Max Hype Inc. is expected to have an EBIT of $440,000.00 next year. Also next year, depreciation, the increase in net working capital, and capital spending are expected to be $37,500.00, $23,000.00, and $47,500.00, respectively. All of these variables are expected to grow at 7 percent per year until the end of year 5. The company currently has $120,000.00 in debt and 450,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 4 percent indefinitely. The company's WACC is 9 percent and its tax rate is 35 percent.

1. What is the price per share of the company's stock?
2. If the company's stock price is $14.01 on the stock market, is the company overvalued, undervalued or correctly priced on the stock market?
3. Would you buy the company's stock? Why or why not?

Choctaw Co. completed the following transactions in Year 1, the first year of operation.

1. Issued 27,000 shares of $12 par common stock for $12 per share.
2. Issued 3,700 shares of $20 stated value preferred stock for $20 per share.
3. Purchased 1,700 shares of common stock as treasury stock for $14 per share.
4. Declared a $2,700 cash dividend on preferred stock.
5. Sold 1,100 shares of treasury stock for $16 per share.
6. Paid $2,700 cash for the preferred dividend declared in Event 4.
7. Earned cash revenues of $92,000 and incurred cash expenses of $48,000.
8. Appropriated $8,700 of retained earnings.

Required

a. Organize the transaction in accounts under an accounting equation.
b. Prepare a balance sheet as of December 31, Year 1.

• Required A

Organize the transaction in accounts under an accounting equation. (Enter any decreases to account balances with a minus sign. Not all cells in the "Accounts Titles for Retained Earnings" column may require an input - leave cells blank if there is no corresponding input needed.)

Required B

An investment offers $10,300 per year for 14 years, with the first payment occurring one year from now. Assume the required return is 11 percent. What is the value of the investment today? What would the value be if the payments occurred for 39 years?

Consider the following two bonds: a 5-year and a 10-year bond, each with a 7% coupon. Both bonds currently sell at par and coupon payments are made annually (i.e., one coupon payment per year).

(a) What is the current price of each bond?

Hint: answer does not require calculations; read description of bonds carefully to determine what price must be (10 points) Suppose you buy the 10-year bond. One year later, interest rates decrease to 5%.

(b) What will be the new price of the bond? (30 points)

(c) What rate of return would you have earned on the bond over the one-year period? (20 points)

(d) Which bond will have a higher rate of return over the year, the 5-year bond or the 10-year bond? Why? (5 points).

You don’t need calculations for this one and will not be given any points for a numerical answer; respond based on your understanding of interest rate risk (price sensitivity) in bonds.

The following is a four- year forecasted estimate for ABC limited.

Required

1. Estimate the fair market value of ABC limited at the end of 2018. Assume that after 2022 earnings before interest and tax will remain constant at Sh. 200 million, depreciation will equal capital expenditure in each year and working capital will not change. The weighted average cost of capital for the company is 11% and its tax rate is 30%.

2. Estimate the fair market value per share of the company’s equity at the end of 2018 if the company has 40 million shares outstanding and the market value of interest-bearing liabilities on the valuation date equals Sh. 300 million. (10 Marks)

An asset used in a 4-year project falls in the 5-year MACRS class (refer to MACRS table on page 277), for tax purposes. The asset has an acquisition cost of $17341411 and will be sold for $7116692 at the end of the project. If the tax rate is 0.29, what is the aftertax salvage value of the asset (SVNOT)?

Heights of 10 year olds. Heights of 10 year olds, regardless of gender, closely follow a normal distribution with mean 55 inches and standard deviation 6 inches. Round all answers to two decimal places.

1. What is the probability that a randomly chosen 10 year old is shorter than 57 inches?

2. What is the probability that a randomly chosen 10 year old is between 61 and 63 inches?

3. If the shortest 15% of the class is considered very tall, what is the height cutoff for very tall?  inches

4. What is the height of a 10 year old who is at the 24 th percentile?  inches

Who has the lowest risk for developing dementia in the next year?

Parents of an 8-year-old boy and an 11-year-old girl want to enroll their children in a resistance training program at the local community center. They believe that resistance training will help make their children stronger and faster (and maybe even improve their soccer performance), but they are concerned about the potential for injury. Comment on issues regarding the safety of youth resistance training, and highlight program design considerations that address these concerns.