Your firm is considering introducing a new product for which returns are expected to be as follows:

Year 1 to Year 3 (Inclusive): $2,000 per year

Year 4 to Year 8 (Inclusive): $5,000 per year

Year 9 to Year12 (Inclusive): $3,000 per year

The introduction of the product requires an immediate outlay (expenditure) of $15,000 for equipment estimated to have a salvage value of $2,000 after 12 years. Compute the Internal Rate of Return (IRR) for the launch of this product. Write your answer to two decimal places.

(a) Explain what is meant by the terms “horizon (terminal) date” and “horizon (terminal) value”. (b)Suppose D0 = RM5.00 and rs = 10%. The expected growth rate from Year 0 to Year 1 (g0 to 1) = 20%, the expected growth rate from Year 1 to Year 2 (g1 to 2) = 10%, and the constant rate beyond Year 2 is gn = 5%. What are the expected dividends for Year 1 and Year 2? What is the expected horizon value price at Year 2? What is the expected P0

Kafue Fisheries paid a dividend of K0.58 per share this year. Dividends at the end of each of the next five years are expected to be as follows:

Year 1 K0.70

Year 2 K0.83

Year 3 K0.96

Year 4 K1.09

Year 5 K1.22

After year 5, dividends are expected to grow indefinitely at 10 percent a year. If your required rate of return for Kafue Fisheries’ common stock is 12 percent, what is the most that you would pay per share for Kafue Fisheries today?

Michelangelo Inc., a software development firm, has stock outstanding as follows: 10,000 shares of cumulative 3%, preferred stock of $20 par, and 13,000 shares of $50 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $2,300; second year, $3,200; third year, $23,030; fourth year, $41,750. 1st Year 2nd Year 3rd Year 4th Year Preferred stock (dividend per share) $ $ $ $ Common stock (dividend per share) $ $ $ $

You are running a small manufacturing process that has projected cash flows of -$13,000 in year one, $4,000 in year 2, $5000 in year 3, -$3,000 in year 4, $6,000 in year 5, and $7,000 in year 6, what is the interest rate that gives a net present value of zero. For information, In year four, you were required to make some upgrades to the process and that forced the negative $3,000. (Hint: Take the cash flow at the end of the year) (Give answer to one decimal place. That is, xx.x%)

Jack started a new accounting practice. He purchased $35,000 of computer equipment and placed the equipment in service in May. (Here is MARCS HY depreciation rates for 5 year property. (Year 1 -20.0%, Year 2 -32.0%, Year 3 -19.2% Year 4 -11.52%, Year 5 -11.52% and Year 6% - 5.76%. Unfortunately, the business was not doing well. In year 3, Jack decided to close the business. He sold the property for $10,500. What is Jack's gain or loss on the sale of the computer equipment?

Progressive Studios​ Corporation’s sales in Year 2019 is 800 million dollars.​ Let’s make the following assumptions on the​ firm’s performance to forecast its free cash flow in Year​ 2020:

​• Sales grow​ 25% from Year 2019 to Year 2020.

​• Corporate tax rate is​ 25%.

​• COGS is​ 40% of the sales in Year 2020.

​• SG&A is​ 20% of the sales in Year 2020.

​• Depreciation is​ 10% of the sales in Year 2020.

​• Net working capital amounts to​ 30% of the sales for each year​ (i.e., NWC for 2019 is​ 30% sales in​ 2019, NWC for 2020 is prediced to be​ 30% sales in​ 2020).

​• Capital expenditure is​ 5% of the sales in Year 2020.

a. What is the forcasted EBIT of Progressive Studios Corporation in Year​ 2020? Progressive Studios ​Corporation’s forecasted EBIT in Year 2020 is $___.(Round to the nearest​ dollar.)

b. What is Progressive Studios ​Corporation’s forecasted free cash flow in Year​ 2020? Progressive Studios ​Corporation’s forecasted free cash flow in Year 2020 is ​$___.​(Round to the nearest​ dollar.)

c. Assume that starting from Year 2021 and​ beyond, Progressive​ Studios' free cash flow will grow​ 2% per year. The weighted average cost of capital is ​ 12%. The corporation has debt outstanding of​ $100 million and cash of​ $50 million in Year 2019. The number of shares outstanding is 100 million shares. What is the price of Progressive Studios stock will be consistent with the​ forecast? The price per share of $___ will be consistent with the forecast

Problem 6-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2]

Haas Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:

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.

Problem 7-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1, LO7-2]

Haas Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:

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 $65 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.

Problem 6-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2]

Haas Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:

During its first year of operations, Haas produced 40,000 units and sold 40,000 units. During its second year of operations, it produced 55,000 units and sold 30,000 units. In its third year, Haas produced 20,000 units and sold 45,000 units. The selling price of the company’s product is $46 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.