Q4. When a Mexican distillery offers rebates to its current customers, what growth strategy is the company using? (0.5 points) (20-70 words)

Hand-to-Mouth (H2M) is currently​ cash-constrained, and must make a decision about whether to delay paying one of its​ suppliers, or take out a loan. They owe the supplier $ 12 comma 500 with terms of 2.4​/10 Net​ 40, so the supplier will give them a 2.4 % discount if they pay by today​ (when the discount period​ expires). ​ Alternatively, they can pay the full $ 12,500 in one month when the invoice is due. H2M is considering three​ options:

Alternative​ A: Forgo the discount on its trade credit​ agreement, wait and pay the full $ 12,500 in one month.

Alternative​ B: Borrow the money needed to pay its supplier today from Bank​ A, which has offered a​ one-month loan at an APR of 12.4 %. The bank will require a​ (no-interest) compensating balance of 4.6 % of the face value of the loan and will charge a $ 90 loan origination fee. Because H2M has no​ cash, it will need to borrow the funds to cover these additional amounts as well.

Alternative​ C: Borrow the money needed to pay its supplier today from Bank​ B, which has offered a​ one-month loan at an APR of 14.9 %. The loan has a 1.3 % loan origination​ fee, which again H2M will need to borrow to cover.

To provide a consistent frame of reference for the company’s financial statements and ratios, assume that the following balance sheet and income statement reflect the company’s pre-transaction condition and performance.

Phoenix Golf Club Co.’s Pre transaction Statement of Financial Condition

¹Cost of goods sold equals 40% of sales.

²Interest expense equals 6% of the combined notes payable and long-term debt balances.

³The average federal and state tax rate is 35%.

Indicate if any of the listed financial statement accounts is affected by the following business transactions and whether the listed ratios will increase, decrease, or remain unchanged as a result of the transaction. (Hint: Assume that the business transaction occurs exactly as stated without interpreting it further. Do not consider any related transactions that may occur before or after the specified transaction. Assume there are 365 days in a year.)

Business Transaction 1

Phoenix Golf Club Co. (PGC) sells 25,000 shares of new common stock ($1 per share par value) to new and existing shareholders for $20 per share.

Business Transaction 2

Phoenix Golf Club Co. (PGC) switches from holding an available inventory to a just-in-time inventory system, thereby reducing its inventory by 80.00%.

Venture capital financing is a type of funding which assembles cash from investors and lends it to startup businesses that have high potential for success. Venture capital investments usually encompass very high risk; however, the reward has the potential to exceed the risk. The process for acquiring venture capital financing sometimes is complicated, but generally there are five stages in the process of procuring venture capital financing.

• Discuss the five main stages in the process of venture capital financing.

n this unit we learned to conduct a retirement needs analysis taking into account various assumptions such as inflation rate, retirement period, life expectancy, income sources, and other variables, and determine financial needs during the accumulation and retirement period. Lets extend the discussion by examining the practical implications of these concepts. TIAA-CREF has an excellent site that provides a consider- able amount of information on retirement planning and retirement options. Visit the site at tiaa-cref.org click on the What We Offer tab, and examine the information in the Retirement section.

Why do firms have trouble managing their cash flow? What events cause a cash flow crisis?

Budgeting

Describe your company's annual budget process.

• What is your involvement in the process?
• What works well? What doesn't work?
• If you were CEO/CFO, what changes would you make and why?
• How would you communicate to employees the value that the process brings to the business?

Indicate and Discuss how will be affected the prices (and the yields) of the next Bonds (no calculations required) i. US Treasury Bonds with Moderate GDP Growth ii. German Government Bonds with Higher than expected GDP Growth iii. Investment Grade Corporate Bonds with Terrorist attack in London, NY. iv. Spanish, Italian and Portuguese Bonds with EU Debt Crisis v. High Yield Corporate Bonds with US Debt out of control due to Trump cutting Taxes.

Business and Corporations Law

5. Larry Large started a business in early 2001 involving direct marketing of a range of garden products. He operated through a proprietary company, Large Larry Pty Ltd. The business was quite successful, aided apparently by a media campaign featuring Larry himself. In 2017 he decided to dramatically expand the business and to change the operation from direct marketing to distribution of products through various retail outlets. In that year he converted the proprietary company into a public company (Large Larry Ltd). He now wants to raise $15 million in additional funds to assist with the expansion and also to retire some debt. One option that is being considered is to offer shares in Large Larry Ltd to a number of large institutional investors. An alternative option is to float the business, that is offer the shares to the public and apply for listing on the Australian Stock Exchange (ASX). Larry is very upbeat about the company’s prospects. He believes that with favourable economic conditions the company will double in size within a year. He approaches you and asks you to advise him on the following matters:

a) What are the implications under Chapter 6D of the Corporations Act of the two fundraising options being considered?

b) If a decision is made to carry out a float, what type of disclosure document will be required and what type of information must it contain?

c) If the offer document includes forecasts consistent with Larry’s view concerning the prospects of the company, what consequences could follow if the forecasts are not met?

There are four zero-coupon Treasury bonds as follows: Maturity (years) Price ($) 0.5 979.43 1.0 955.54 1.5 928.60 2.0 897.17 Assume that the face values are $1000 for all the bonds. (a) Determine the quasi-modified duration for the given 1.0-year zero-coupon bond. (Keep 2 decimal places, e.g. xx.12) (b) The price for a 2-year Treasury note with semi-annual coupon payments is $ 987.42. Find the annual coupon rate for the note, and hence determine its quasi-modified duration. Coupon rate: % (Keep it in percentage format with 2 decimal places, e.g. xx.12%) Qusi-modified duration: (Keep 2 decimal places, e.g. xx.12)

1) You visited Switzerland over summer and brought back 3,722.25 swiss francs to the United States. How many U.S. dollars will you get if you exchange your swiss francs for U.S. dollars? The exchange rate is 1 U.S dollar = 1.0147 swiss francs.

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

2) Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.224 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 1.1651 euros. What is the cross-rate of Swiss francs to euros (SF/Euro)?

Enter your answer rounded off to FOUR decimal points.

3) ABC Company sells 2,412 chairs a year at an average price per chair of $182. The carrying cost per unit is $22.78. The company orders 344 chairs at a time and has a fixed order cost of $113.3 per order. The chairs are sold out before they are restocked. What are the total shortage costs?

Enter your answer rounded off to two decimal points. Do not enter comma or $ in the answer box. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

Assume that the 1-year zero-coupon bond is sold at $88.97 and the yields to maturity for the coupon bonds selling at market prices equal to their face values are 12% and 14% for 1-year and 1.5-year issues respectively. Coupons are paid every 6 months and face values are $100 for all the bonds.

(a) Calculate the spot rate curve (s_0.5, s₁, s_1.5).

(Keep your answer in decimal format 4 decimal places, e.g. 0.1234. Do not give in percent format e.g. 12.34%.)

     s_0.5:     s₁:      s_1.5 :

(b) Compute the quasi-modified duration for each of these bonds. (Keep 2 decimal places, e.g. xx.12.)

     Zero-coupon bond:

    12% coupon bond:  

    14% coupon bond:  

(c)  Determine the current price of an 10% coupon bond with face value $100 and 18 months to maturity. (Keep 2 decimal places, e.g. xx.12.)

Structured Product Explanation

Find a derivative or structured product from any issuer and explain it in plain English. Having done so, state the problems you may have encountered in conveying the features to a client.

The successful submission will clearly and concisely explain the product in a manner appropriate for a retail client who is intelligent but not experienced with investments.

FINANCIAL ANALYSIS
The extracts of the financial statements of Micanfin Auto Spares (Pvt) Limited for 2017 are provided
below:
Extract of the Statement of Comprehensive Income for the year ended 31 December 2017.
Sales (credit) 1 288 000
Less cost of sales 650 000
Gross profit 638 000
Less Operating expenses 360 000
Operating profit 278 000
Less interest expense 70 000
Profit before tax 208 000
Profit after tax 180 000
Extract of Statement of Financial Position as at 31 December 2017.
Non-current assets 1 140 000
Inventories 266 000
Debtors 300 000
Bank 220 000
Total assets 1 926 000
Ordinary share capital 1 000 000
Retained earnings 482 000
Non-current liabilities 240 000
Creditors 215 000
Total liabilities 1 926 000
Required:
Calculate the following ratios for 2017. Where applicable, answers must be rounded off to two decimal places.
Profit margin
Interest cover
Debtors collection period
Current ratio
Acid test ratio
Return on own capital

16-11

Mercury Air’s debt consists of $50,000 in accounts payable, $100,000 in 10 percent notes payable. And $240,000 in 8 percent bonds. Mercury has no preferred stock. If its marginal tax rate is 35 percent, what is Mercury’s financial breakeven point?

16-14

Stumpy’s Gator Farm forecasts that its net income will be $46,800 this year. The firm’s marginal tax rate is 35 percent, and it must pay $36,000 interest on outstanding debt. Stumpy’s has no preferred stock. What is the firm’s degree of financial leverage (DFL)?