restrictions) that might require a company to adapt its business strategy.

Intellectual Property

Discuss the country’s regulations to protect intellectual property, such as brand names, copyrights, patents, software, music, videos. (Some countries do not enforce these laws resulting in the pirating of products and lost profits for companies.)

PART 1)  Statement of the Assignment:

Please prepare a comprehensive list of financial ratios . Write a brief explanation below each financial ratio, e.g. what does the financial ratio measures or what the significance of it is.

For example:

Current Ratio = Current Assist / Current Liabilities

Current ratio measures whether our current assets, if liquidated, are sufficient to pay all of our current liabilities. A CR of 1.5, for example, shows that if we were to liquidate all of our current assets, we will be able to cover 1.5x our current liabilities, whereas a CR of 0.5 shows that liquidating our current assets only covers half of our current liabilities.

THE FOLLOWING RATIONS ARE THE RATIONS I NEED. CAN I GET AN ANSWER EACH ONE OF THEM. (EACH BULLET POINT) please explain each ration, its process and how each one of them it is used

  Asset management, Or turnover, measures

Receivables Turnover = sales / accounts receivable

• NWC turnover= sales / NWC

• Fixed asset turnover = sales/ net fixed assets

• Total asset turnover = sales/ total assets

• Return on equity = net income / total equity

• EPS = net income/ Shares outstanding

• PE= price per share / earning per share

• Market to book ratio= market value per share / book value per share

• Enterprise value= total market value of the stock + book value of liabilities – cash

• EBITA Ration= enterprise value/ EBITDA

Consider an option on a non-dividend-paying stock when the stock price is $48, the exercise price is $46, the risk-free interest rate is 6% per annum, the volatility is 20% per annum, and time to maturity is four months. (a) What is the price of the option if it is a European call? (b) What is the price of the option if it is a European put? (c) What is the price of the option if it is an American call? (d) How would the result of a) change if a dividend of $1 is expected in two months? How would the result of a) change if a dividend of $2 is expected in six months?

TWO PARTS PROBLEM

PART 1)  Statement of the Assignment:

Please prepare a comprehensive list of financial ratios . Write a brief explanation below each financial ratio, e.g. what does the financial ratio measures or what the significance of it is.

For example:

Current Ratio = Current Assist / Current Liabilities

Current ratio measures whether our current assets, if liquidated, are sufficient to pay all of our current liabilities. A CR of 1.5, for example, shows that if we were to liquidate all of our current assets, we will be able to cover 1.5x our current liabilities, whereas a CR of 0.5 shows that liquidating our current assets only covers half of our current liabilities.

THE FOLLOWING RATIONS ARE THE RATIONS I NEED. CAN I GET AN ANSWER EACH ONE OF THEM. (EACH BULLET POINT) please explain each ration, its process and how each one of them it is used

  Asset management, Or turnover, measures

Receivables Turnover = sales / accounts receivable

• NWC turnover= sales / NWC

• Fixed asset turnover = sales/ net fixed assets

• Total asset turnover = sales/ total assets

Profitability measures

• Profit margin = Net income/ sales

• Return on Assets= Net income / total assets

• Return on equity = net income / total equity

Market Value Measures

• EPS = net income/ Shares outstanding

• PE= price per share / earning per share

• Market to book ratio= market value per share / book value per share

• Enterprise value= total market value of the stock + book value of liabilities – cash

• EBITA Ration= enterprise value/ EBITDA

PART 2)

Select one of the financial ratios LISTED BELOW . Write the formula for calculating it, and then explain how it is useful in analyzing the financial health of the firm.

How would you use the ratio, how would you assess whether it is at an appropriate level or if it should be improved, and if so, how would you improve it?

Short-term solvency, or liquidity, measures

• Current ratio = current assets/ current liabilities

• Quick ration = Current assets – inventory / current liabilities

Other liquidity Ratios

• Cash ratio = Cash/ Current Liabilities
• Net Working Capital to Total Assets = Net working Capital / Total Assets
• Interval Measure= Current assets / Average daily operating costs

Long term Solvency Measures

• Total assets – total equity / total assets
• Debit- equity ratio = total debt / total equity
• Equity multiplier = total assets / total equity

• Long term debt ratio = long term debt / long term + total equity

• Tomes interest earned ratio = EBIT / Interest
• Cash coverage ratio= EBIT + Depreciation / interest

Asser management, Or turnover, measures

• Inventory turnover = Cost of goods sold / inventory
• Receivables Turnover = sales / accounts receivable

• NWC turnover= sales / NWC
• Fixed asset turnover = sales/ net fixed assets
• Total asset turnover = sales/ total assets

Profitability measures

• Profit margin = Net income/ sales
• Return on Assets= Net income / total assets
• Return on equity = net income / total equity

Market Value Measures

• EPS = net income/ Shares outstanding
• PE= price per share / earning per share
• Market to book ratio= market value per share / book value per share
• Enterprise value= total market value of the stock + book value of liabilities – cash
• EBITA Ration= enterprise value/ EBITDA

Stocks:

50% of portfolio - Advanced Micro Devices, Inc. (AMD)

starting price: 30.9$ Closing price: 29.94$

50% of portfolio - Canopy Growth Corp (CGC)

Starting price: 24.21$ Closing price: 27.31$

Report the variance-covariance matrix

Option 1: Take estimates from the other web pages

You can take estimates of volatilities of individual stocks from Reuters, Bloomberg, Yahoo finance or other sources. If you are not quite sure how to estimate covariances between stocks:

You can take estimates of Reuters, Bloomberg or other credible web page.

Option 2: Compute by yourself using historical data

How to estimate variance-covariance matrix from historical data:

Hint: check my excel file.

Option 3: Less preferable

You can assume that all the covariances are zeroes. It is an option only if you are unable to do one of the two methods above.

Accounts Receivable 250,000 Accounts Payable 260,000 Capital Surplus 100,000 Cash 190,000 Common Stock 300,000 Costs 640,000 Depreciation Expense 40,000 Dividends 97,500 Net Furniture & Fixtures 200,000 Goodwill 180,000 Interest Expense 50,000 Inventory 175,000 Land 305,000 Line of Credit (used) 200,000 Long Term Loan 340,000 Retained Earnings 100,000 Sales 980,000 Tax rate 21% Shares outstanding 15,000

Find Ratios:

Current Ratio 1.34

Total Debt Ratio .615

Earnings Per Share 13.17

Payables Turnover 2.46

Book Value Per Share 33.33

Days Sales in Payables 148.37

Trying to find out if I'm on the right track.

) Statement of the Assignment:

Please prepare a comprehensive list of financial ratios . Write a brief explanation below each financial ratio, e.g. what does the financial ratio measures or what the significance of it is.

For example:

Current Ratio = Current Assist / Current Liabilities

Current ratio measures whether our current assets, if liquidated, are sufficient to pay all of our current liabilities. A CR of 1.5, for example, shows that if we were to liquidate all of our current assets, we will be able to cover 1.5x our current liabilities, whereas a CR of 0.5 shows that liquidating our current assets only covers half of our current liabilities.

THE FOLLOWING RATIONS ARE THE RATIONS I NEED. CAN I PLEASE GET AN ANSWER EACH ONE OF THEM. (EACH BULLET POINT) please explain each ration, its process and how each one of them it is used

• Total debt Ratio=Total assets – total equity / total assets

• Debit equity ratio = total debt / total equity

• Equity multiplier = total assets / total equity

• Long term debt ratio = long term debt / long term + total equity

• Times interest earned ratio = EBIT / Interest

• Cash coverage ratio= EBIT + Depreciation / interest

  Asset management, Or turnover, measures

• Inventory turnover = Cost of goods sold / inventory

• Receivables Turnover = sales / accounts receivable

• NWC turnover= sales / NWC

• Fixed asset turnover = sales/ net fixed assets

• Total asset turnover = sales/ total assets

Profitability measures

• Profit margin = Net income/ sales

• Return on Assets= Net income / total assets

• Return on equity = net income / total equity

Market Value Measures

• EPS = net income/ Shares outstanding

• PE= price per share / earning per share

• Market to book ratio= market value per share / book value per share

• Enterprise value= total market value of the stock + book value of liabilities – cash

• EBITA Ration= enterprise value/ EBITDA

2)

Select one of the financial ratios LISTED. Write the formula for calculating it, and then explain how it is useful in analyzing the financial health of the firm.

How would you use the ratio, how would you assess whether it is at an appropriate level or if it should be improved, and if so, how would you improve it?

The rates of return on Cherry Jalopies, Inc., stock over the last five years were 16 percent, 11 percent, −1 percent, 6 percent, and 11 percent. What is the geometric return for Cherry Jalopies, Inc.? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 35% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CVx = CVy = Which stock is riskier for a diversified investor? For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is more risky. Stock Y has the higher beta so it is more risky than Stock X. For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the higher standard deviation of expected returns is more risky. Stock X has the higher standard deviation so it is more risky than Stock Y. For diversified investors the relevant risk is measured by beta. Therefore, the stock

with the lower beta is more risky. Stock X has the lower beta so it is more risky than Stock Y. For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the lower standard deviation of expected returns is more risky. Stock Y has the lower standard deviation so it is more risky than Stock X. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is less risky. Stock Y has the higher beta so it is less risky than Stock X. Calculate each stock's required rate of return. Round your answers to two decimal places. rx = % ry = % On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor? Calculate the required return of a portfolio that has $7,000 invested in Stock X and $8,500 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places. rp = % If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return?