Name at least two changes brought about by Sarbanes Oxley (SOX) Act of 2002.

Explain what technical analysis is and how you can use it to make an investment decision. Please provide examples to illustrate your points and any website visited.

The most likely outcomes for a particular project are estimated as follows:

However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 5% higher or 5% lower than the initial estimate. The project will last for 10 years and requires an initial investment of $1.1 million, which will be depreciated straight-line over the project life to a final value of zero. The firm’s tax rate is 40% and the required rate of return is 14%.

b. What is project NPV in the worst-case scenario? (A negative amount should be indicated by a minus sign. Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearest dollar amount.)

Under what circumstances if any, can the Tax Court have jurisdiction over petitioner’s overpayment of tax? Explain how this can occur – give an example that you can see happening with a client. Is there a benefit to the Tax Court having jurisdiction over the overpayment?

Maria Bakery is considering a 3-year project with an initial cost of $93,000. The project will not directly produce any sales but will reduce operating costs by $31,000 a year. The equipment is classified as MACRS 7-year property. The MACRS table values are .1429, .2449, .1749, .1249, .0893, .0892, .0893, and .0446 for Years 1 to 8, respectively. At the end of the project, the equipment will be sold for an estimated $43,270. The tax rate is 34 percent and the required return is 10 percent. An extra $12,000 of inventory will be required for the life of the project. What is the total cash flow for Year 3?

6. You are considering the purchase of a $250,000 house using a regular fixed rate mortgage loan with a 20% down payment; what is the monthly payment (not including taxes and insurance) using a 30-year (5.0%), 20-year (4.50%), and a 15-year (4.00%)? How much total interest would you pay using the three different loans over the course of the loan? What are the reasons you would consider using a 5/1 adjustable rate mortgage? Would it be beneficial in today’s current interest rate environment to consider using an ARM?

1. Explain the difference between the Dow Jones Industrial Average index, NASDAQ, and S&P 500 index. What is the current price for each and how has each changed since the start of the class? What is the current stock price of Google and Chipotle, and would you consider investing in either company? Why or why not?

Satriale uses 145,600 switches per year (or 2,800 per week) and currently orders 2,800 weekly (assume they are delivered immediately). If the carrying cost per switch is $6.20 and the fixed order cost is $1,200, is the company’s inventory policy optimal? What is the economic order quantity they should use? How much money will they save by changing their ordering behavior to that quantity compared to what they are spending now?

Capital Structure Analysis

The Rivoli Company has no debt outstanding, and its financial position is given by the following data:

The firm is considering selling bonds and simultaneously repurchasing some of its stock. If it moves to a capital structure with 30% debt based on market values, its cost of equity, r_s, will increase to 11% to reflect the increased risk. Bonds can be sold at a cost, r_d, of 7%. Rivoli is a no-growth firm. Hence, all its earnings are paid out as dividends. Earnings are expected to be constant over time.

1. What effect would this use of leverage have on the value of the firm?
   I. Increasing the financial leverage by adding debt results in an increase in the firm's value.
   II. Increasing the financial leverage by adding debt results in a decrease in the firm's value.
   III. Increasing the financial leverage by adding debt has no effect on the firm's value.
   -Select-IIIIIIItem 1
   
2. What would be the price of Rivoli's stock? Do not round intermediate calculations. Round your answer to the nearest cent.
   $   per share
   
3. What happens to the firm's earnings per share after the recapitalization? Do not round intermediate calculations. Round your answer to the nearest cent.
   The firm -Select-increaseddecreasedItem 3 its EPS by $   .
   
4. The $500,000 EBIT given previously is actually the expected value from the following probability distribution:

   Probability	EBIT
   0.10	($ 110,000)
   0.20	250,000
   0.40	450,000
   0.20	850,000
   0.10	1,110,000

   
   Determine the times-interest-earned ratio for each probability. Use a minus sign to enter negative values, if any. Do not round intermediate calculations. Round your answers to two decimal places.

   Probability	TIE
   0.10
   0.20
   0.40
   0.20
   0.10

   
   What is the probability of not covering the interest payment at the 30% debt level? Do not round intermediate calculations. Round your answer to two decimal places.
   
     %

On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from Builders, Inc. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $545,210 over a 4-year lease term (also the asset’s useful life), payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's incremental borrowing rate is 10.0%, the same rate Builders used to calculate lease payment amounts. Builders manufactured the equipment at a cost of $3.2 million. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1. Determine the price at which Builders is “selling” the equipment (present value of the lease payments) at June 30, 2021.
2. What amount related to the lease would Builders report in its balance sheet at December 31, 2021 (ignore taxes)?
3. What line item amounts related to the lease would Builders report in its income statement for the year ended December 31, 2021 (ignore taxes)?
(For all requirements, enter your answers in whole dollars and not in millions. Round your final answer to the nearest whole dollar.)

1. What is the value of a semi-annual pay 9% coupon bond 2 years from now that was bought in 2019 and matures in 15 years if rates go to 10% in 2 years.

1. 1000
2. 923
3. 928
4. 965

Your firm may purchase certain assets from a struggling competitor. The competitor is asking $50,000,000 for the assets. Last year, the assets produced revenues of $15,000,000. Revenues earned in the next year (i.e., year 1) and in future years are estimated using the information in the table below.

Your staff expects that the following assumptions will hold over the operating period:

• The assets will be viable for another 10 years but will be worthless at the end of the 10 year period
• The assets are qualified by the IRS for depreciation using the straight-line method
• A constant tax rate of 20%

Your staff has also identified three key areas of uncertainty, which include

For this case, address the following goals (each goal should be shown in a separate worksheet in an Excel workbook; provide labels on each worksheet):

Goal 1- Develop the annual pro forma after-tax cash flow statement for each scenario.

Goal 2- Calculate the NPV and IRR for each scenario. Within the Goal 2 worksheet, discuss/interpret the NPV and IRR values that you have calculated in terms of whether the acquisition should be accepted or rejected.

Goal 3- Use the probability distribution given along with your estimates from Goals 1 and 2 to calculate the expected value of the NPV and IRR for acquiring the assets. Interpret the expected values for both capital budgeting measures (compare your estimate of the expected value of the IRR to a benchmark IRR of 14.8%).

Goal 5- Discuss three ways in which your financing modeling assumptions may be incorrect and state the associated impact on the ATCFs, NPV and IRR. Your discussion should be at least 250 words. Proof read before submitting.

Is exchange rate is an important factor in capital decision making by Multinational Company?

How can future appreciation/depreciation of the currency of a parent company affect the value of a project established in another country. Relative cost (Ignore possible exchange rate effects.) (10marks)

Eddy Ltd is considering investing in a project at a cost of N$3 000 000. The estimated economic life of the project is 5 years. The company will use the straight-line method to depreciate the cost of the project over 5 years. The company estimates that sales will amount to 240 000 units per year at an estimated selling price of N$40 per unit. The company expects to incur fixed overheads, excluding depreciation of N$300 000 per year and variable cost per unit is N$30. The company cost of capital is 11% and the corporate tax rate is 28%. The expected residual value of the project in 5 years’ time is expected to be zero.

Required:

a) Use the sensitivity analysis to determine what the NPV of the project would be if selling price, sales volume, and variable cost per unit are increased or reduced by 10%.

b) Use break-even analysis to determine the minimum sales volume that the company is required to achieve to break-even in terms of NPV.