Cash to Monthly Cash Expenses Ratio Action Therapeutics, Inc., reported the following financial data (in thousands) for the years ending December 31, Year 3, Year 2, and Year 1. For Years Ending December 31 Year 3 Year 2 Year 1 Cash and cash equivalents $30,600 $17,040 $10,200 Net cash flows from operations (40,800) (28,800) (24,000) a. Determine the monthly cash expenses for Year 3, Year 2, and Year 1 (in thousands). Year 3: $ per month Year 2: $ per month Year 1: $ per month b. Determine the ratio of cash to monthly cash expenses as of December 31, Year 3, Year 2, and Year 1. Round to one decimal place. Year 3: months Year 2: months Year 1: months c. Since Year 1, Action Therapeutics, Inc.'s monthly cash expenses have . Based on cash at the end of year three the company will run out of cash in about unless it changes its operations or raises additional financing.
In: Accounting
For the given quarterly sales data, a) calculate seasonal indices for each quarter, b) the year 4 annual forecast based on a linear regression trend forecasting method, c) the seasonally adjusted trend based quarterly forecasts for that 4th year, d) the year 4 annual forecast based on the Naive forecasting method, and e) the seasonally adjusted Naive based quarterly forecast for that 4th year.
| Quarter: | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| 1 | 2 | 3 | 7 |
| 2 | 6 | 10 | 18 |
| 3 | 2 | 6 | 8 |
| 4 | 5 | 9 | 15 |
| Total | 15 | 28 | 48 |
a) Seasonal indices: Q1 ; Q2 ; Q3 ; Q4
b) Year 4 forecast, trend based: Year 4
c) Seasonally adjusted trend forecast, year 4: Year 4 Q1 ; Year 4 Q2 ; Year 4 Q3 ; Year 4 Q5
d) Year 4 forecast, Naive based: Year 4
e) Seasonally adjusted Naive forecast, year 4: Year 4 Q1 ; Year 4 Q2 ; Year 4 Q3 ; Year 4 Q5
In: Accounting
Compute the IRR, NPV, PI, and payback period for the following two projects. Assume the required return is 12%.
Cashflow for each year
Project A : Year 0= -2500 Year 1=900 Yaer 2=800 Year 3=1600 Year 4=100 Yaer 5=50 Year 6= 300
Project B Year 0 =-2500 Year 1=50 Year2= 600 Year 3=150 Year 4=900 Year 5= 500 Year 6=2500
In: Finance
Problem 9-4
Comparison of Depreciation Methods
Italian Construction Company purchased a new crane for $360,500 at the beginning of year 1. The crane has an estimated residual value of $35,000 and an estimated useful life of six years. The crane is expected to last 10,000 hours. It was used 1,800 hours in year 1; 2,000 hours in year 2; 2,500 hours in year 3; 1,500 hours in year 4; 1,200 hours in year 5; and 1,000 hours in year 6.
1. Compute the annual depreciation and carrying value for the new crane for each of the six years under each of the following methods. When calculating the rate for double-declining-balance, round the percentage to two decimal places, like 16.67% or 33.33%. Round your answers to the nearest whole dollar.
a. Straight-line:
| Depreciation | Carrying value | |
| Year 1: | $ | $ |
| Year 2: | $ | $ |
| Year 3: | $ | $ |
| Year 4: | $ | $ |
| Year 5: | $ | $ |
| Year 6: | $ | $ |
b. Production:
| Depreciation | Carrying value | |
| Year 1: | $ | $ |
| Year 2: | $ | $ |
| Year 3: | $ | $ |
| Year 4: | $ | $ |
| Year 5: | $ | $ |
| Year 6: | $ | $ |
c. Double-declining-balance:
| Depreciation | Carrying value | |
| Year 1: | $ | $ |
| Year 2: | $ | $ |
| Year 3: | $ | $ |
| Year 4: | $ | $ |
| Year 5: | $ | $ |
| Year 6: | $ | $ |
2. If the crane is sold for $250,000 after year 3, what would be the amount of gain or loss under each method?
| a. Straight-line: | $ |
| b. Production: | $ |
| c. Double-declining-balance: | $ |
In: Accounting
Problem 9-4
Comparison of Depreciation Methods
Italian Construction Company purchased a new crane for $360,500 at the beginning of year 1. The crane has an estimated residual value of $35,000 and an estimated useful life of six years. The crane is expected to last 10,000 hours. It was used 1,800 hours in year 1; 2,000 hours in year 2; 2,500 hours in year 3; 1,500 hours in year 4; 1,200 hours in year 5; and 1,000 hours in year 6.
1. Compute the annual depreciation and carrying value for the new crane for each of the six years under each of the following methods. When calculating the rate for double-declining-balance, round the percentage to two decimal places, like 16.67% or 33.33%. Round your answers to the nearest whole dollar.
a. Straight-line:
| Depreciation | Carrying value | |
| Year 1: | $ | $ |
| Year 2: | $ | $ |
| Year 3: | $ | $ |
| Year 4: | $ | $ |
| Year 5: | $ | $ |
| Year 6: | $ | $ |
b. Production:
| Depreciation | Carrying value | |
| Year 1: | $ | $ |
| Year 2: | $ | $ |
| Year 3: | $ | $ |
| Year 4: | $ | $ |
| Year 5: | $ | $ |
| Year 6: | $ | $ |
c. Double-declining-balance:
| Depreciation | Carrying value | |
| Year 1: | $ | $ |
| Year 2: | $ | $ |
| Year 3: | $ | $ |
| Year 4: | $ | $ |
| Year 5: | $ | $ |
| Year 6: | $ | $ |
2. If the crane is sold for $250,000 after year 3, what would be the amount of gain or loss under each method?
| a. Straight-line: | $ |
| b. Production: | $ |
| c. Double-declining-balance: | $ |
In: Accounting
Problem 4-23
Determinants of Interest Rates
Suppose you and most other investors expect the inflation rate to be 8% next year, to fall to 5% during the following year, and then to remain at a rate of 3% thereafter. Assume that the real risk-free rate, r*, will remain at 2% and that maturity risk premiums on Treasury securities rise from zero on very short-term securities (those that mature in a few days) to a level of 0.2 percentage points for 1-year securities. Furthermore, maturity risk premiums increase 0.2 percentage points for each year to maturity, up to a limit of 1.0 percentage point on 5-year or longer-term T-notes and T-bonds.
Calculate the interest rate on 1-year Treasury securities.
Round your answer to two decimal places.
%
Calculate the interest rate on 2-year Treasury securities. Round
your answer to two decimal places.
%
Calculate the interest rate on 3-year Treasury securities. Round
your answer to two decimal places.
%
Calculate the interest rate on 4-year Treasury securities. Round
your answer to two decimal places.
%
Calculate the interest rate on 5-year Treasury securities. Round
your answer to two decimal places.
%
Calculate the interest rate on 10-year Treasury securities. Round
your answer to two decimal places.
%
Calculate the interest rate on 20-year Treasury securities. Round
your answer to two decimal places.
%
In: Finance
Instructions
Complete the following problems using either a financial calculator
or a spreadsheet program. Do not use interim rounding, state your
answers as positive values, to two decimal places for dollar or
period values and four places for percentages stated as decimals;
do not label answers with symbols such as $ or %. For example,
10.5% should be input as .1050.
1. When comparing two investments with the same effective rate, one with a 4-year term and semi-annual compounding and one with a 2-year term and quarterly compounding, the nominal rate of the 4-year term instrument is ____ the nominal rate of the 2-year term instrument.
A. Lower than
B.the same as
C. higher than
2. Seamus McIntyre started saving for retirement today by investing $241 in an account earning 0.0888. He plans to continue with monthly contributions of the same amount for 32 years. The present value of his investment is:
In: Finance
3-year horizon
10-year bond
face value 100
5% coupon
initial y-t-m 5.75%
first reinvestment rate 4%
second reinv rate 4.2%
y-t-m in three years 5.8%
rather than reinvesting the first coupon at 4% for two years, invest it for one year at 4% and then combine those proceeds with the second coupon to reinvest at 4.2%. Calculate ROR
In: Finance
Problem 3-18 Common-Size and Common-Base-Year Financial Statements
In addition to common-size financial statements,
common-base-year financial statements are often used. Common-base
year financial statements are constructed by dividing the
current-year account value by base-year account value. Thus, the
result shows the growth rate in the account.
Prepare the common-size balance sheet and common-base-year balance
sheet for the company. Use 2016 as the base-year. (Do not
round intermediate calculations. Enter all common-size answers as a
percent. Round your common-size answers to 2 decimal places, e.g.,
32.16, and common-base-year answers to 4 decimal places, e.g.,
32.1616.)
| JARROW CORPORATION | ||||||||||||||
| 2016 | Common-size | 2017 | Common-size |
Common-base year |
||||||||||
| Assets | ||||||||||||||
| Current assets | ||||||||||||||
| Cash | $ | 8,364 | % | $ | 10,304 | % | ||||||||
| Accounts receivable | 21,153 | % | 23,637 | % | ||||||||||
| Inventory | 37,522 | % | 42,497 | % | ||||||||||
| Total | $ | 67,039 | % | $ | 76,438 | % | ||||||||
| Fixed assets | ||||||||||||||
| Net plant and equipment | 216,070 | % | 244,040 | % | ||||||||||
| Total assets | $ | 283,109 | % | $ | 320,478 | % | ||||||||
| Liabilities and Owners’ Equity | ||||||||||||||
| Current liabilities | ||||||||||||||
| Accounts payable | $ | 41,598 | % | $ | 46,584 | % | ||||||||
| Notes payable | 18,164 | % | 17,735 | % | ||||||||||
| Total | $ | 59,762 | % | $ | 64,319 | % | ||||||||
| Long-term debt | 24,700 | % | 31,700 | % | ||||||||||
| Owners' equity | ||||||||||||||
| Common stock and paid-in surplus | 38,700 | % | 39,900 | % | ||||||||||
| Accumulated retained earnings | 159,947 | % | 184,559 | % | ||||||||||
| Total | $ | 198,647 | % | $ | 224,459 | % | ||||||||
| Total liabilities and owners' equity | $ | 283,109 | % | $ | 320,478 | % | ||||||||
In: Accounting
Haas Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:
| Variable costs per unit: | ||
| Manufacturing: | ||
| Direct materials | $ | 28 |
| Direct labor | $ | 20 |
| Variable manufacturing overhead | $ | 4 |
| Variable selling and administrative | $ | 3 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 210,000 |
| Fixed selling and administrative expenses | $ | 150,000 |
During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company’s product is $61 per unit.
Required:
1. Compute the company’s break-even point in unit sales.
2. Assume the company uses variable costing:
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3.
3. Assume the company uses absorption costing:
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3.
Compute the company’s break-even point in unit sales.
|
Compute the unit product cost for Year 1, Year 2, and Year 3. Assume the company uses variable costing.
|
Prepare an income statement for Year 1, Year 2, and Year 3. Assume the company uses variable costing.
|
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Compute the unit product cost for Year 1, Year 2, and Year 3. Assume the company uses absorption costing. (Round your intermediate calculations and final answers to 2 decimal places.)
|
Prepare an income statement for Year 1, Year 2, and Year 3. Assume the company uses absorption costing. (Round your intermediate calculations to 2 decimal places.)
|
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In: Accounting