The Beasley Corporation has been experiencing declining earnings but has just announced a 50 percent salary increase for its top executives. A dissident group of stockholders wants to oust the existing board of directors. There are currently 15 directors and 31,000 shares of stock outstanding. Mr. Wright, the president of the company, has the full support of the existing board. The dissident stockholders control proxies for 12,001 shares. Mr. Wright is worried about losing his job.

a-1. Under cumulative voting procedures, how many directors can the dissident stockholders elect with the proxies they now hold? (Do not round intermediate calculations. Round your answer down to the nearest whole number.)
  

a-2. How many directors could they elect under majority rule with these proxies?
  

b. How many shares (or proxies) are needed to elect eight directors under cumulative voting? (Do not round intermediate calculations. Round your answer up to the nearest whole number.)
  

Plot since 1990 the return on equity of small banks (banks with assets of less than $1 billion; FRED code: US1ROE) and large banks (banks with assets of greater than $15 billion; FRED code: USG15ROE).How do you explain the long-run pattern?

BOND VALUATION

Bond X is noncallable and has 20 years to maturity, a 8% annual coupon, and a $1,000 par value. Your required return on Bond X is 8%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 10%. How much should you be willing to pay for Bond X today? (Hint: You will need to know how much the bond will be worth at the end of 5 years.) Do not round intermediate calculations. Round your answer to the nearest cent.

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5.  Problem 7.09

Please give me the correct answer:

Jacobs Engineering Group had its target price increased by analysts at KeyCorp from $82.00 to $86.00 in a research note issued to investors on Wednesday, Benzinga Ratings Tables reports. The firm currently has an "overweight" rating on the construction company's stock. KeyCorp's price target indicates a potential upside of 7.69% from the company's current price. Other research analysts have also issued research reports about the company. MKM Partners lifted their price target on Jacobs Engineering Group to $87.00 and gave the stock a "buy" rating in a report on Tuesday, February 26th. ValuEngine upgraded Jacobs Engineering Group from a "hold" rating to a "buy" rating in a report on Monday, February 25th. Cowen set a $82.00 price objective on Jacobs Engineering Group and gave the stock a "buy" rating in a report on Wednesday, February 20th. Citigroup set a $83.00 price objective on Jacobs Engineering Group and gave the stock a "buy" rating in a report on Wednesday, February 20th. Finally, Robert W. Baird set a $83.00 price objective on Jacobs Engineering Group and gave the stock a "buy" rating in a report on Wednesday, February 20th. Two equities research analysts have rated the stock with a hold rating and fifteen have issued a buy rating to the company's stock. Jacobs Engineering Group has a consensus rating of "Buy" and a consensus target price of $84.55.

The case above reports that two of the equities research analysts have rated the stock with a “hold” rating. If the two equities research analysts are right, what results must have found about the value of Jacobs Engineering Group’s common stock?

1. Two equities research analysts found that the current market price of common stock for Jacobs Engineering Group is above the book value of Jacobs Engineering Group’s common stock.

2. Two equities research analysts found that the current market price of common stock for Jacobs Engineering Group is equal to the intrinsic value of Jacobs Engineering Group’s common stock.

3. Two equities research analysts found that the current book of common stock for Jacobs Engineering Group is above the intrinsic value of Jacobs Engineering Group’s common stock.

4. Two equities research analysts found that the intrinsic value of common stock for Jacobs Engineering Group is above to the current common stock price of Jacobs Engineering Group.

5. none of the answers is correct.

Benchmark, the Silicon Valley venture firm and early investor in Uber, has sued former CEO Travis Kalanick.

In a Delaware Chancery Court filing, originally identified by Axios’ Dan Primack, the suit alleges that Kalanick committed fraud, breach of contract and breach of fiduciary duty. Both Kalanick and Benchmark hold Uber board seats.

Accusing Kalanick of being “selfish” by packing Uber’s board with “loyal allies,” Benchmark alleges that the ousted CEO broke the law by trying to pave the way.

The board of directors and corporate managers work together and at times, because they know each other well, there could be an entrenchment among them. As the alleged claim is true CEO Travis Kalanick committed fraud, breach of contract and breach of fiduciary duty to benefit himself, what kind of problem in a corporation describes the situation the best?

1. managers benefiting themselves rather than the shareholders of the company is called “fiduciary problem.”

2. managers benefiting the shareholders of the company rather than themselves is called “corporate governance.”

3. managers benefiting the shareholders of the company rather than themselves is called “agency problem.”

4. none of the answers is correct.

5. managers benefiting themselves rather than the shareholders of the company is called “agency problem.”

Pomerantz LLP is investigating claims on behalf of investors of EQT Corporation (“EQT” or the “Company”). The investigation concerns whether EQT and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices.
On June 19, 2017, EQT announced entry into an agreement to acquire Rice Energy Inc. (“Rice”) for total consideration of $6.7 billion (the “Acquisition”). EQT touted the purported benefits of the proposed merger, telling its shareholders that the Acquisition would result in $2.5 billion in synergies, including $100 million in cost savings in 2018 alone. On July 3, 2017, activist investor JANA Partners LLC (“JANA”), in several letters citing detailed evidence, asserted that the Rice merger synergies were “grossly exaggerated” and that according to JANA’s expert analysis, “it would be impossible for EQT to support its claimed synergy drilling plan.” Nonetheless, EQT repeatedly denied JANA’s assertions and reassured investors of the merits of the Acquisition. EQT and Rice shareholders thereafter approved the Acquisition. After the Acquisition closed in November 2017, EQT continued to tout the “significant operational synergies” or the merger that would purportedly allow EQT to become “one of the lowest-cost operators in the United States.” On March 15, 2018, just five months after the Acquisition closed, EQT announced the sudden and unexpected resignation of Steven T. Schlotterbeck as the Company’s Chief Executive Officer. Then, on October 25, 2018, EQT reported surprisingly bad third-quarter financial results caused by a significant increase in total costs, which were $586.2 million higher than in the same period of the prior year. Moreover, EQT disclosed that its estimated capital expenditures for well development in 2018 would increase by $300 million, to $2.5 billion, as a result of “inefficiencies from higher activity levels, the learning curve on ultra-long horizontal wells, and service cost increases.” As a result, EQT reduced its full-year forecast for 2018. These disclosures were at odds with EQT’s prior representations concerning the purported synergies of the Acquisition.
On this news, EQT’s stock price fell $2.79 per share, or 12.65%, to close at $19.24 per share on October 25, 2018.

Which one of the goals will be appropriate for Steven T. Schlotterbeck as the Company’s Chief Executive Officer to follow?

1. Shareholders wealth maximization.

2. Short-term profit maximization.

3. Sales and net income maximization.

4. Free cash flow maximization.

5. none of the answers is correct.

When Ultra Petroleum Corp. emerges from bankruptcy protection in the coming weeks, as expected, the natural gas producer's chief executive is on track to be rewarded with roughly $35 million worth of its stock, more than 10 times his annual compensation in recent years.

Michael Watford, the CEO, and other employees at the Houston company are sharing 7.5% of the Ultra's new shares, a fairly typical cut awarded to managers of companies emerging from bankruptcy protection to incentivize them to stick around. Bankrupt companies usually issue new stock when they emerge from bankruptcy, replacing their old shares.

What's unusual in Ultra's case is the size of the pie from which that slice is coming: The company's postbankruptcy equity value has been set at about $4 billion, meaning that its employees are due some $300 million of stock, 40% of it to be doled out the day its new shares are launched, according to court filings and people familiar with the matter. The rest would be distributed at the discretion of its board.

While Ultra Petroleum Corp. emerges from bankruptcy protection, Michael Watford, the CEO of the company, will be rewarded with roughly $35 million worth of its stock. Do you think this is consistent with the firm’s goal?

1. The amount of the award is outrageous, and it is inconsistent with the sales maximization goal.

2. none of the answers is correct.
3. There's more to Uber IPO flop than meets the eye: It’s clear now that Uber Technologies Inc’s initial public offering will be left with a less than five-star review. The stock remains below its IPO price, and many people have heaped fault on the bankers who told executives that Uber could be worth $120 billion.

4. Even though the amount awarded is outrageous, the incentivizing top managers with bonuses is consistent with the shareholders wealth maximization goal.

5. Even though the amount awarded is outrages, the incentivizing top managers with bonuses is consistent with the shareholders sales maximization goal.

6. The amount of the award is outrageous, and it is inconsistent with the shareholders wealth maximization goal.

Byers, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $1,680,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1,950,000 in annual sales, with costs of $1,060,000. The project requires an initial investment in net working capital of $150,000, and the fixed asset will have a market value of $175,000 at the end of the project. Assume that the tax rate is 34 percent and the required return on the project is 14 percent.

At the annual meeting shareholders voted for reinvesting the company's profit without paying dividents. What are the causes/ reasons & expected effects of buying common shares ? Write three causes/reasons and three effects.

Parramore Corp has $19 million of sales, $2 million of inventories, $2.75 million of receivables, and $2 million of payables. Its cost of goods sold is 85% of sales, and it finances working capital with bank loans at a 7% rate. Assume 365 days in year for your calculations.

A. What is Parramore's cash conversion cycle (CCC)? Do not round intermediate calculations. Round your answer to two decimal places.
days

B. 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

C. 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? Write out your answer completely. For Example, 13.2 million should be entered as 13,200,000. Do not round intermediate calculations. Round your answer to the nearest dollar.
$  

D. 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? Write out your answer completely. For Example, 13.2 million should be entered as 13,200,000. Do not round intermediate calculations. Round your answer to the nearest dollar.
$  

Part Two

hastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Chastain's 2019 sales (all on credit) were $235,000, its cost of goods sold is 80% of sales, and it earned a net profit of 5%, or $11,750. It turned over its inventory 5 times during the year, and its DSO was 31.5 days. The firm had fixed assets totaling $32,000. Chastain's payables deferral period is 45 days. Assume 365 days in year for your calculations.

1. Calculate Chastain's cash conversion cycle. Do not round intermediate calculations. Round your answer to two decimal places.
   days
2. 
   
3. Assuming Chastain holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Do not round intermediate calculations. Round your answers to two decimal places.
   

   Total assets turnover:
   ROA:		%

4. 
   
5. Suppose Chastain's managers believe that the inventory turnover can be raised to 9.1 times. What would Chastain's cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9.1 for 2019? Do not round intermediate calculations. Round your answers to two decimal places.
   

   Cash conversion cycle:		days
   Total assets turnover:
   ROA:		%

1. The management of Oodles of Noodles Inc. is contemplating a 30% stock dividend. The company currently has cash of $250,000, fixed assets of $5 million, and debt of $3 million. Its net income for the most recent fiscal year was $800,000. The company’s shares are currently selling for $25 per share, and it has 1 million shares outstanding. Assume that there are no costs associated with issuing a stock dividend.        

a.   What would be the effect of such a stock dividend on the following?

i.    Number of shares outstanding                                                          (1 mark)

ii.   Earnings                                                                                                  (1 mark)

iii. Market value of cash                                                                                       (1 mark)

iv. Market value of equity                                                                        (1 mark)

v.   Share price                                                                                          

vi. Earnings per share (EPS)                                                                

vii. Price-earnings ratio (P/E)                                                                          

viii.            Shareholders’ wealth                                                                                    

b.   If the company’s management would like to hold its EPS within the range of 0.7‑0.9, should the company go ahead with the stock dividend?                  (1 mark)

c.   If the company’s shareholders only care about their wealth and the P/E ratio, should the company go ahead with the stock dividend?                              (1 mark)

An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 12% annual coupon. Bond L matures in 19 years, while Bond S matures in 1 year. Assume that only one more interest payment is to be made on Bond S at its maturity and that 19 more payments are to be made on Bond L. What will the value of the Bond L be if the going interest rate is 5%? Round your answer to the nearest cent. $ What will the value of the Bond S be if the going interest rate is 5%? Round your answer to the nearest cent. $ What will the value of the Bond L be if the going interest rate is 9%? Round your answer to the nearest cent. $ What will the value of the Bond S be if the going interest rate is 9%? Round your answer to the nearest cent. $ What will the value of the Bond L be if the going interest rate is 12%? Round your answer to the nearest cent. $ What will the value of the Bond S be if the going interest rate is 12%? Round your answer to the nearest cent. $ Why does the longer-term bond’s price vary more than the price of the shorter-term bond when interest rates change? Long-term bonds have greater interest rate risk than do short-term bonds. The change in price due to a change in the required rate of return decreases as a bond's maturity increases. Long-term bonds have lower interest rate risk than do short-term bonds. Long-term bonds have lower reinvestment rate risk than do short-term bonds. The change in price due to a change in the required rate of return increases as a bond's maturity decreases. Grade It Now Save and Continue Continue without saving

Excel Online Structured Activity: Bond valuation An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000, and has a yield to maturity of 9.1%. Bond C pays a 10.5% annual coupon, while Bond Z is a zero coupon bond. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet Assuming that the yield to maturity of each bond remains at 9.1% over the next 4 years, calculate the price of the bonds at each of the following years to maturity. Do not round intermediate calculations. Round your answers to the nearest cent. Years to Maturity Price of Bond C Price of Bond Z 4 $ $ 3 $ $ 2 $ $ 1 $ $ 0 $ $

Problem 4-16
Future Value for Various Compounding Periods

Find the amount to which $550 will grow under each of the following conditions. Do not round intermediate calculations. Round your answer to the nearest cent.

1. 9% compounded annually for 5 years
   $   
   
2. 9% compounded semiannually for 5 years
   $   
   
3. 9% compounded quarterly for 5 years
   $   
   
4. 9% compounded monthly for 5 years
   $  

McGriff Dog Food Company normally takes 24 days to pay for average daily credit purchases of $9,950. Its average daily sales are $10,060, and it collects accounts in 32 days. a. What is its net credit position?

b-1. If the firm extends its average payment period from 24 days to 40 days (and all else remains the same), what is the firm's new net credit position? (Negative amount should be indicated by a minus sign.)

b-2. Has the firm improved its cash flow? Yes No

Your firm bought a new sanding machine for its factory floor two years ago for $40,000. The current market value (Year 0) of the machine is $10,000 and you believe that it will last 5 more years (Years 1 - 5). When you're done with the machine, you can sell it for scrap and receive $1,000. However, your firm is now considering buying a more advanced sander for $80,000. The more advanced machine also last 5 more years. The new machine will have a salvage value of $5,000. The more advanced sander will increase revenues by $50,000 a year and save the company $10,000 in labor costs each year when compared to the old machine. The appropriate discount rate for this project is 12% and the company's tax rate is 35%. Use straight-line depreciation (including the appropriate salvage values).

What is the NPV of replacing the old machine? Be sure you take into account the sale of the old machine (including the tax consequences of the sale) in Year 0. This problem is really all about carefully calculating the cash flows associated with this decision each year. Build a mini-income statement for each year and then take that income and turn it into free cash flow by taking into account depreciation.