Requirements: Develop a ten-year sales projection assuming the growth as below:

1. 1% for 2^nd year
2. 3% for 3^rd to 5^th year
3. 8% for 6^th to 10^th year

During Year 1 and Year 2, Agatha Corp. completed the following transactions relating to its bond issue. The corporation’s fiscal year is the calendar year. Year 1 Jan. 1 Issued $330,000 of 8-year, 8 percent bonds for $324,000. The annual cash payment for interest is due on December 31. Dec. 31 Recognized interest expense, including the straight-line amortization of the discount, and made the cash payment for interest. Dec. 31 Closed the interest expense account. Year 2 Dec. 31 Recognized interest expense, including the straight-line amortization of the discount, and made the cash payment for interest. Dec. 31 Closed the interest expense account. Required a-1. When the bonds were issued, was the market rate of interest more or less than the stated rate of interest? a-2. If Agatha had sold the bonds at their face amount, what amount of cash would Agatha have received? b. Prepare the liabilities section of the balance sheet at December 31, Year 1 and Year 2. c. Determine the amount of interest expense that will be reported on the income statements for Year 1 and Year 2. d. Determine the amount of interest that will be paid in cash to the bondholders in Year 1 and Year 2.

PROJECT CASH FLOW

Colsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project:

The company has a 40% tax rate, and its WACC is 12%.

Write out your answers completely. For example, 13 million should be entered as 13,000,000.

1. What is the project's cash flow for the first year (t = 1)? Round your answer to the nearest dollar.
   $_____?
2. 
   
3. If this project would cannibalize other projects by $1.5 million of cash flow before taxes per year, how would this change your answer to part a? Round your answer to the nearest dollar.
   The firm's project's cash flow would now be $______? .
4. 
   
5. Ignore part b. If the tax rate dropped to 30%, how would that change your answer to part a? Round your answer to the nearest dollar.
   The firm's project's cash flow would -INCREASE OR DECREASE??  by $______? .

Investors expect the following series of dividends from a particular common stock: Year 1 $0.95 Year 2 $1.03 Year 3 $1.18 Year 4 $1.24 Year 5 $1.32 After the 5th year, dividends will grow at a constant rate. If the required rate of return on the stock is 8% and the current market price is $47.86, what is the long-term rate of dividend growth expected by the market?

A 5-year Treasury bond has a 4.75% yield. A 10-year Treasury bond yields 6.05%, and a 10-year corporate bond yields 9.45%. The market expects that inflation will average 2.25% over the next 10 years (IP₁₀ = 2.25%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: DRP = LP = 0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.

Open spreadsheet

What is the yield on this 5-year corporate bond? Round your answer to two decimal places.

_____%

The yield to maturity on one-year zero-coupon bonds is currently 7 percent; the YTM on two-year zeroes is 8 percent. The federal government plans to issue a two-year-maturity coupon bond, paying coupons once per year with a coupon rate of 9 percent. The face value of the bond is $100.

1. At what price will the bond sell?
2. What will be the yield to maturity on the bond?
3. If the expectations theory of the yield curve is correct, what is the market expectation of the price that the bond will sell for next year?
4. If the liquidity preference theory is correct and you believe that the liquidity premium is 1 percent, what is the market expectation of the price that the bond will sell for next year?

A 5-year Treasury bond has a 4.4% yield. A 10-year Treasury bond yields 6.9%, and a 10-year corporate bond yields 8.5%. The market expects that inflation will average 3% over the next 10 years (IP10 = 3%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: DRP = LP = 0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.What is the yield on this 5-year corporate bond? Round your answer to two decimal places

Comparative financial statement data for Carmono Company follow:

For this year, the company reported net income as follows:

This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year.

Required:

1. Using the indirect method, prepare a statement of cash flows for this year.

2. Compute Carmono’s free cash flow for this year.

Consider a sample of year-end prices for Alphabet, Inc. (Google) over a five year period. Google did not pay a dividend over the sample period.

Calculate the average (arithmetic) return.

Calculate the holding period return.

Calculate the geometric return.

Calculate the standard deviation in the returns.

The annual sales for​ Salco, Inc. were $ 4.46 million last year. The​ firm's end-of-year balance sheet was as​ follows:  Salco's income statement for the year was as​ follows:

a. Calculate​ Salco's total asset​ turnover, operating profit​ margin, and operating return on assets. b. Salco plans to renovate one of its plants and the renovation will require an added investment in plant and equipment of $ 1.09 million. The firm will maintain its present debt ratio of 50 percent when financing the new investment and expects sales to remain constant. The operating profit margin will rise to 13.9 percent. What will be the new operating return on assets ratio​ (i.e., net operating income divided by total ​assets) for Salco after the​ plant's renovation?

c. Given that the plant renovation in part ​(b​) occurs and​ Salco's interest expense rises by $ 53,000 per​ year, what will be the return earned on the common​ stockholders' investment? Compare this rate of return with that earned before the renovation. Based on this​ comparison, did the renovation have a favorable effect on the profitability of the​ firm?

Balance sheet

Income statement