PINNACLE PLUS Horizontal Analysis Increase (Decrease) in the Current year (versus Previous year) Current Year Previous Year Amount Percentage Income Statement Sales Revenue $120,000 $106,000 % Cost of Goods Sold 54,000 49,000 Gross Profit 66,000 57,000 Operating Expenses 41,000 35,500 Interest Expense 5,000 5,000 Income before Income Tax Expense 20,000 16,500 Income Tax Expense (30%) 6,000 4,950 Net Income $14,000 $11,550 % Balance Sheet Cash $77,900 $43,000 % Accounts Receivable, Net 19,000 10,000 Inventory 26,000 40,000 Property and Equipment, Net 96,000 110,000 Total Assets $218,900 $203,000 % Accounts Payable $44,000 $36,000 % Income Tax Payable 3,000 1,500 Note Payable (long-term) 50,000 50,000 Total Liabilities 97,000 87,500 Common Stock (par $10) 87,000 87,000 Retained Earnings† 34,900 28,500 Total Liabilities and Stockholders’ Equity $218,900 $203,000 % †During the current year, cash dividends amounting to $7,600 were declared and paid.

Wal Mart Stores Consolidated Income Statement (amounts in millions)

Year 4             Year 5             Year 6             Year 7

Sales Revenues                                               $83,412           $94,749           $106,146

Cost of Goods Sold                                        $65,586           $74,564           $83,663

Accounts Receivables             $ 690              $     900           $      853          $      845         

Inventories                              $11,014           $14,064           $15,989           $ 15,897                     

Question # 6

Please calculate the accounts receivable and inventory ratios for years 5 thru 7.

Question # 7

Does any of the inventory scenarios and interpretations that we discussed at the end of session 4 apply here?

Question # 8

Why does Wal Mart have such a big difference between its account receivable turnover ratios and inventory ratios? Does it have anything to do with the line of business it is active?

XYZ's stock price and dividend history are as follows:

An investor buys three shares of XYZ at the beginning of 2017, buys another two shares at the beginning of 2018, sells one share at the beginning of 2019, and sells all four remaining shares at the beginning of 2020.

a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your year-by-year rates of return and final answer to 2 decimal places. Do not round other calculations.)

b. What is the dollar-weighted rate of return? (Hint: Carefully prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2017, to January 1, 2020. If your calculator cannot calculate IRR, you will have to use trial and error or a spreadsheet program.) (Round your answers to 4 decimal places. Negative amount should be indicated by a minus si

XYZ's stock price and dividend history are as follows:

An investor buys three shares of XYZ at the beginning of 2017, buys another two shares at the beginning of 2018, sells one share at the beginning of 2019, and sells all four remaining shares at the beginning of 2020.

a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your year-by-year rates of return and final answer to 2 decimal places. Do not round other calculations.)

b. What is the dollar-weighted rate of return? (Hint: Carefully prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2017, to January 1, 2020. If your calculator cannot calculate IRR, you will have to use trial and error or a spreadsheet program.) (Round your answers to 4 decimal places. Negative amount should be indicated by a minus sign.)

rev: 10_31_2013_QC_37911, 03_06_2015_QC_CS-9041

XYZ stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End 2010 $ 130 $ 5 2011 $ 144 $ 5 2012 $ 120 $ 5 2013 $ 125 $ 5 An investor buys six shares of XYZ at the beginning of 2010, buys another three shares at the beginning of 2011, sells one share at the beginning of 2012, and sells all eigth remaining shares at the beginning of 2013. a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Arithmetic mean % Geometric mean % b-1. Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2010, to January 1, 2013. (Negative amounts should be indicated by a minus sign.) Date Cash Flow 1/1/2010 $ 1/1/2011 1/1/2012 1/1/2013 b-2. What is the dollar-weighted rate of return? (Hint: If your calculator cannot calculate internal rate of return, you will have to use a spreadsheet or trial and error.) (Negative value should be indicated by a minus sign. Round your answer to 4 decimal places.) Rate of return %

3.There are three zero coupon bonds. Their prices are:1 year =$920; 2 year =$840; 3 year =$750.

Three zero coupon bonds have the face value of 1000.

To calculate YTM

Year 1   

Face value = Price (1+ YTM)

1000 = 920 ( 1+ YTM)

1+ YTM = 1000/920

YTM = 1.0896-1

YTM = 0.0869 = 8.70%

Year 2

Face value = Price (1+ YTM)²

1000 = 840 ( 1+ YTM)²

(1+ YTM)² = 1000/840

(1+YTM)² = 1.1905

1+ YTM = 1.0911

YTM = 1.0911-1

YTM = 0.0911 = 9.11%

Year 3

Face value = Price (1+ YTM)³

1000 = 750 ( 1+ YTM)³

(1+ YTM)³ = 1000/750

(1+YTM)^{3 =} 1.333333

1+ YTM = 1.1006

YTM = 1.1006-1

= 0.1006

= 10.06%

The answers are in the brackets. I want to know the process to get the answers.

***Question**** b. What are the 1 year forward rate at the end of year 1, and the annualized forward rate between end of years 1 and 3? [answers: 9.52%, and 10.75%]

Suppose the prices of one-year, two-year, and three-year zero coupon bonds each with a par value of $100 are $90,$80, and $70, respectively. Determine the arbitrage-free price of the annuity

XYZ stock price and dividend history are as follows:

An investor buys six shares of XYZ at the beginning of 2015, buys another two shares at the beginning of 2016, sells one share at the beginning of 2017, and sells all seven remaining shares at the beginning of 2018.

b-1. Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2015, to January 1, 2018. (Negative amounts should be indicated by a minus sign.)

b-2. What is the dollar-weighted rate of return? (Hint: If your calculator cannot calculate internal rate of return, you will have to use a spreadsheet or trial and error.) (Negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)