The December 31, 2019, balance sheet for Baird Corporation is presented here. These are the only accounts on Baird’s balance sheet. Amounts indicated by question marks (?) can be calculated using the following additional information:

Required

1. Compute the balance in trade accounts payable as of December 31, 2019.
2. Compute the balance in retained earnings as of December 31, 2019.
3. Compute the balance in the inventory account as of December 31, 2019. (Assume that the level of inventory did not change from last year.)

(For all requirements, negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

You have $9,000 to invest. You've done some security analysis and generated the following data for three stocks and Treasury bills, including weights in the optimal risky portfolio (ORP) from doing Markowitz portfolio optimization:

Part 1

What is the expected return of the optimal risky portfolio (ORP)?

Part 2

How much money should you invest in the ORP to achieve an expected return of 8% for the complete portfolio (in $)?

Part 3

If you want to achieve an expected return of 8% for the complete portfolio, how much money should you invest in stock A (in $)?

You bought Sumsung stock for $45 on April 1. The stock paid a dividend of $2 on July 1, and had a price of $55. It is now Oct. 1, and the stock price is $50. Treasury bills yield 1%.

1. What was the arithmetic average quarterly return?

2. What was the standard deviation of quarterly returns?

3. What's your best guess for the Sharpe ratio of Samsung stock for the next quarter?

The Woodruff Corporation purchased a piece of equipment three years ago for $230,000. It has an asset depreciation range (ADR) midpoint of eight years. The old equipment can be sold for $90,000.

A new piece of equipment can be purchased for $320,000. It also has an ADR of eight years.

Assume the old and new equipment would provide the following operating gains (or losses) over the next six years:

Question: The firm has a 25 percent tax rate and a 9 percent cost of capital. Should the new equipment be purchased to replace the old equipment? Explain your answer.

Prepare NOTES for the following essay question from a past Exam. Discuss the strengths and weaknesses of models which incorporate ratios that an analyst could use to predict financial distress

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Discuss the types of financial institutions involved in the financial market and the markets they serve. Be sure to distinguish between the primary and secondary markets and the money and capital markets.

● Discuss what it means when it is said that markets are “efficient” and include an explanation of whether this seems true today.

● Discuss the role of regulators in the financial market. Your discussion should include information about the importance of accounting as a key to the success of those regulators.

300 words

Which of the following sets of Excel entries will correctly solve this problem: Jim paid $167,000 for an old house to renovate. He spent an average of $1,998 per quarter over the next two years as he readied the renovated house for sale. He wants to set the price of the house high enough so that he will earn an annual rate of return of 10% for his investment. Given that information, what price should Jim set on the house?

A. NPER=8 RATE=2.5000% PV=(167,000) PMT=1998 solve for FV

B. NPER=8 RATE=2.5000% PV=($167,000) PMT=($1,998) solve for FV

C. NPER=2 RATE=10.0000% PV=($167,000) PMT=($7,992) solve for FV

D.  NPER=24 RATE=0.8333% PV=($167,000) PMT=($1,998) solve for FV

Businesses need to make a profit. Profit provides capital for expansion and a return on their investment to the owners of the business. Do businesses also need to generate cash? Can a business be profitable and yet run out of cash? What is characteristic of a business that generates lots of profits but doesn't have enough cash to operate.

how do brokerage firms make money through Trading profits on stocks and Trading profits on bonds

Sunburn Sunscreen has a zero coupon bond issue outstanding with a $21,000 face value that matures in one year. The current market value of the firm’s assets is $22,800. The standard deviation of the return on the firm’s assets is 26 percent per year, and the annual risk-free rate is 5 percent per year, compounded continuously.

Based on the Black–Scholes model, what is the market value of the firm’s equity and debt?

how do brokerage make their money in investment banking fees and mutual fees

Rentz Corporation is investigating the optimal level of current assets for the coming year. Management expects sales to increase to approximately $2 million as a result of an asset expansion presently being undertaken. Fixed assets total $3 million, and the firm plans to maintain a 50% debt-to-assets ratio. Rentz's interest rate is currently 8% on both short-term and long-term debt (which the firm uses in its permanent structure). Three alternatives regarding the projected current assets level are under consideration: (1) a restricted policy where current assets would be only 45% of projected sales, (2) a moderate policy where current assets would be 50% of sales, and (3) a relaxed policy where current assets would be 60% of sales. Earnings before interest and taxes should be 12% of total sales, and the federal-plus-state tax rate is 40%.

1. What is the expected return on equity under each current assets level? Round your answers to two decimal places.
   

   Restricted policy		%
   Moderate policy		%
   Relaxed policy		%

2. 
   
3. In this problem, we assume that expected sales are independent of the current assets investment policy. Is this a valid assumption?
   1. Yes, the current asset policies followed by the firm mainly influence the level of long-term debt used by the firm.
   2. Yes, the current asset policies followed by the firm mainly influence the level of fixed assets.
   3. No, this assumption would probably not be valid in a real world situation. A firm's current asset policies may have a significant effect on sales.
   4. Yes, this assumption would probably be valid in a real world situation. A firm's current asset policies have no significant effect on sales.
   5. Yes, sales are controlled only by the degree of marketing effort the firm uses, irrespective of the current asset policies it employs.
   
   -Select-IIIIIIIVVItem 4
4. 
   
5. How would the firm's risk be affected by the different policies?
   
   The input in the box below will not be graded, but may be reviewed and considered by your instructor.
   

Unlev Inc., an unlevered firm, has perpetual expected earnings before interest and taxes of $6.6 million per year, a tax rate of 34.00% and a beta of 1.5. The risk-free rate is 3.75% and the market risk-premium is 5.50%. Management is considering buying some of its stock back through an issue of debt. The firm will be issuing 5,280 bonds at a coupon rate of 7.00%. The face value of a bond = $1,000. The bonds will be offered at par.

a. What is the cost of equity of the unlevered firm?

b. What is the value of the unlevered firm?

c. What is the value of the levered firm?

d. What is the levered firm’s cost of capital?

e. Which firm (levered or unlevered) has the highest value? Discuss how leverage affects the value of a firm and whether it is optimal for firms to maintain a 100% leverage structure?

You just won the initial school of finance lottery! You have won $10,000 today, $20,000 five years from today, and $50,000 ten years from today. As an alternative, you can receive your winnings as a 15 year annuity with the first payment received ten years from today. If you require a 6% return on your investment, how much annuity pay you each for you to select that option?