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             %

Consider a ten-year bond with 5% coupon issued by Good Health Food Stores. The ten-year U.S. Treasury note yields 2.5%. Which of the following is correct?

1. If GHFS’s credit spread widens and the Treasury yield increases, the GHFS bond price will surely decline.
2. If GHFS’s credit spread widens and the Treasury yield decreases, the GHFS bond price may rise or decline, depending on the relative sizes of the changes.
3. If GHFS’s credit spread narrows and the Treasury yield increases, the GHFS bond price will surely rise.
4. If GHFS’s credit spread narrows and the Treasury yield increases, the GHFS bond price may rise or decline, depending on the relative sizes of the changes.
5. If GHFS’s credit spread narrows and the Treasury yield does not change, the GHFS bond price will surely rise.

A,B,D,E

I have the answers but can you please explain why they are

During all of Year 4, our company had 200,000 common shares outstanding.

During all of Year 4, there were 30,000 outstanding call options to buy common shares at $40 a share; and there were 20,000, $7, no par value, cumulative and convertible preferred shares outstanding. Each preferred share is convertible into three common shares.

During all of Year 4, we had outstanding $2,000,000 of 8% convertible bonds issued at face value. Each $1,000 bond is convertible into 20 common shares.

Year 4 net income was $750,000.

Instructions

Calculate basic and diluted earnings per share for Year 4. Prepare a schedule like we did in class and show all calculations for possible part marks.

Margo, a calendar year taxpayer, paid $580,000 for new machinery (seven-year recovery property) placed in service on August 1, 2017. Use Table 7-2. Assuming that the machinery was the only tangible property placed in service during the year, compute Margo’s maximum cost recovery deduction. How would your answer to part a change if the machinery was purchased in 2018 instead of 2017? COnsider section179, bonus and MACRS depreciation.

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.

A 36-year-old man and his 32-year-old wife are undergoing an evaluation for fertility. A seminal fluid specimen is collected at home and brought to the lab for routine testing.

Color: Gray Volume: 4.5 mL liquefaction: 50 minutes

Viscosity: 0 (watery) Motility: 70%

Concentration: 15x106/mL Morphology: 70% normal

vitality: 60% Leukocytes: 0.8x106 cells/mL

1. List any abnormal or discrepant results.

2. Do any of the results obtained suggest improper specimen collection or laboratory error?

3. Are any of the results obtained associated with male infertility?

4. Based on these results, what chemical test should be performed to evaluate the functional integrity of the seminal vesicles and ejaculatory ducts?