The records at the end of January of the current year for Young Company showed the following for a particular kind of merchandise:

Beginning Inventory at FIFO: 17 Units @ $20 = $340

Beginning Inventory at LIFO: 17 Units @ $16 = $272

Required:

1. Compute the inventory turnover ratio for the month of January under the FIFO and LIFO inventory costing methods.

2. Which costing method is the more accurate indicator of the efficiency of inventory management?

You will be paying $10,800 a year in tuition expenses at the end of the next two years. Bonds currently yield 9%.

a. What is the present value and duration of your obligation? (Do not round intermediate calculations. Round "Present value" to 2 decimal places and "Duration" to 4 decimal places.)

b. What is the duration of a zero-coupon bond that would immunize your obligation and its future redemption value? (Do not round intermediate calculations. Round "Duration" to 4 decimal places and "Future redemption value" to 2 decimal places.)

You buy a zero-coupon bond with value and duration equal to your obligation.

c-1. Now suppose that rates immediately increase to 10%. What happens to your net position, that is, to the difference between the value of the bond and that of your tuition obligation? (Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Net position changes by            $

c-2. What if rates fall to 8%? (Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Net position changes by            $

Payments of $1000 are invested into an account at the end of each year for 8 years, earning 8% effective per annum. Interests can only be reinvested at 6% for the first 6 years and 7% thereafter. Find the accumulated value of the investment after 10 years. (Answer: $12092.96)

Consider the following information on a stock and the market portfolio: For the next year, there will be two possible scenarios: Good and Bad. The probability of Good scenario happening is 0.6 and the probability of Bad scenario happening is 0.4. The return on the stock is 30% in Good scenario and -8% in Bad scenario. The return on the market portfolio is 20% in Good scenario and -5% in Bad scenario. Calculate the expected return for the stock and the market portfolio.

Select one:

a. 7.20%; 5.00%

b. 14.00%; 8.80%

c. 18.00%; -3.20%

d. 14.80%; 10.00%

For the above question, calculate the standard deviations for the stock and the market portfolio.

Select one:

a. 0.2378; 0.1581

b. 0; 0

c. 0.1862; 0.1225

d. 0.1960; 0.1127

For the above questions, calculate the covariance between the stock and the market portfolio.

Select one:

a. 0.03440

b. 0.03760

c. 0.02280

d. 0.02208

For the above questions, calculate the beta for the stock

Select one:

a. 1.7391

b. 0.5750

c. 0.6579

d. 1.5200

e. The questions do not provide enough information to calculate beta

For the above questions, suppose the risk-free rate of return is 5 percent. Use CAPM to calculate the required rate of return for the stock. Do you recommend purchasing the stock based on your calculation of required rate of return?

Select one:

a. The required rate of return for the stock is 12.60%. I do not recommend buying the stock

b. The required rate of return for the stock is 12.60%. I recommend buying the stock

c. The questions do not provide enough information to do the recommendation

d. The required rate of return for the stock is 11.61%. I recommend buying the stock

e. The required rate of return for the stock is 11.61%. I do not recommend buying the stock

At the end of the year, a company offered to buy 4,610 units of a product from X Company for a special price of $11.00 each instead of the company's regular price. The following information relates to the 61,300 units of the product that X Company has already made and sold to its regular customers:

The special order product has some unique features that will require additional material costs of $0.72 per unit and the rental of special equipment for $4,000.

5. Profit on the special order would be

6. The marketing manager thinks that if X Company accepts the special order, regular customers will be lost, with demand falling by 750 units. This loss in sales will cause firm profits to fall by

At the end of the year, a company offered to buy 4,200 units of a product from X Company for a special price of $11.00 each instead of the company's regular price. The following information relates to the 69,100 units of the product that X Company has already made and sold to its regular customers:

The special order product has some unique features that will require additional material costs of $0.90 per unit and the rental of special equipment for $3,000.

The marketing manager thinks that if X Company accepts the special order, regular customers will be lost, with demand falling by 800 units. This loss in sales will cause firm profits to fall by ______________?

Lizo is a public company with the following characteristics (in the most recent year):

• - At the start of the year, the firm had book value of equity of $400 million, debt outstanding (book value as well as market value) of $200 million, and cash balance of $100 million. These numbers did not change during the most recent year.

• - The cost of capital for the firm is 6% next year, 8% the year after and 9% thereafter (in perpetuity).

• - Shares outstanding: 200 million

• - After-tax operating income: $100 million

• - Revenues: $800 million

  a) Lizo’s after-tax operating income is expected to grow 20% in each of the next 3 years. You expect Lizo to maintain its current return on invested capital (ROIC) forever. Estimate the free cash flows to the firm in each of the next 3 years.

  b) At the end of year 3, you expect Lizo to be in stable growth, growing 5% a year in perpetuity, while maintaining its current return on invested capital. Estimate the terminal value at the end of year 3.

c) Estimate the market value of equity today.

d) Lizo has 50 million options outstanding. Assume that the market value of each option is $5. Using the “market value approach”, estimate the value per share for Lizo today.

The Winston Company estimates that the factory overhead for the following year will be $1,216,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 38,000 hours. The total machine hours for the year was 54,900. The actual factory overhead for the year was $1,746,000.

Required:

Chart of Accounts

Factory Overhead

(a) Determine the total factory overhead amount applied.

(b) Calculate the overapplied or underapplied amount for the year. Enter the amount as positive values.

General Journal

(c) Prepare the journal entry to close Factory Overhead into Cost of Goods Sold on December 31. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL