Capital Budget Problem:

This case continues following the new project of the WePPROMOTE Company, that you and your partner own. WePROMOTE is in the promotional materials business. The project being considered is to manufacture a very unique case for smart phones. The case is very durable, attractive and fits virtually all models of smart phone. It will also have the logo of your client, a prominent, local company and is planned to be given away at public relations events by your client.

More details have emerged and your estimates are becoming more precise.

The following are the new values to the data that you have been estimating up to this point:

1. You can borrow funds from your bank at 3%.

2. The cost to install the needed equipment will be $105,000 and this cost is incurred prior to any cash is received by the project.

3. The gross revenues from the project will be $25,000 for year 1, then $27,000 for years 2 - 4. Year 5 will be $23,000.

4. The expected annual cash outflows (current project costs) are estimated at being $13,000 for the first year, then $12,000 for years 2, 3, and 4. The final year costs will be $10,000.

5. After 5 years the equipment will stop working and will be worthless.

6. The discount rate you are assuming continues to be 6%.

Please set-up solution model for the following capital budget problem. Explain the approach you plan to take and why. Then, please perform the calculations of your model and draw conclusions.​

Spanner company is a retailer that uses the periodic inventory system. on march 1, it had 100 units of product m at a cost of $1590. On march 6 spanner purchased 200 units of m for $3600. on march 10 it purchased 125 units of m for $3000. on march 15 it sold 200 units of m for $6000. calculate the march cost of goods sold and ending inventory at march 31 using (A) first in-first out (B) last in first out and (C) the weighted-average cost method. round your final answer to the nearest dollar.

4. On January 2, 2016, Prebish Corporation issued $1,500,000 of 10% bonds to yield 11% due December 31, 2025. Interest on the bonds is payable annually, each December 31. The bonds are callable at 101 (i.e., at 101% of the face amount) and on January 2, 2019, Prebish called $1,500,000 face amount of the bonds and retired them. (100 POINTS)

Instructions

1. Determine the price of the Prebish bonds, when issued on January 2, 2016.
2. Prepare an Amortization Schedule for 2016-2020 for the bonds.
3. Prepare the journal entry to record the retirement of $1,500,000 by Prebish on January 2, 2019.

Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate of j₂ = 4.36% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2025. The yield rate is assumed to be j₂ = 4.91% p.a. Assume that this corporate bond has a 2.4% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive no further payments at all. Calculate the purchase price for 1 unit of this corporate bond. Round your answer to three decimal places.

Presented below is selected information for Cullumber Company.

Answer the questions asked about each of the factual situations.

1. Cullumber purchased a patent from Vania Co. for $1,230,000 on January 1, 2015. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2025. During 2017, Cullumber determined that the economic benefits of the patent would not last longer than 6 years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2017?

$_________________

Emma Limited’s current and forecasted free cash flows to the firm (FCFF) over the forecast horizon and the terminal period are as follows ($ millions):

Valuation assumptions and other information for Emma Limited are as follows:

REQUIRED:

Estimate Emma Limited’s equity value per share at the end of 2021 using the DCF model.

The following data is provided for a market 500 Index:                                                               
                                                                                    
                        Year     Total return     Year     Total return                 
                        2010    9.0%                2020    2.0%                
                        2011    11.0%             2021    3.0%                
                        2012    -3.0%               2022    3.0%                
                        2013    1.0%                2023    -1.0%               
                        2014    5.0%                2024    5.0%                
                        2015    -12.0%             2025    4.0%                
                        2016    3.0%                2026    -3.0%               
                        2017    4.9%                2027    3.5%                
                        2018    -7.0%               2028    7.0%                
                        2019    0.1%                2029    5.8%                
                                                                                    
Calculate the 20-year arithmetic average annual rate of return on the market Index.

A) 2.07%

B) 0.10%

C) 2.59%

D) 5.62%                                                          

2014 I 31 2017 I 69 II 24 II 54 III 23 III 46 IV 16 IV 32 2015 I 42 2018 I 82 II 35 II 66 III 30 III 51 IV 23 IV 38 2016 I 53 2019 I 91 II 45 II 72 III 39 III 59 IV 27 IV 41 Create a multiple regression equation incorporating both a trend (t=0 in 2013: IV) and dummy variables for the quarters. Let the first quarter represent the reference (or base) group. Complete (e) thru (h) using your results. This is a computer deliverable. (e) Test to see if there is an upward trend in new customers. Use alpha = 0.01. (f) Test to see if the model has explanatory power. Use alpha = 0.05. (g) Forecast the number of new customers in the first and second quarters of 2020. (h) Test for the existence of first order autocorrelation, use alpha = 0.05. The calculated dw = 1.19.

Austin Partners provides management consulting services to government and corporate clients.

Austin has two support departments —administrative services​ (AS) and information systems (IS)—and

two operating departments—government consulting​ (GOVT) and corporate consulting​ (CORP). For the first quarter of 2013​, Austin's cost records indicate the​ following:

Boston Partners provides management consulting services to government and corporate clients.

Boston has two support Departments —administrative

services​ (AS) and information systems (IS)—and two operating departments—government

consulting​ (GOVT) and corporate consulting​ (CORP). For the first quarter of 2013​,

Boston's cost records indicate the​ following:

1.Allocate the two support​ departments' costs to the two operating departments using the following​ methods:

a.Direct method

b.​Step-down method​ (Allocate AS​ first)

c.Step-down method​ (Allocate IS​ first)

2.Compare and explain differences in the​ support-department costs allocated to each operating department.

3.What approaches might be used to decide the sequence in which to allocate support departments when using the​ step-down method?