Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to an industry growth rate in year 4. The spreadsheet above is a template for forecasting Banco Industries' free cash flows (FCFs), with assumptions provided.

a) (8 points) Forecast Banco Industries' FCFs in year 1-4. Banco Industries's FCF is expected to be $Answer million in year 1, $Answer million in year 2, $Answer million in year 3, $Answer million in year 4. State your answers in 2 decimal places.

b) (4 points) Banco Industries expect sales to settle to an industry growth rate of 5% in year 4 and after. If Banco industries has a weighted average cost of capital of 11%, $50 million in cash, $80 million in debt, and 18 million shares outstanding, the best estimate of Banco's stock price is $Answer. (1 decimal place)

URGERNT

Sky Entertainment is a provider of​ cable, Internet, and​ on-demand video services. Sky currently sends monthly bills to its customers via the postal service. Because of a concern for the environment and recent increases in postal​ rates, Sky management is considering offering an option to its customers for paperless billing. In addition to saving​ printing, paper, and postal​ costs, paperless billing will save energy and water​ (through reduced paper​ needs, reduced waste​ disposal, and reduced transportation​ needs.) While Sky would like to switch to​ 100% paperless​ billing, many of its customers are not comfortable with paperless billing or may not have Web​ access, so the paper billing option will remain regardless of whether Sky adopts a paperless billing system or not.

The cost of the paperless billing system would be $112,800 per quarter with no variable costs since the costs of the system are the salaries of the clerks and the cost of leasing the computer system. The paperless billing system being proposed would be able to handle up to 1,040,000 bills per quarter​ (more than 1,040,000 bills per quarter would require a different computer system and is outside the scope of the current situation at Sky​.) Sky has gathered its cost data for the past year by quarter for​ paper, toner​ cartridges, printer maintenance​ costs, and postage costs for the billing department. The cost data is as​ follows:

Requirement 1. Calculate the variable cost per bill mailed under the current​ paper-based billing system.

Using the​ high-low method, the variable cost per bill mailed under the current​ paper-based billing system is ​$...? .

​Requirement 2. Assume that the company projects that it will have a total of 800,000 bills to mail in the upcoming quarter. If enough customers choose the paperless billing option so that 25​% of the mailings can be converted to​ paperless, how much would the company save from the paperless billing system​ (be sure to consider the cost of the paperless billing​ system)?The company would save ​$........? from using the paperless billing system.

Requirement 3. What if only 15​% of the mailings are converted to the paperless option​ (assume a total of 800,000 ​bills)? Should the company still offer the paperless billing​ system? Explain your rationale. ​(Enter any losses as a positive​ number.) If only 15​% of the mailings are converted to the paperless​ option, the company ......? should continue to should no longer offer the paperless billing system because the company ........? loses saves ​$......? from using the paperless billing system.

A three-digit number is formed from nine numbers (1, 2, 3, 4, 5, 6, 7, 8 & 9). No number can be repeated. How many different three-digit numbers are possible if 1 and 2 will not be chosen together?

Select one:

a. 462

b. 336

c. 672

d. 210

Consider the following time series data.

a. Use a smoothing constant of a = 0.4 to compute the MSE (to 2 decimals).

(___)

2.Consider the following time series data.

b. Develop the three-week moving average forecasts for this time series. Compute MSE and a forecast for week 7 (to 2 decimals if necessary).

c. Use a = 0.2 to compute the exponential smoothing forecasts for the time series. Compute MSE and a forecast for week 7 (to 2 decimals).

e. Use a smoothing constant of a = 0.4 to compute the MSE (to 2 decimals).

(___)

Hw 12, alg 2:

Problem 12-18 Parts 1, 3, 4) Relevant Cost Analysis in a Variety of Situations [LO12-2, LO12-3, LO12-4]

Andretti Company has a single product called a Dak. The company normally produces and sells 84,000 Daks each year at a selling price of $54 per unit. The company’s unit costs at this level of activity are given below:

A number of questions relating to the production and sale of Daks follow. Each question is independent.

Required:

1-a. Assume that Andretti Company has sufficient capacity to produce 105,000 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its unit sales by 25% above the present 84,000 units each year if it were willing to increase the fixed selling expenses by $140,000. What is the financial advantage (disadvantage) of investing an additional $140,000 in fixed selling expenses?

1-b. Would the additional investment be justified?

3. The company has 700 Daks on hand that have some irregularities and are therefore considered to be "seconds." Due to the irregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What is the unit cost figure that is relevant for setting a minimum selling price?

4. Due to a strike in its supplier’s plant, Andretti Company is unable to purchase more material for the production of Daks. The strike is expected to last for two months. Andretti Company has enough material on hand to operate at 25% of normal levels for the two-month period. As an alternative, Andretti could close its plant down entirely for the two months. If the plant were closed, fixed manufacturing overhead costs would continue at 35% of their normal level during the two-month period and the fixed selling expenses would be reduced by 20% during the two-month period.

a. How much total contribution margin will Andretti forgo if it closes the plant for two months?

b. How much total fixed cost will the company avoid if it closes the plant for two months?

c. What is the financial advantage (disadvantage) of closing the plant for the two-month period?

d. Should Andretti close the plant for two months?

Consider the following time series data.

(a)

Construct a time series plot.

What type of pattern exists in the data?

The data appear to follow a seasonal pattern.

The data appear to follow a cyclical pattern.    

The data appear to follow a trend pattern.

The data appear to follow a horizontal pattern.

(b)

Develop the three-month moving average forecasts for this time series.

Compute MSE. (Round your answer to two decimal places.)

MSE =

What is the forecast for month 8?

(c)Use α = 0.2 to compute the exponential smoothing forecasts for the time series. (Round your answers to two decimal places.)

Compute MSE. (Round your answer to two decimal places.)

MSE =

What is the forecast for month 8? (Round your answer to two decimal places.)

(d)Compare the three-month moving average approach with the exponential smoothing approach using α = 0.2. Which appears to provide more accurate forecasts based on MSE?

The exponential smoothing using α = 0.2 provides a better forecast since it has a smaller MSE than the three-month moving average.

The three-month moving average provides a better forecast since it has a smaller MSE than the exponential smoothing using α = 0.2.  

  The exponential smoothing using α = 0.2 provides a better forecast since it has a larger MSE than the three-month moving average.

The three-month moving average provides a better forecast since it has a larger MSE than the exponential smoothing using α = 0.2.

1. For the given data set representing the runs scored by two players in last 15 matches, conduct the following analysis:

i. Which average you will use to summarize the performance of the player? Find average runs scored for both of the players. Also give reasons for the choice of the average?

ii. If selection is possible on the basis of consistency, which player would you choose in the team? Perform the required statistics and justify the selection.

iii. Check whether there exists any relationship among the runs scored by two players using Karl Pearson coefficient of correlation and interpret the same.

Treasury is: Spot 1-year Treasury is 4% Spot 2-year treasury is 4.5%

B Corporate Debt interest annually Spot 1 year 8.5%, Spot 2 years 9.5%

Forward 1 Year maturity

Let’s call the Treasury x

The Corporate debt is called y

1. What is the value of x the forward rate on one-year maturity Treasuries delivered in one year?
2. What is the value of y the forward rate on one-year maturity B corporate debt delivered in one year?
3. Exercising the term structure of default probabilities, the implied default probability for B corporate debt during the current year is?
4. Exercising the term structure of default probabilities, the implied default probability for B corporate debt during the second year is what?