You are looking to purchase a Tesla Model X sport utility vehicle. The price of the vehicle is $97,750. You negotiate a six-year loan, with no money down and no monthly payments during the first year. After the first year, you will pay $1,725 per month for the following five years, with a balloon payment at the end to cover the remaining principal on the loan. The APR on the loan with monthly compounding is 6.2 percent. What will be the amount of the balloon payment six years from now?

You are looking to purchase a Tesla Model X sport utility vehicle. The price of the vehicle is $95,750. You negotiate a six-year loan, with no money down and no monthly payments during the first year. After the first year, you will pay $1,525 per month for the following five years, with a balloon payment at the end to cover the remaining principal on the loan. The APR on the loan with monthly compounding is 4.6 percent. What will be the amount of the balloon payment six years from now?

From 1999 to 2017, the average IPO rose by 19.2% in its first day of trading. In 2000, 115 deals doubled in price on the first day. What factors might contribute to the huge 1st-day returns on IPOs? Some critics of the current IPO system claim that underwriters may knowingly underprice an issue. Why might they do this? Why might issuing companies accept lower IPO prices? What impact do institutional investors have on IPO pricing?

The company issues 4.4% 10-year bonds with a total face amount of $1,000,000 with interest paid semi-annually. The market rate of interest is 4.5%.

ROUND ANSWERS TO NEARST DOLLAR

What is the issue price of the bond? $_______

What is the interest expense for the first interest payment? $_____

What is the bond liability after the first interest payment? $_______

Ivanhoe Industries manufactures sump-pumps. Its most popular product is called the Super Soaker, which has a retail price of $1,280 and costs $540 to manufacture. It sells the Super Soaker on a standalone basis directly to businesses. Ivanhoe also provides installation services for these commercial customers, who want an emergency pumping capability (with regular and back-up generator power) at their businesses. Ivanhoe also distributes the Super Soaker through a consignment agreement with Menards. Income data for the first quarter of 2020 from operations other than the Super Soaker are as follows.

Ivanhoe has the following information related to two Super Soaker revenue arrangements during the first quarter of 2020.

Diversified Industries manufactures sump-pumps. Its most popular product is called the Super Soaker, which has a retail price of $1,200 and costs $540 to manufacture. It sells the Super Soaker on a standalone basis directly to businesses. Diversified also provides installation services for these commercial customers, who want an emergency pumping capability (with regular and back-up generator power) at their businesses. Diversified also distributes the Super Soaker through a consignment agreement with Menards. Income data for the first quarter of 2017 from operations other than the Super Soaker are as follows. Revenues $9,500,000 Expenses ?7,750,000 Diversified has the following information related to two Super Soaker revenue arrangements during the first quarter of 2017. 1.Diversified sells 30 Super Soakers to businesses in flood-prone areas for a total contract price of $54,600. In addition to the pumps, Diversified also provides installation (at a cost of $150 per pump). On a standalone basis, the fair value of this service is $200 per unit installed. The contract payment also includes a $10 per month service plan for the pumps for 3 years after installation (Diversified's cost to provide this service is $7 per month). The Super Soakers are delivered and installed on March 1, 2017, and full payment is made to Diversified. Any discount is applied to the pump/installation bundle. 2.Diversified ships 300 Super Soakers to Menards on consignment. By March 31, 2017, Menards has sold two-thirds of the consigned merchandise at the listed price of $1,200 per unit. Menards notifies Diversified of the sales, retains a 5% commission, and remits the cash due Diversified.

Accounting:Determine Diversified Industries' 2017 first-quarter net income. (Ignore taxes.)

Analysis: Determine free cash flow for Diversified Industries for the first quarter of 2017. In the first quarter, Diversified had depreciation expense of $175,000 and a net increase in working capital (change in accounts receivable and accounts payable) of $250,000. In the first quarter, capital expenditures were $500,000; Diversified paid dividends of $120,000.

Assume that there is a flat yield curve where the current interest rate on all government bonds is 10% per annum. The government has just issued 1-year, 2-year, 5-year and 10-year bonds, all offering an interest rate of 10%, a face value of $100 and paying interest once per annum. Calculate the market price for each of these bonds, assuming that immediately following purchase of the bonds at $100 there is either a parallel upward movement in the yield curve to 12 percent per annum or a parallel downward movement in the yield curve to 8 percent per annum. Explain the effect on interest rate change on bond prices taking into consideration the different maturities.

Calvin Clients Limited reported the inventory and cost of goods sold using the LIFO valuation method (perpetual) . The following table shows the details of purchases and sales for the year 2010. Assume that in each month the purchases happen at the start of the month and sales happened at the end of the month.

The cost of goods sold for the company is $

Zagrot Trucking’s balance sheet shows a total of noncallable $45 million long-term debt with a coupon rate of 8.00% and a yield to maturity of 6.00%. This debt currently has a market value of $100 million. The balance sheet also shows that the company has 20 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $650 million. The current stock price is $100 per share; stockholders' required return, rs, is 13.00%; and the firm's tax rate is 21%. The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. What is the difference between these two WACCs?