1.A data analytics company wants Short Stop to provide a new client billing process which integrates their current customers with new payment options as well as technical information. The payment for Short Stop’s services would be structured with the specific payments to be $400,000 immediately, a further $300,000 at the end of the 2nd year, $500,000 at the end of the 4th year and $1,000,000 on completion, at the end of the 7th year.
The paid monies can be invested at a nominal rate of 9% p.a. compounded monthly.
To complete the desired work, Short Stop would have to purchase additional computers and data sources immediately which are valued at $1,500,000.
In determining if this project is a viable project for Short Stop, your manager wants you to provide a detailed information on the differences between the effective rate of return and a nominal rate. In what circumstances can we use these to evaluate different investment opportunities?
2. As information becomes increasingly available, additional storage is needed for the handling of client’s insurance capacities. Short Stop is looking to modernise the hardware in which they store the data. Under the proposed idea, Short Stop would purchase dedicated virtual servers and cloud storage which costs $50,000 per year, indefinitely, from the end of year 2 onward (as it takes a year to implement this change). If implemented, this would result in an immediate cost saving of $500,000. Short Stop has estimated that it could invest this money elsewhere, as an alternative, at 8% p.a.
From a business perspective, describe the concept of time value of money in such a way that your description sheds light on how businesses come to financial investment decisions or how investments today can be valued in the future. In the discussion, your manager wants a clear description on the benefits of this concept for the business (or any business).
3. The company has an opportunity to purchase a small company (Trek Travel) which will augment the current operations of the company. The cash flows from the company are variable as it is still a growing company. The owners of the company have indicated that they would be willing to sell the company to Short Stop for $2 million dollars. An independent accountant has reviewed Trek Travel’s annual statements and has estimated the future (yearly) cash flows from its operations to be:
Yr 1: -$100,000, Yr 2: $300,000, Yr 3: $500,000, Yr 4: $600,000, Yr 5: $800,000 and Yr 6: $1,100,000.
Short Stop requires a rate of return of 9% p.a. for an investment of this kind.
As this project is the purchase of another company, your manager wishes for you to explain the objective of maximising / enhancing shareholder wealth. How would the managers of a company achieve this goal?

4. The last project involves rolling out a personal finance advisory platform and includes the servicing and maintenance of the platform. There are two competing clients who would purchase the platform, however due to legal, licensing and competition restrictions, Short Stop can only sell the platform to one of the clients.
The first client is offering a payment structure comprising of quarterly payments of $200,000 over a 6-year period, starting at the end of the 1st quarter.
The second client is offering a different payment structure compromising monthly payments of $60,000 over the 6-year period. Additionally, they will pay $30,000 at the start of each year for 6 years, starting immediately.
Short Stop estimates that the personal finance advisory platform can be created from current embedded systems and augmented with other applications. The required computing hardware can be delivered and installed immediately after the client has been approved, at a cost of $3 million to Short Stop. As such, the rollout of the project can be completed immediately after the choice of client.
Given a required rate of return on a project such as this is a nominal 12% p.a., your manager wishes you to advise on which client Short Stop should choose to maximise value.
Given that the clients offering to pay for the personal finance advisory platform are providing payment plans that are regular, detail using diagrams if needed, how payments received at the beginning of a period differ from payments received at the end of a period. Provide some discussion on the present value and future value of these types of cash flows in terms of how they are calculated

Dorothy Koehl recently leased space in the Southside Mall and opened a new business, Koehl's Doll Shop. Business has been good, but Koehl frequently run out of cash. This has necessitated late payment on certain orders, which is beginning to cause a problem with suppliers. Koehl plans to borrow from the bank to have cash ready as needed, but first she needs a forecast of how much she should borrow. Accordingly, she has asked you to prepare a cash budget for the critical period around Christmas, when needs will be especially high.

Sales are made on a cash basis only. Koehl's purchases must be paid for during the following month. Koehl pays herself a salary of $4,400 per month, and the rent is $2,800 per month. In addition, she must make a tax payment of $13,000 in December. The current cash on hand (on December 1) is $850, but Koehl has agreed to maintain an average bank balance of $4,500 - this is her target cash balance. (Disregard the amount in the cash register, which is insignificant because Koehl keeps only a small amount on hand in order to lessen the chances of robbery.)

The estimated sales and purchases for December, January, and February are shown below. Purchases during November amounted to $130,000.

1. Prepare a cash budget for December, January, and February.

   I. Collections and Purchases:
   	December	January	February
   Sales	$	$	$
   Purchases	$	$	$
   Payments for purchases	$	$	$
   Salaries	$	$	$
   Rent	$	$	$
   Taxes	$	---	---
   Total payments	$	$	$
   Cash at start of forecast	$	---	---
   Net cash flow	$	$	$
   Cumulative NCF	$	$	$
   Target cash balance	$	$	$
   Surplus cash or loans needed	$	$	$

   
   
2. Suppose Koehl starts selling on a credit basis on December 1, giving customers 30 days to pay. All customers accept these terms, and all other facts in the problem are unchanged. What would the company's loan requirements be at the end of December in this case? (Hint: The calculations required to answer this part are minimal.)
   $

Problem Set 1 You are the owner of a large data-services firm and are deciding on the purchase of a new hardware cooling system that you expect will yield $233,300 in cost-savings per year for the next 15 years. The installation of this cooling system will cost $3,000,000.

1. At face value, does this system seem profitable? By how much?

2. Assume that your company uses a discount rate of 6%.

a. What is the Net Present Value (NPV) of this project?

b. How does the NPV of this project change as you assume a higher or lower discount rate? Why?

c. What is the IRR/ROI of this project?

d. How much should the yearly cost-savings be in order to break even? i. (hint) use goal-seek/what-if analysis

3. Suppose that you decide to finance the purchase of this system through a loan from the bank. The bank is willing to loan this money over an 8 year term at an interest rate of 4% per year.

a. Using a 70/30 debt-to-equity ratio, what is the NPV of this project? i. (hint) calculate the yearly payment using excel function “PMT”

b. How does the NPV of this project change if a larger portion is financed through equity (e.g. debt-to-equity ratio of 60/40)? Why?

Finance is exciting! In this course, we learned how money can grow through the use of compounding and interest rates and your growth strategies may now be different. What are your new financial goals? Would you like to become more liquid, to save more for your retirement, or to start a new business? Whatever your goals, finance is right at the core. Think about what you learned in this course regarding investing to complete this assignment.

Write a two to three (2-3) page paper in which you:

1. Describe (3) ways you will invest in your future based on the principles of finance discussed in this course. Include terminology from the course and use citations as necessary to support your explanation of the terminology.
2. Discuss one of the (3) ways you feel most confident as a way to invest in your future. Explain your level of confidence.
3. Of the (3) ways you will invest in your future, discuss the one you perceive might be the most challenging. Then, discuss how you might overcome some of those challenges.

the stock price is currently $80. The stock price annual up-move factor is 1.15. The risk free rate is 3.9%. Compute the value of a 2 year European call option with an exercise price of $62 using a two-step binomial model

Jeremy earned $100,000 in salary and $6,000 in interest income during the year. Jeremy’s employer withheld $11,000 of federal income taxes from Jeremy’s paychecks during the year. Jeremy has one qualifying dependent child who lives with him. Jeremy qualifies to file as head of household and has $23,000 in itemized deductions.

Determine Jeremy’s tax refund or taxes due.

The Price is Right! Utilizing 1 of these public companies—Target, Coke, Pepsi, Wal-Mart, or J. P. Morgan—determine the right price for that company’s stock in the following 5 easy steps: Visit this Web site. Type in your selected company’s name in the Quote Search box, and select your company's stock symbol. Jot down the current stock price. Select the Analysis tab, and find the Analyst Recommendation box. Jot down the stock’s Earnings Per Share (EPS) Estimate. Select the Price Ratios tab, and jot down the current Price to Earnings Ratio (P/E) for the industry (not the company). Using the PE valuation model to determine the right price for this stock, multiply the industry average P/E ratio by the stock’s EPS to estimate the intrinsic price of the stock. Answer the following questions: Is this stock overvalued or undervalued when compared to the current stock price? What are the analysts’ recommendations for this stock (buy, sell, or hold)? Do you agree with them? Would you consider purchasing this stock? Why?

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.