Problem 2-03A a-d (Video)

Tom Zopf owns and manages a computer repair service, which had the following trial balance on December 31, 2019 (the end of its fiscal year).

Summarized transactions for January 2020 were as follows.

Post the journal entries to the accounts in the ledger. (Post entries in the order of journal entries presented in the previous part.)

Assume that on September 1 Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September these transactions occurred.

Sept. 6 Purchased calculators from Green Box Co. at a total cost of $1,620, terms n/30.

9 Paid freight of $50 on calculators purchased from Green Box Co.

10 Returned calculators to Green Box Co. for $38 credit because they did not meet specifications.

12 Sold calculators costing $520 for $780 to University Book Store, terms n/30.

14 Granted credit of $45 to University Book Store for the return of one calculator that was not ordered. The calculator cost $28.

20 Sold calculators costing $570 for $900 to Campus Card Shop, terms n/30.

Journalize the Septemper transactions?

Suppose that the current market price of the stock of Company X is $ 872. Suppose that you expect that the news release by Company X will cause at least ca 10% movement in the market price of its stock by Dec. 4th, 2020. However, you are not sure whether there will be a downward adjustment or an upward adjustment of the market price. Describe briefly a trading strategy involving call and (or) put options that accounts for this expectation. Use graph to demonstrate the payoffs and identify clearly your pay-offs from each option position as well as from the overall position at the date of expiry (please consider the price range of $600 to $1200 on the graph) and mark clearly the numerical values of break-even stock prices related to your strategy. Suppose that the call and put options, which are available on the market and can be used for the construction of trading strategy, are following:

COUPLE INTERVIEW

You are asked to interview a couple who has been married or cohabitating for at least five continuous years and write a paper which summarizes both the interview content and your personal observations and thoughts about the relationship. The interview must be conducted with both parties present at the same time and the interview must be a minimum of 45 minutes long.

Use the following outline to structure your interview and paper:

I. Introduction: Introduce your topic (marriage and family life) and include information about the couple. Be sure to use a fictitious name to protect the confidentiality of the couple. Include information about the couple such as; race, religion, ethnicity, ages, years together as a couple, number and ages of children (if any), how long have you known them, why did you select them, is this a same-sex couple, inter-faith, inter-racial, etc.

II. Body: Address the following issues at a minimum:

A. The history of the relationship – how did they meet, what was the initial attraction, what made them decide to commit to a long-term relationship, etc.?

B. How do they structure their family – traditional vs. non-traditional roles, occupational and child care concerns, etc.? Be sure to refer to your textbook for appropriate terms and definitions.

C. How do they communicate? Pay attention to their statements and body language, as well as your personal observations and experiences. How do they make family decisions?

D. What have been the most challenging times in their relationship? How have they worked through those issues?

III. Analysis:  Address the following items, at a minimum:

A. Do you consider this to be a successful relationship? Why or why not?

B. What “type” of marriage or relationship would you categorize this relationship to be? Explain your answer.

C. What qualities of this relationship would you like to have in your own relationship? How would you create these qualities in your relationship? What type of efforts would you be willing to make to retain those qualities in your relationship?

D. What qualities would you want to avoid? How would you avoid them? What preventative measure would you take in your relationships?

E. What have you learned about committed relationships from your interview with this couple? How will you apply this information to your personal life?

On November 14, Thorogood Enterprises announced that the public and acrimonious battle with its current CEO had been resolved. Under the terms of the deal, the CEO would step down from his position immediately. In exchange, he was given a generous severance package. Given the information below, calculate the cumulative abnormal return (CAR) around this announcement. Assume the company has an expected return equal to the market return. (A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 1 decimal place.)

Interview a program/project manager; it can be inside your organization or external to your organization, preferably this individual has more than ten-years’ experience in the profession.

ask the following:

What is your approach to managing a project?

What is your school of thought on project management? Do you prefer waterfall, agile methods etc.?

What skills does a program manager need to have in today’s market?

What is the greatest challenge as a program manager?

Where do you see program management going in the future?

How do you handle politics and conflict?

Write a 2 to 4 paragraph summary of the interview, from the above questions.

STEPHENSON REAL ESTATE RECAPITALIZATION Stephenson Real Estate Company was founded 25 years ago by the current CEO, Robert Stephenson. The company purchases real estate, including land and buildings, and rents the property to tenants. The company has shown a profit every year for the past 18 years and the shareholders are satisfied with the company’s management. Prior to founding Stephenson Real Estate, Robert was the founder and CEO of a failed alpaca farming operation. The resulting bankruptcy made him extremely averse to debt financing. As a result, the company is entirely equity financed, with 12 million shares of common stock outstanding. The stock currently trades at $53.80 per share. Stephenson is evaluating a plan to purchase a tract of land in the southeastern United States for $49 million. The land will subsequently be leased to tenant farmers. This purchase is expected to increase Stephenson’s annual pretax earnings by $11.5 million in perpetuity. Kim Weyand, the company’s new CFO, has been put in charge of the project. Kim has determined that the company’s current cost of capital is 10.5 percent. She feels that the company would be more valuable if it included debt in its capital structure, so she is evaluating whether the company should issue debt to entirely finance the project. Based on some conversations with investment banks, she thinks that the company can issue bonds at par value with a coupon rate of 7 percent. Based on her analysis, she also believes that a capital structure in the range of 70 percent equity/30 percent debt would be optimal. If the company goes beyond 30 percent debt, its bonds would carry a lower rating and a much higher coupon because the possibility of financial distress and the associated costs would rise sharply. Stephenson has a 21 percent corporate tax rate (state and federal).

1.If Stephenson wishes to maximize its total market value, would you recommend that it issue debt or equity to finance the land purchase? Explain.

2.Construct Stephenson’s market value balance sheet before it announces the purchase.

3.Suppose Stephenson decides to issue equity to finance the purchase.

a.What is the net present value of the project?

b.Construct Stephenson’s market value balance sheet after it announces that the firm will finance the purchase using equity. What would be the new price per share of the firm’s stock? How many shares will Stephenson need to issue to finance the purchase?

c.Construct Stephenson’s market value balance sheet after the equity issue but before the purchase has been made. How many shares of common stock does Stephenson have outstanding? What is the price per share of the firm’s stock?

d.Construct Stephenson’s market value balance sheet after the purchase has been made.

4.Suppose Stephenson decides to issue debt to finance the purchase.

a.What will the market value of Stephenson be if the purchase is financed with debt?

b.Construct Stephenson’s market value balance sheet after both the debt issue and the land purchase. What is the price per share of the firm’s stock?

5.Which method of financing maximizes the per-share stock price of Stephenson’s equity?