CAP TABLES ASSIGNMENT:

Exhibits 2 and 3 are sensitivity analysis (i. higher initial investment, ii. longer time to exit)

“X” means some calculation or a number needs to be filled in that cell. Absence of “X” means no calculation/number is expected. Submit the above exhibits the way they are presented here showing all the calculations in appropriate column(s)

Bethesda Mining Company reports the following balance sheet information for 2018 and 2019. BETHESDA MINING COMPANY Balance Sheets as of December 31, 2018 and 2019 2018 2019 2018 2019 Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 63,014 $ 79,447 Accounts payable $ 187,422 $ 195,111 Accounts receivable 64,781 85,139 Notes payable 82,520 134,088 Inventory 117,852 182,862 Total $ 269,942 $ 329,199 Total $ 245,647 $ 347,448 Long-term debt $ 232,000 $ 168,750 Owners’ equity Common stock and paid-in surplus $ 223,000 $ 223,000 Accumulated retained earnings 179,352 216,427 Fixed assets Net plant and equipment $ 658,647 $ 589,928 Total $ 402,352 $ 439,427 Total assets $ 904,294 $ 937,376 Total liabilities and owners’ equity $ 904,294 $ 937,376 Calculate the following financial ratios for each year: a. Current ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Quick ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. Cash ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) d. Debt-equity ratio and equity multiplier. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) e. Total debt ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

What risks are associated with fixed interest securities, such as bonds? How do these risks differ with those associated with money market securities?

As a financial advisor you have a high wealth client who is thinking about making some life changes. Stanley is 50 (today is his birthday), and he want to retire at 65. He wants to put away the same amount of money every birthday (starting today) up to and including his 65th birthday. He then wants to be able to withdraw $100,000 every birthday (starting with his 66th) up to and including his 85th birthday.   He believes he can earn an average annual return of 9.5% by investing in higher risk investments over the next ten years, but will put it in a lower risk portfolio on retirement – which he thinks will earn 8%

A. Ignoring taxes, how much does Stanley need to save each year to achieve this objective?

B. As Stanley’s advisor you note that Japan has amongst the highest life expectancy in the world, and the average expectancy for males is 80.5 years?  You suggest to Stanley that he will spend less as he gets older is unlikely to need $100,000 a year for living from the age of 75 on – and advise that it would be more like $60,000. In this case what would Stanley’s revised annual saving need to be.

Tax credits are dollar-for-dollar reductions in taxable income.

Social security taxes are paid on earned income but not on investment income.

Dividends received from the stock you own will be taxable income.

Murray (age 68, single) just sold his home of 35 years so that he could relocate nearer his grandchildren. He realized a $400,000 capital gain on the home. How much of this gain will Murray have to pay taxes on?

Bethesda Mining Company reports the following balance sheet information for 2018 and 2019. BETHESDA MINING COMPANY Balance Sheets as of December 31, 2018 and 2019 2018 2019 2018 2019 Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 63,014 $ 79,447 Accounts payable $ 187,422 $ 195,111 Accounts receivable 64,781 85,139 Notes payable 82,520 134,088 Inventory 117,852 182,862 Total $ 269,942 $ 329,199 Total $ 245,647 $ 347,448 Long-term debt $ 232,000 $ 168,750 Owners’ equity Common stock and paid-in surplus $ 223,000 $ 223,000 Accumulated retained earnings 179,352 216,427 Fixed assets Net plant and equipment $ 658,647 $ 589,928 Total $ 402,352 $ 439,427 Total assets $ 904,294 $ 937,376 Total liabilities and owners’ equity $ 904,294 $ 937,376 Calculate the following financial ratios for each year: a. Current ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Quick ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. Cash ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) d. Debt-equity ratio and equity multiplier. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) e. Total debt ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

1. Gordon has been giving dance lessons for Elvira`s Studio for the last three years. He decides to strike out on his own and open his own dance studio. Discuss the relative merits of sole proprietorship and corporation. Which do you recommend?

2. After five years, the business has been growing steadily and Gordon wants to open other location. On a personal level, Gordon plans to marry and purchase a home as well as some income property. Should he change his business form to a partnership or a corporation?

Briefly describe Michael Porter's Five-Forces Model of industry competition. Why is it important to pay attention to these five forces of competition?

A sinking fund is set up so that level annual payments will accumulate, at i %p.a compounding annually, to $50,000 in 10 years. Assuming the payments made are at each year-end, after exactly 5 years the sinking fund will be: [Note: a sinking fund allows for money to be set aside by periodical deposits in order to accumalte an amout to e.g replace equipment or repay debt due at a future date]

What is the value (to the nearest cent) of a 4 year 5.9% coupon bond with a face value of $1,000. The yield-to-maturity on the bond is 11.7% and the bond makes semi-annual coupon payments.

Select one: a. $818.84 b. $2447.84 c. $822.71 d. $642.37

A three-year old 10-year 8% semi-annual coupon bond is selling at $1,200 today. If the yield increases by 25 basis points, how much of the price change is due to

convexity of the bond? (Face Value = $1,000)

Introductory data:Julia Gupta is 40 years old and has never married. She wants to retire at age 62 with an 80% wage replacement ratio. Julia currently earns $100,000 as an employee and has managed to save $100,000 toward her retirement goal (including investment assets and cash equivalents). She is currently saving $5,000 per year in her 401(k) plan. Her employer’s plan calls for a 50% match for contributions.Financial goal:Julia’s primary goal is to retire at age 62 with an 80% wage replacement, including Social Security, projected to be $30,000 in today’s dollars at normal retirement age of 67. She wants to plan for a life expectancy to age 95.

Economic and investment information

1. General inflation is expected to average 3.0% annually for the foreseeable future.
2. Julia’s expected investment portfolio rate of return is 8.5%.
3. Julia’s marginal income tax rate is 25%.
4. Social Security Tax is 7.65%.

Requirements:Please submit no more than five pages of the analysis, including references, tables, and graphs. In your analysis, please include as detailed as possible, including calculation steps. One submission per group. Please note: If any groups/individuals have the same report, both will earn zero credit. The analyses depends on your assumptions, so there are no absolutely right answers. Please design a financial plan to meet her financial goal.Do you think ($5,000 saving + employer’s contribution) matches her goal

• If not, how to make adjustment? Please consider the following scenarios:
  • Should she save more per year before retirement?
  • Should she delay retirement?

A prize pays $16,000 each quarter for 4 years (16 payments)commencing in exactly 6 months’ time. If the appropriate discount rate is 9.7% p.a compounding quarterly, the value of the prize today is (round to nearest cent; don’t use $ sign or commas): [HINT: the annuity is deferred]

TASK 1:

Annual report is a comprehensive report providing useful financial and non-financial information to shareholders and interested parties. It contains company’s activities and financial performance for the financial year. Annual reports are prepared at the end of a fiscal year for external users to gain financial information about the inner workings of the company and what management plans to do in the future.

a)    Financial statements are the main component in an annual report that indicate financial information of a company. What are the main elements of a financial statement? Discuss the functions of each of the element of a financial statement.

(8)

b)    Auditor’s report is one of the elements in an annual report. Discuss the functions of the auditor’s report in an annual report.

(6)

c)    What other qualitative information that you will find in an annual report? Discuss the objectives of the qualitative information that you have identified.

(6)

(Total: 20 marks)

A fast growth share has the first dividend (t=1) of $2.41. Dividends are then expected to grow at a rate of 6 percent p.a. for a further 2 years. It then will settle to a constant-growth rate of 1.6 percent. . If the required rate of return is 16 percent, what is the current price of the share? (to the nearest cent)

Select one:

a. $17.95

b. $36.10

c. $16.74

d. $17.91

A company has its share currently selling at $18.70 and pays dividends annually. The company is expected to grow at a constant rate of 3 percent pa.. If the appropriate discount rate is 18 percent p.a., what is the expected dividend, a year from now (rounded to nearest cent)?

ABC Limited has a stable sales track record but does not expect to grow in the future. Its last annual dividend was $5.39. If the required rate of return on similar investments is 19 percent p.a., what is the current share price? (to the nearest cent; don't use the $ sign)