Mexican Motors’ market cap is 200 billion pesos. Next year’s free cash flow is 8.6 billion pesos. Security analysts are forecasting that free cash flow will grow by 7.60% per year for the next five years.

a. Assume that the 7.60% growth rate is expected to continue forever. What rate of return are investors expecting? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Rate of Return:_________%

b-1. Mexican Motors has generally earned about 10% on book equity (ROE = 10%) and reinvested 50% of earnings. The remaining 50% of earnings has gone to free cash flow. Suppose the company maintains the same ROE and investment rate for the long run. What will be the growth rate of earnings? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal places.)

Growth Rate: ______%

b-2. What would be the rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Rate of return:_____%

Job Cost Sheet

Remnant Carpet Company sells and installs commercial carpeting for office buildings. Remnant Carpet Company uses a job order cost system. When a prospective customer asks for a price quote on a job, the estimated cost data are inserted on an unnumbered job cost sheet. If the offer is accepted, a number is assigned to the job, and the costs incurred are recorded in the usual manner on the job cost sheet. After the job is completed, reasons for the variances between the estimated and actual costs are noted on the sheet. The data are then available to management in evaluating the efficiency of operations and in preparing quotes on future jobs. On October 1, Remnant Carpet Company gave Jackson Consulting an estimate of $2,418 to carpet the consulting firm’s newly leased office. The estimate was based on the following data:

On October 3, Jackson Consulting signed a purchase contract, and the delivery and installation were completed on October 10.

The related materials requisitions and time tickets are summarized as follows:

Required:

Enter amounts as positive numbers.

1. Complete that portion of the job order cost sheet that would be prepared when the estimate is given to the customer.

2. Record the costs incurred, and complete the job order cost sheet.

What is the best explanation for the variances between actual costs and estimated costs. (For this purpose, assume that the additional meters of material used in the job were spoiled, the factory overhead rate has proven to be satisfactory, and an inexperienced employee performed the work.)

1. The direct materials cost exceeded the estimate by $136 because 4 meters of materials were spoiled. The direct labor cost exceeded the estimate by $120 because an additional 4 hours of labor were used by an inexperienced employee. The factory overhead cost exceeded the estimate because an additional $90 of factory overhead was allocated because of the increase in direct labor.
2. Management didn't provide enough direction to complete tasks on budget.
3. The direct materials cost exceeded the estimate by $75 because 3 meters of materials were spoiled.
4. The direct labor cost exceeded the estimate by $120 because an additional 4 hours of labor were used by an inexperienced employee.

Select the correct answer from the above choices.
a, b, c, d

McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $511,000, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $74,300. Project B will cost $330,000, has an expected useful life of 12 years, a salvage value of zero, and is expected to increase net annual cash flows by $49,600. A discount rate of 8% is appropriate for both projects. Click here to view PV table.

Compute the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Net present value - Project A $

Profitability index - Project A

Net present value - Project B $

Profitability index - Project B

Which project should be accepted based on Net Present Value? choice project a/ project b

Which project should be accepted based on profitability index? choice project a/ project b

Ethical dilemma......................................Ethical dilemma..................................Ethical dilemma.....................................Ethical dilemma

Suzanne Cureis an American who has been a well-regarded Motorolan for many years. She worked in a division of Motorola that was highly profitable. One of the reasons for her satisfaction with the corporation was that she had been involved in a fine performance bonus plan. The benefits she and her family enjoyed were more generous than those available to employees in a number of other divisions. She had often wondered about those discrepancies, but since her own situation was so good, she never took the time to look into the matter in any great depth.

Three year ago, however, things took a turn which made her look into it deeply indeed. Suzanne was given a promotion and assigned to manage an operation in Pacifica, a rapidly developing Pacific Rim nation. Her assignment was to build up the operation significantly, and she succeeded beyond most people’s expectations. In the process, she got to know many Pacifican Motorolans quite well, and was struck by their strong commitment and loyalty to the corporation and to their work units.

In Pacifica, it was not the tradition for companies, local or multinational, to award performance bonuses, and Motorola conformed to this pattern. Suzanne noted that most local employees were quite happy to work for Motorola because they felt that they earned competitive wages and enjoyed good job security. Local Motorolans knew little about performance bonuses, nor were they aware that such rewards varied among different divisions and geographies within the corporation.

Suzanne decided to pursue an innovative pilot project, and, on the basis of her excellent track record, managed to convince her Motorola superiors to allow her to try it for a period of three years. The project was to introduce rewards for good performance, in the form of a quarterly bonus. What made the project truly audacious, though, was that each employee would receive the samemonetary amount, regardless of salary level. (New employees with less than one year’s service were handled differently, and the bonus was handled separately form merit raises, promotions in grade, etc.)

At the end of the first year, the total bonus turned out to be $456 for each employee, regardless of rand or salary. This amount was seen as trivial by the higher-paid employees but, in this low-wage country with considerable annual inflation, was eagerly welcomed by the lesser-paid ones. Suzanne had learned, from extensive dialogues with local employees, that they preferred to be rewarded as members of a unit. They would have regarded individual bonuses as unfair and divisive.

The program is now in the early stage of its second year. Already, the results have been encouraging. Productivity has generally risen. Employees, especially those at lower pay levels, seem enthusiastic. None of those at higher levels appear quite satisfied with the new arrangement, but few have complained formally. Various surveys conducted at this facility confirm that morale is generally higher, as measured by a number of quantitative indicators.

Answer the following questions.

1.         What is the issue?

2.         Are there any ways that the performance bonus program be improved?

3.         What are possible pitfalls in this bonus program over the short-term? The long-term?

The demand for solvent, one of numerous products manufactured by RZM Industries Inc., has dropped sharply because of recent competition from a similar product. The company’s chemists are currently completing tests of various new formulas, and it is anticipated that the manufacture of a superior product can be started on June 1, one month in the future. No changes will be needed in the present production facilities to manufacture the new product because only the mixture of the various materials will be changed.

The controller has been asked by the president of the company for advice on whether to continue production during May or to suspend the manufacture of solvent until June 1. The controller has assembled the following pertinent data:

The production costs and selling and administrative expenses, based on production of 4,000 units in April, are as follows:

Sales for May are expected to drop about 20% below those of the preceding month. No significant changes are anticipated in the fixed costs or variable costs per unit. No extra costs will be incurred in discontinuing operations in the portion of the plant associated with solvent. The inventory of solvent at the beginning and end of May is expected to be inconsequential.

Prepare an estimated income statement in absorption costing form for May for solvent, assuming that production continues during the month. Round amounts to two decimals. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Prepare an estimated income statement in variable costing form for May for solvent, assuming that production continues during the month. Round amounts to two decimals. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign.

What would be the estimated loss in income from operations if the solvent production were temporarily suspended for May? If a loss is incurred, enter that amount as a negative number using a minus sign. ___________

Nautical Creations is one of the largest producers of miniature ships in a bottle. An especially complex part of one of the ships needs special production equipment that is not useful for other products. The company purchased this equipment early in 2016 for $200,000. It is now early in 2020, and the manager of the Model Ships Division, Jeri Finley, is thinking about purchasing new equipment to make this part. The current equipment will last for four more years with zero disposal value at that time. It can be sold immediately for $30,000. The following are last year's total manufacturing costs, when production was 7,800 ships: Direct materials $28,080 Direct labor 28,080 Variable overhead 13,260 Fixed overhead 36,660 Total $106,080 The cost of the new equipment is $140,000. It has a four year useful life with an estimated disposal value at that time of $30,000. The sales representative selling the new equipment stated, "The new equipment will allow direct labor and variable overhead combined to be reduced by a total of $2.10 per unit." Finley thinks this estimate is accurate, but also knows that a higher quality of direct material will be necessary with the new equipment, costing $0.21 more per unit. Fixed overhead costs will increase by $4,500. Finley expects production to be 8,400 ships in each of the next four years. Assume a discount rate of 5%.

Do you pay GST on taxable supplies and can you claim GST credits for purchases associated with taxable supplies?

SUBJECT 3

a. A company with a dividend payout ratio of 40% for 2018, has a ROE of 10%. The dividends and stock’s earnings are expected to grow at the same rate. The current year earnings per share are 7 euros and the company has a beta coefficient of 1. The risk-free rate is 6% and analysts estimate that the market risk premium is 5%. Taking into account the above information, estimate:

I. The expected growth rate, and its P/E ratio.

II. The intrinsic value of Salomon company using the P/E ratio approach.

III. If dividend growth forecasts for Salomon Company are revised downward by 1% what will happen to the Salomon stock price and P/E ratio. IV. Explain how an increase in dividend payout would affect the (all other factors remain constant) growth rate and P/E ratio.

b. Τhe price to earnings ratio indicates the expected price of a share based on its earnings. As a company’s earnings per share rise, so does their market value per share. A company with a high P/E ratio usually indicates positive future performance and investors are willing to pay more for this company’s shares. But reported earnings are computed in accordance with generally accepted accounting rules and often management can easily manipulate it with specific accounting techniques. Which are those accounting methods that artificially may restructure the P/E ratio trend line?

In 2019, Windsor Enterprises issued, at par, 60 $1,000, 8% bonds, each convertible into 100 shares of common stock. Windsor had revenues of $17,800 and expenses other than interest and taxes of $10,000 for 2020. (Assume that the tax rate is 20%.) Throughout 2020, 1,900 shares of common stock were outstanding; none of the bonds was converted or redeemed.

(a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.)

(b) Assume the same facts as those assumed for part (a), except that the 60 bonds were issued on September 1, 2020 (rather than in 2019), and none have been converted or redeemed. Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.)

(c) Assume the same facts as assumed for part (a), except that 20 of the 60 bonds were actually converted on July 1, 2020. Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.)

a companys number of days to collect is higher than the length of credit period. Analyst might conclude

A. Customers dissatisfied with the product or service

b. company effictively managing its recievables.

C. company has begun estimating amount of uncollectibles using percentage of sales rather than aging the recievables

Estimated Income Statements, using Absorption and Variable Costing Prior to the first month of operations ending October 31 Marshall Inc. estimated the following operating results: Sales (19,200 x $68) $1,305,600 Manufacturing costs (19,200 units): Direct materials 787,200 Direct labor 186,240 Variable factory overhead 86,400 Fixed factory overhead 103,680 Fixed selling and administrative expenses 28,200 Variable selling and administrative expenses 34,100 The company is evaluating a proposal to manufacture 21,600 units instead of 19,200 units, thus creating an Inventory, October 31 of 2,400 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. a. 1. Prepare an estimated income statement, comparing operating results if 19,200 and 21,600 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank or enter “0”. Marshall Inc. Absorption Costing Income Statement For the Month Ending October 31 19,200 Units Manufactured 21,600 Units Manufactured $ $ Cost of goods sold: $ $ $ $ $ $ Income from operations $ $ a. 2. Prepare an estimated income statement, comparing operating results if 19,200 and 21,600 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank or enter “0”. Marshall Inc. Variable Costing Income Statement For the Month Ending October 31 19,200 Units Manufactured 21,600 Units Manufactured $ $ Variable cost of goods sold: $ $ $ $ $ $ $ $ Fixed costs: $ $ Total fixed costs $ $ $ $ b. What is the reason for the difference in income from operations reported for the two levels of production by the absorption costing income statement? The increase in income from operations under absorption costing is caused by the allocation of overhead cost over a number of units. Thus, the cost of goods sold is . The difference can also be explained by the amount of overhead cost included in the inventory. Check My Work

Please explain bounded rationality using the Iranian Hostage Crisis.

What is a private-purpose trust fund? There are two types of assets that can be held by a private-purpose trust; what are the two types of assets and how do the asset types compare to governmental permanent fund assets?