An analyst is trying to value Jason’s Specialties (JS) stock. The analyst has collected data from the company and other sources to prepare the below financials, both actual and projected. Based upon these sources, the analyst expects the company’s free cash flows to grow at 4% on average. The analyst has estimated the company’s cost of capital (WACC) to be 16% and its cost of equity to be 21%. The risk-free rate is 2.3%..

1. Which items listed under Current Assets and Current Liabilities are typically excluded from NOWC? What is JS’s NOWC in years 2019 and 2020?
2. Compute the firm’s FCF (free cash flow) for year 2020.
3. Find the value of the firm using DCF method and price per share assuming that there are 10,000,000 shares issued and outstanding.
4. Find the value of the firm using ECF method and price per share assuming that there are 10,000,000 shares issued and outstanding
5. What is the External Financing Needed for year 2020? Explain your calculation
6. Suppose that the firm's probability of bankruptcy is estimated to be 5% and the economic loss associated with bankruptcy is likely to amount to $55,000,000. What valuation method would allow you to take this into account? Describe briefly how you would implement it (you do not have enough information to actually do the calculations, so no need to try).

Income statement for the fiscal year ending January 1 (Millions of dollars)

Balance sheets for the fiscal year ending January 1 (Millions of dollars)

Problem 2-30 Statement of Cash Flows (LG2-5) Use the balance sheet and income statement below: VALIUM’S MEDICAL SUPPLY CORPORATION Balance Sheet as of December 31, 2021 and 2020 (in thousands of dollars) Assets 2021 2020 Liabilities and Equity 2021 2020 Current assets: Current liabilities: Cash and marketable securities $ 82 $ 81 Accrued wages and taxes $ 66 $ 51 Accounts receivable 195 191 Accounts payable 160 151 Inventory 322 301 Notes payable 141 141 Total $ 599 $ 573 Total $ 367 $ 343 Fixed assets: Long-term debt $ 612 $ 576 Gross plant and equipment $ 1,103 $ 902 Stockholders’ equity: Less: Accumulated depreciation 166 123 Preferred stock (6 thousand shares) $ 6 $ 6 Net plant and equipment $ 937 $ 779 Common stock and paid-in surplus (100 thousand shares) 120 120 Other long-term assets 154 154 Retained earnings 585 461 Total $ 1,091 $ 933 Total $ 711 $ 587 Total assets $ 1,690 $ 1,506 Total liabilities and equity $ 1,690 $ 1,506 VALIUM’S MEDICAL SUPPLY CORPORATION Income Statement for Years Ending December 31, 2021 and 2020 (in thousands of dollars) 2021 2020 Net sales $ 912 $ 822 Less: Cost of goods sold 399 362 Gross profits $ 513 $ 460 Less: Other operating expenses 57 51 Earnings before interest, taxes, depreciation, and amortization (EBITDA) $ 456 $ 409 Less: Accumulated depreciation 43 41 Earnings before interest and taxes (EBIT) $ 413 $ 368 Less: Interest 58 52 Earnings before taxes (EBT) $ 355 $ 316 Less: Taxes 75 66 Net income $ 280 $ 250 Less: Preferred stock dividends $ 6 $ 6 Net income available to common stockholders $ 274 $ 244 Less: Common stock dividends 150 150 Addition to retained earnings $ 124 $ 94 Per (common) share data: Earnings per share (EPS) $ 2.74 $ 2.44 Dividends per share (DPS) $ 1.50 $ 1.50 Book value per share (BVPS) $ 7.05 $ 5.81 Market value (price) per share (MVPS) $ 8.08 $ 6.29 Prepare a statement of cash flows for Valium’s Medical Supply Corporation. (Enter your answers in thousands. Amounts to be deducted should be indicated with a minus sign.)

Problem 2-29 Statement of Cash Flows (LG2-5) Use the balance sheet and income statement below: CLANCY’S DOG BISCUIT CORPORATION Balance Sheet as of December 31, 2021 and 2020 (in millions of dollars) Assets 2021 2020 Liabilities and Equity 2021 2020 Current assets: Current liabilities: Cash and marketable securities $ 2 $ 2 Accrued wages and taxes $ 7 $ 4 Accounts receivable 19 15 Accounts payable 14 12 Inventory 22 20 Notes payable 12 10 Total $ 43 $ 37 Total $ 33 $ 26 Fixed assets: Long-term debt $ 25 $ 21 Gross plant and equipment $ 80 $ 60 Stockholders’ equity: Less: Accumulated depreciation 15 10 Preferred stock (2 million shares) $ 2 $ 2 Net plant and equipment $ 65 $ 50 Common stock and paid-in-surplus (5 million shares) 11 11 Other long-term assets 13 13 Retained earnings 50 40 Total $ 78 $ 63 Total $ 63 $ 53 Total assets $ 121 $ 100 Total liabilities and equity $ 121 $ 100 CLANCY’S DOG BISCUIT CORPORATION Income Statement for Years Ending December 31, 2021 and 2020 (in millions of dollars) 2021 2020 Net sales $ 78 $ 82 Less: Cost of goods sold 40 36 Gross profits $ 38 $ 46 Less: Other operating expenses 7 6 Earnings before interest, taxes depreciation, and amortization (EBITDA) $ 31 $ 40 Less: Accumulated depreciation 5 5 Earnings before interest and taxes (EBIT) $ 26 $ 40 Less: Interest 6 6 Earnings before taxes (EBT) $ 20 $ 29 Less: Taxes 4 6 Net income $ 16 $ 23 Less: Preferred stock dividends $ 1 $ 1 Net income available to common stockholders $ 15 $ 22 Less: Common stock dividends 5 5 Addition to retained earnings $ 10 $ 17 Per (common) share data: Earnings per share (EPS) $ 3.00 $ 4.40 Dividends per share (DPS) $ 1.00 $ 1.00 Book value per share (BVPS) $ 12.20 $ 10.20 Market value (price) per share (MVPS) $ 12.85 $ 13.60 Prepare a statement of cash flows for Clancy’s Dog Biscuit Corporation. (Enter your answers in millions of dollars. Amounts to be deducted should be indicated with a minus sign.)

You are responsible for providing instructions to patients before they have an in-office surgery. How would you provide appropriate information for before the procedure, on the day of surgery, and after the surgery?

4. Identify situations where open-ended questions are more appropriate than closed-ended questions. Think about the advantage of using closed-ended questions over open-ended questions?

Let f : V mapped to W be a continuous function between two topological spaces V and W, so that (by definition) the preimage under f of every open set in W is open in V : Y is open in W implies f^−1(Y ) = {x in V | f(x) in Y } is open in V. Prove that the preimage under f of every closed set in W is closed in V . Feel free to take V = W = R^n to simplify things. Hint: show that the “preimage of” operation plays nice with set-complements, and then use the fact that every closed set is the complement of some open set. Note that R^n is both open and closed as a subset of itself.

Financial information on AAA Ltd. is shown below.

Sales are forecast to increase by 20% in 2020.

Notes Payable, Short-term Debt, Long-term Debt, and Common Share Capital will not change. Net Plant and Equipment is forecasted to be $2,900,000 next year. Short-term investments are expected to be $240,000.

In 2020, the company’s dividend payout ratio will be 40%.

In 2020, cost of goods sold is expected to be 52% of sales. Other expenses will be 23% of sales. Depreciation expense in 2020 is expected to be $90,000.

Cash is expected to be 2% of sales, and inventories will be 30% of sales. Accounts receivable will be 6% of sales. Accounts payable will be 5% of sales. Accruals will be 1% of sales.

The company is expected to pay 4% per year compounded annually on its short-term debt and 6% per year compounded annually on its long-term debt. The interest expense on the short-term debt in 2020 is calculated as: [interest rate on short-term debt * amount of short-term debt outstanding at the end of 2019]. The interest expense on the long-term debt is calculated as: [interest rate on long-term debt * amount of long-term debt outstanding at the end of 2019].

The company’s tax rate is 30%.

Based on the information provided you are to:

1. Complete the pro-forma income statement and balance sheet for 2020.
2. Calculate the amount of Additional Funds Needed in 2020.

A pilot study is run to investigate the effect of a lifestyle intervention designed to increase medication adherence in patients with HIV. Medication adherence is measured as the percentage of prescribed pills that are taken over a one-week observation period. Ten patients with HIV agree to participate and their medication adherence before and after the intervention are shown below. Compute the standard deviation of the difference in adherence before versus after intervention.

An ergonomics consultant is engaged by a consumer products company to see what they can do to increase productivity. The consultant recommends an “employee athlete” program, encouraging every employee to devote five minutes an hour to physical activity. The company decides to try this program. To measure the difference in productivity, they measure the average number of keystrokes per hour of 23 employees before and after the five-minutes-per-hour program is instituted. The data follow: Before After Difference (After – Before) Mean 1497.3 1544.8 47.5 SD 155.4 136.7 122.8 n 23 23 23 Table: Keystrokes per Hour Is there evidence to suggest the program increases productivity? Use a 5% level of significance to test it.