Calculate a​ one-year holding period return​ (HPR) for the following two investment​ alternatives: Which investment would you​ prefer, assuming they are of equal​ risk? Explain. The HPR for investment X is nothing​%. ​ (Enter as a percentage and round to two decimal​ places.)

Question 1

Comparative statement data for Whispering Company and Metlock Company, two competitors, appear below. All statement of financial position data are as of December 31, 2017, and December 31, 2016.

Prepare a vertical analysis of the 2017 income statement data for Whispering Company and Metlock Company in columnar form. (Round percentages to 1 decimal place, e.g. 12.1%. Enter all percentages as positive numbers.)

You just won the $87 million Ultimate Lotto jackpot. Your winnings will be paid as $2,900,000 per year for the next 30 years. If the appropriate interest rate is 6.2 percent, what is the value of your windfall?

You are an investor who bought 100 shares of a company at $35 per share with a stock on margin of 60%. The stock is now trading at $50 per share, and the initial margin require- ments has been lowered to 50%. You now want to buy 300 more shares of the stock. What is the minimum amount of equity that you will have to put up in this transaction?

Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly.

Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with two years to maturity has a coupon rate of 3%. The yield to maturity (YTM) of the bond is 11.00%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:

$859,794.00

$730,824.90

$541,670.22

$1,031,752.80

Based on your calculations and understanding of semiannual coupon bonds, complete the following statements: • Assuming that interest rates remain constant, the T-note’s price is expected to_______ .

• The T-note described is selling at a_________.

• When valuing a semiannual coupon bond, the time period variable (N) used to calculate the price of a bond reflects the number of_________ periods remaining in the bond’s life.

JPJ Corp has sales of $ 1.05 ​million, accounts receivable of $ 52,000​, total assets of $ 5.13 million​ (of which $ 2.76 million are fixed​ assets), inventory of $ 154,000​, and cost of goods sold of $ 603,000. What is​ JPJ's accounts receivable​ days? Fixed asset​ turnover? Total asset​ turnover? Inventory​ turnover?

Relative Valuation Methods with Price Multiples:

1. Price-to-Sales Ratio
2. Price-to-Cash Flow Ratio
3. Price-to-Book Ratio

What are the benefits and disadvantages of these methods?

Would you ever use any of them as stand alone valuation methods of a target company?

Using the information provided in the following table, find the value of each asset.

In December 2015​, Apple had cash of $37.98 billion, current assets of $76.66 billion, and current liabilities of $76.12 billion. It also had inventories of $2.45 billion.

a. What was​ Apple's current​ ratio?

b. What was​ Apple's quick​ ratio?

c. In January 2016​, ​Hewlett-Packard had a quick ratio of 0.66 and a current ratio of 0.90

What can you say about the asset liquidity of Apple relative to​Hewlett-Packard?

The 2015 income statement for Egyptian Noise Blasters shows that depreciation expense is $82 million, NOPAT is $245 million. At the end of the year, the balance of gross fixed assets was $660 million. The change in net operating working capital during the year was $72 million. Egyptian’s free cash flow for the year was $190 million.

Calculate the beginning-of-year balance for gross fixed assets. (Enter your answer in millions of dollars.)

The 2013 balance sheet of Maria's Tennis Shop, Inc., showed long-term debt of $1.9 million, and the 2014 balance sheet showed long-term debt of $2.6 million. The 2014 income statement showed an interest expense of $655,000. During 2014, Maria’s Tennis Shop, Inc., had a cash flow to stockholders for the year of $321,000. Suppose you also know that the firm’s net capital spending for 2014 was $855,000, and that the firm reduced its net working capital investment by $76,000 What was the firm’s 2014 operating cash flow, or OCF?

Part 1.

Considering his analysis of similar services and to keep things simple, W.T. plans to price all jobs the same and charge $15 per job. Because of this flat rate, he anticipates he’ll likely need to create different types of “jobs”. For example, purchasing a list of items at the grocery store would be one job, while a bundle of 2-3 small errands such as picking up dry cleaning and prescriptions, might be considered one job. We’ll deal with those details later. For now, assume that all jobs are priced at $15 each and all have the associated variable expenses listed above.

Because this will be a new business, W.T. knows business will likely be slow at the beginning. Complete the following table assuming W.T. completes 10 jobs in a single month.

Part 2

Yikes! He’ll clearly have to complete more than 10 jobs. W.T. needs to be able to at least cover his costs. Still using the preliminary estimates provided, how many jobs would W.T. have to complete to break even? What would that be in dollars?

(1) Contribution margin:

(2) Break-even point in units:

Note: W.T. won’t be paid if he only completes part of a job.

(3) Break-even point in sales:

Check your work:

Part 2

Yikes! He’ll clearly have to complete more than 10 jobs. W.T. needs to be able to at least cover his costs. Still using the preliminary estimates provided, how many jobs would W.T. have to complete to break even? What would that be in dollars?

(1) Contribution margin:

(2) Break-even point in units:

Note: W.T. won’t be paid if he only completes part of a job.

(3) Break-even point in sales:

Part 3

That number of jobs seems doable to W.T. But the whole reason he’s going into business is to make a profit. Otherwise, he’ll end up using all of his savings and he definitely doesn’t have enough to last the entire school year. W.T.’s parents help him cover a number of his expenses, but he needs to generate at least $400 per month to avoid having to use any savings.

How many jobs would W.T. need to complete to earn $400? What would that be in dollars?

(1) Sales volume to earn desired profit (in units):

Remember: W.T. can’t complete just part of a job.

(2) Sales volume to earn desired profit (in dollars):

Check your work:

Question: Why isn’t the profit exactly $400?

Explain in your own words the tax policy reason behind section 118-195 Income tax Assessment Act 1997 with respect to deceased estates. In so doing discuss why the commissioner has been given the discretion to extend the two year period . Your answer must be supported by reference to legislation case law and tax rulings if any... note: Australian taxation law

Excel assignment

• Prepare an amortization table for a 30-year mortgage where the homeowner is borrowing $170,000 at a 3.75% interest rate. In addition to the monthly table, provide a summary table showing the interest paid, principal paid, and ending balance on a yearly basis. Create three separate graphs illustrating interest paid over time, principal paid over time, and ending balance over time for the 30 annual periods in the summary table.

• Repeat the analysis, changing the interest rate to 8.75% and comment (briefly) on the impact of mortgage rates on home affordability.