4) Your company is considering a project that will generate sales revenue of $90 million in Year 1. Revenue is expected to be flat for subsequent years. The project requires working capital equal to 16% of sales revenue, and has total operating costs excluding depreciation equal to 50% of sales. The equipment has a 3 year MACRS life and can be purchased and installed for $100 million. The project will end in three years. At that time, the equipment can be sold for $4.2 million. Your company’s tax rate is 25%.

a) Find the initial cash flow (Yr. 0).

b) Find the operating cash flows (Yrs. 1-3).

MACRS Depreciation Tables

5)   Using the information from Problem 4:

         a)   Find the after-tax cash flow from the sale of the equipment.

         b)   Find the total flow that occurs in Yr. 3.

Tehra Dactyl is an accounting for Skeds, Inc., a footwear and apparel company. The company's revenue and net income have increased by more than 100% over the past three years. During the same period, Tehra and her colleagues in the Accounting department have not received a raise or salary increase. Frustrated by not receiving a raise while the company has thrived, Tehra has begun submitting expense reimbursements for personal purchases. Tehra has a good relationship with her supervisor, and he simply 'signs off' on Tehra's expense reimbursements. Tehra suspects that he knows that she is submitting personal expenses for reimbursement and is 'looking the other way' because Tehra has not received a raise in the last three years.

Are Tehra and her supervisor acting in an ethical manner? Why or why not? Explain.

What controls could the company implement to help deter such actions from happening within their accounting department? Explain beyond a listing of controls.

Remember to use proper grammar and syntax for your answers and to answer in narrative form. Follow proper APA formatting for your answers, including proper citations/references for any sources that may be used.

A company produces at an output level where marginal cost is equal to marginal revenue and has the following revenue and cost levels:
Total revenue = $1,450
Total cost = $1,500
Total variable cost = $1,300
What would you suggest?

The owner of a movie theater company would like to predict weekly gross revenue as a function of advertising expenditures. Historical data for a sample of eight weeks follow.

(a)

Use α = 0.01 to test the hypotheses

for the model

y = β₀ + β₁x₁ + β₂x₂ + ε,

where

Find the value of the test statistic. (Round your answer to two decimal places.)

Find the p-value. (Round your answer to three decimal places.)

p-value =

State your conclusion.

Reject H₀. There is insufficient evidence to conclude that there is a significant relationship among the variables

Do not reject H₀. There is sufficient evidence to conclude that there is a significant relationship among the variables.    

Do not reject H₀. There is insufficient evidence to conclude that there is a significant relationship among the variables.

Reject H₀. There is sufficient evidence to conclude that there is a significant relationship among the variables.

(b)

Use α = 0.05 to test the significance of

β₁.

State the null and alternative hypotheses.

Find the value of the test statistic. (Round your answer to two decimal places.)

Find the p-value. (Round your answer to three decimal places.)

p-value =

State your conclusion.

Reject H₀. There is insufficient evidence to conclude that β₁ is significant.

Reject H₀. There is sufficient evidence to conclude that β₁ is significant.  

Do not reject H₀. There is insufficient evidence to conclude that β₁ is significant.

Do not reject H₀. There is sufficient evidence to conclude that β₁ is significant.

Should x₁ be dropped from the model? Yes or No?

(c)

Use α = 0.05 to test the significance of

β₂.

State the null and alternative hypotheses.

Find the value of the test statistic. (Round your answer to two decimal places.)

Find the p-value. (Round your answer to three decimal places.)

p-value =

State your conclusion.

Do not reject H₀. There is insufficient evidence to conclude that β₂ is significant.

Reject H₀. There is sufficient evidence to conclude that β₂ is significant.    

Reject H₀. There is insufficient evidence to conclude that β₂ is significant.

Do not reject H₀. There is sufficient evidence to conclude that β₂ is significant.

Should x₂ be dropped from the model?Yes or No ?  

1. Maximising revenue should be the goal of the company.

   True

   False

2. QUESTION 2Which one of the following statements about business valuation is NOT true?

3. 		Actions by competitors also affect the value of a business.
   		The value of a business changes over time.
   		There is no such thing as the market value for a business.
   		There is a single value for any business.

4. QUESTION 3In finance, the fundamental determinant of an asset's value is the future cash flow it is expected to generate.

5. True

   False

6. 1 points   

   QUESTION 4It is easier to calculate the market value of a private firm, compared to a public firm.

7. True

   False

8. QUESTION 5Young, rapidly growing companies can be more difficult to value compared to mature, stable companies. Why?

9. 		Young companies might only have 2 or 3 years of historical records compared to a mature company with years of records.
   		Many young, rapidly growing companies are not yet profitable and their future is less certain than for mature companies.
   		Due to the amount of money already invested in a young company, cash flows will be negative for the first few years. This makes valuation more difficult.
   		All of the above

10. QUESTION 6An important issue that must be considered when valuing a business is whether a controlling ownership interest or a minority interest is being valued.

11. True

    False

12. QUESTION 7 There is no such thing as ONE value for a business, because...

13. 		the value of a business can be different to different investors.
    		valuing a business is really hard, and no one knows how to do it.
    		accountants and financial managers like to argue.
    		the share market goes up and down all the time.

14. QUESTION 8The value of a business changes over time because...

15. 		changes in general economic conditions, industry conditions, and decisions made by managers all affect value.
    		actions by competitors also affect value.
    		the investment, operating and financing decisions made by managers also affect value.
    		All of the above.

16. QUESTION 9What are the three categories of business valuation?

17. 		Cash flow, growth and capital approach
    		Cost, market and income approach
    		Profit, loss and Excel approach
    		Assets, liabilities and capital approachQUESTION 10'Market Capitalisation' of a company listed on the stock market refers to:

18. 		The market value of the company.
    		The fundamental value of the company.
    		The book value of the company.
    		Nothing, this is not a term we use in finance.

Following the method outlined in the Jamison reading, calculate the revenue requirement for a utility company with a rate base of $50 million, a cost of equity of 20%, an equity financing proportion of 35%, and a tax rate of 37%. Assume that the values for expenses (E) and depreciation (d) are identical to the example in the Jamison reading.

The owner of a movie theater company would like to predict weekly gross revenue as a function of advertising expenditures. Historical data for a sample of eight weeks follow.

(a)

Use α = 0.01 to test the hypotheses

for the model

y = β₀ + β₁x₁ + β₂x₂ + ε,

where

(A) Find the value of the test statistic. (Round your answer to two decimal places.)

Find the p-value. (Round your answer to three decimal places.)

p-value =

(B) Find the value of the test statistic. (Round your answer to two decimals places.)

p-value=

(C) Find the value of the test statistic. (Round your answer to two decimals places.)

p-value=

Create a narrative for simple revenue cycle and expense cycle business process for a company that produces automobiles.

The owner of a movie theater company would like to predict weekly gross revenue as a function of advertising expenditures. Historical data for a sample of eight weeks follow.

1. Use α = 0.01 to test the hypotheses

for the model

y = β₀ + β₁x₁ + β₂x₂ + ε,

where

1b. Find the value of the test statistic. (Round your answer to two decimal places.)

1c. Find the p-value. (Round your answer to three decimal places.)

p-value =

1d. State your conclusion.

(a) Do not reject H₀. There is sufficient evidence to conclude that there is a significant relationship among the variables.

(b) Reject H₀. There is sufficient evidence to conclude that there is a significant relationship among the variables.    

(c) Do not reject H₀. There is insufficient evidence to conclude that there is a significant relationship among the variables.

(d) Reject H₀. There is insufficient evidence to conclude that there is a significant relationship among the variables.

2. Use α = 0.05 to test the significance of β₁.

2a. State the null and alternative hypotheses.

2b. Find the value of the test statistic. (Round your answer to two decimal places.)

2c. Find the p-value. (Round your answer to three decimal places.)

p-value =

2d. State your conclusion.

(a) Do not reject H₀. There is sufficient evidence to conclude that β₁ is significant.

(b) Do not reject H₀. There is insufficient evidence to conclude that β₁ is significant.    

(c) Reject H₀. There is sufficient evidence to conclude that β₁ is significant.

(d) Reject H₀. There is insufficient evidence to conclude that β₁ is significant.

2e. Should x₁ be dropped from the model?

Yes

No

3.Use α = 0.05 to test the significance of β₂.

3a. State the null and alternative hypotheses.

3b. Find the value of the test statistic. (Round your answer to two decimal places.)

3c. Find the p-value. (Round your answer to three decimal places.)

p-value =

3d. State your conclusion.

(a) Reject H₀. There is insufficient evidence to conclude that β₂ is significant.

(b) Do not reject H₀. There is sufficient evidence to conclude that β₂ is significant.   

(c) Do not reject H₀. There is insufficient evidence to conclude that β₂ is significant.

(d) Reject H₀. There is sufficient evidence to conclude that β₂ is significant.

3e. Should x₂ be dropped from the model?

Yes

No