On January 1, Year 1, Company C purchased 10 of the $10,000 face value, 10%, 2-year bonds of Company D. The bonds mature on December 31, Year 2, and pay interest annually on December 31. Company C purchased the bonds to yield 12% and classified the bonds as held-to-maturity. The company's policy is to amortize the bonds' premium or discount according to the effective interest method. Information on present value factors is a as follows:

Enter the appropriate amounts in the designated cells below. Round all amounts to the nearest dollar. If no entry is necessary, enter a zero (0). Enter all amounts as positive values.

Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company’s income statement and balance sheets follow.

Additional Information on Year 2017 Transactions

The loss on the cash sale of equipment was $20,125 (details in b).

Sold equipment costing $91,875, with accumulated depreciation of $45,125, for $26,625 cash.

Purchased equipment costing $111,375 by paying $60,000 cash and signing a long-term note payable for the balance.

Borrowed $5,500 cash by signing a short-term note payable.

Paid $57,625 cash to reduce the long-term notes payable.

Issued 4,000 shares of common stock for $20 cash per share.

Declared and paid cash dividends of $53,100.

Required:
1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
  

Chlo is planning for her 15 year-old daughter’s university education.  She estimates that 1 year of university would cost $15,000 in today’s dollars, but will rise with the rate of inflation of 2% year over year.  How much would Chlo need to have accumulated by the time her daughter starts university at the age of 19 provided she attends university for 3 years and will receive funds at the beginning of each year?  Assume an investment rate of 3.6%, compounded monthly

Seashore Corp. estimates their future free cash flows as followed: Year 1: $10,000; Year 2: $11,600; Year 3: $12,000; and they expect a 5% growth rate beyond year 3. If the required rate of return is 14%:

26) What is their terminal value in Year 3?

A.) $140,000

B.) $133,333

C.) $152,000

D.) $120,293

What is a fair stock price per share of Seashore Corp. if they have $57,000 in debt and 2,400 shares outstanding?

A.) $41.93

B.) $34.58

C.) $26.37

D.) $19.22

If a seashore employee started to contribute to her 401k retirement account. She determines to deposit $200 every month and the retirement fund earns 9% APR. How much will she have in her retirement account in 40 years from now?

A.) $936,264

B.) $597,288

C.) $720,262

D.) $259,281

Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company’s income statement and balance sheets follow. FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 Assets Cash $ 75,400 $ 90,500 Accounts receivable 91,440 67,625 Inventory 301,156 268,800 Prepaid expenses 1,380 2,235 Total current assets 469,376 429,160 Equipment 140,500 125,000 Accum. depreciation—Equipment (45,125 ) (54,500 ) Total assets $ 564,751 $ 499,660 Liabilities and Equity Accounts payable $ 70,141 $ 140,175 Short-term notes payable 15,100 9,400 Total current liabilities 85,241 149,575 Long-term notes payable 56,500 65,750 Total liabilities 141,741 215,325 Equity Common stock, $5 par value 196,750 167,250 Paid-in capital in excess of par, common stock 54,500 0 Retained earnings 171,760 117,085 Total liabilities and equity $ 564,751 $ 499,660 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales $ 667,500 Cost of goods sold 302,000 Gross profit 365,500 Operating expenses Depreciation expense $ 37,750 Other expenses 149,400 187,150 Other gains (losses) Loss on sale of equipment (22,125 ) Income before taxes 156,225 Income taxes expense 48,050 Net income $ 108,175 Additional Information on Year 2017 Transactions The loss on the cash sale of equipment was $22,125 (details in b). Sold equipment costing $97,875, with accumulated depreciation of $47,125, for $28,625 cash. Purchased equipment costing $113,375 by paying $64,000 cash and signing a long-term note payable for the balance. Borrowed $5,700 cash by signing a short-term note payable. Paid $58,625 cash to reduce the long-term notes payable. Issued 4,200 shares of common stock for $20 cash per share. Declared and paid cash dividends of $53,500.

Required: 1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Last year, the yield on AAA-rated corporate bonds averaged approximately 5 percent; one year later, the yield on these same bonds had climbed to about 6 percent because the Reserve Bank of Australia increased interest rates during the year. Assume that BHP Billiton Limited issued a 10-year, 5 percent coupon bond one year ago (on 1 January). On the same date, Rio Tinto Limited issued a 20-year, 5 percent coupon bond. Both bonds pay interest annually. Assume that the market rate on similar risk bonds was 5 percent at the time the bonds were issued.

1. Compute the market value of each bond at the time of the issue. (1.5 marks)
2. Compute the market value of each bond one year after issue if the market yield for similar risk bonds were 6 percent. (1.5 marks)

Projected number of motorcycles sold per year: 150

Projected number of snowmobiles sold per year: 125

Projected number of ATVs sold per year: 100

Projected average retail price of each motorcycle: $8,000

Projected average retail price of each snowmobile: $6,000

Projected average retail price of each ATV: $5,000

Projected total annual repair service revenue: $70,000

Variable Costs

Projected average cost of each motorcycle: $4,000

Projected average cost of each snowmobile: $4,500

Projected average cost of each ATV: $3,500

Sales commissions: 20% of retail product sales

Payroll taxes: Supplies: 12% of sales commissions paid

Supplies: 10% of repair service revenue

Fixed Costs

Advertising: $24,000
Alarm services fee: $1000
Bank fees: $2,400
Cleaning service: $3,200

Depreciation: $ 6,000
Dues and subscriptions: $ 1,000

Store manager salary: $40,000

Sales personnel base salaries: $24,000

Mechanic's annual salary: $40,000

Payroll taxes: 12% of payroll

Insurance: $4,000
Miscellaneous: $1,000
Legal and professional fees: $4,000

Office supplies and postage: $2,000

Payroll service fees: $2,000
Rent: $16,000
Telephone: $1,000
Training and education: $2,000

Utilities: $6,000

a. Prepare a contribution margin income statement that summarizes the dealership’s projected operating income.

b. Calculate the dealership’s projected break-even point in terms of total revenue (total revenue will equal the sum of product sales revenue and repair services revenue). Calculate the dealership’s margin of safety.

c. Assume that the dealership operates under the projections that were initially outlined with the exception of a change in compensation structure for sales personnel. Brad and Lewis intend to eliminate the base salaries for the dealership’s sales personnel and increase their commission to 30% of sales. Prepare a contribution margin statement based upon the modified compensation structure and calculate the company’s new break-even point in terms of total revenue.

Q1: The Questor Corporate has experienced the following sales pattern over a 10-year period:       

a) Using 2-year moving average to forecast sales for the year 2019.

b) Using 4-year moving average to forecast sales for the year 2019.

c) Computer the equation of a trend line (using least-squares regression) for these sales data to forecast sales for the next year. What does this equation forecast for sales in the year 2019?

d) Use a first-order exponential smoothing model with a w = .9 to forecast sales for the year 2019. Begin by assuming . Yt+1= Yt .

Consider the following table for an eight-year period:

Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Calculate the standard deviation of Treasury bill returns and inflation over this time period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Calculate the real return for each year. (A negative answer should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

What is the average real return for Treasury bills? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Average real return for Treasury bills             %