A recession is expected in the market next year with falling output accompanied by a slow in inflation. Draw one graph showing what this will do to the bond market, one graph to show what this will do to the money market (explain whats going to happen to the market interest rate). explain how both of the markets are associated.

The price of a one-year at the money call option is 7.07. The underlying asset is a stock that pays dividends at a rate of 4%. The stock’s volatility is 30% and the current risk-free interest rate is 10%. The call’s Delta is equal to .611831. Determine the current price of the stock.

Create a case study of a 58 year man who is diabetic. The components of the case study must include the following.
a. Learning objective.
b.Medical history of the patient.
c. Social history of the patient.
d. Objective data
e.Subjective data
f. Identify patient problems.

Next.
Develop four questions for your peers related to this case study.

A case study using a 58 year old man who is diabetic as an example or a person suffering from any other disease.

A property owner charges a rent of $30 in the first year, $34 in the second year, and $36 in the third year, but provides two months of free rent in the first year as a concession. Using an 8 percent discount rate, what is the effective rent over the three years?

a) $32.18 b) $33.27 c) $33.89 d) $34.91

At the end of the current year, Accounts Receivable has a balance of $3,000,000; Allowance for Doubtful Accounts has a debit balance of $475,000; and Net Sales for the year total $6,500,000. Bad Debt Expense is estimated at 3/4 of 1% of Net Sales.

1. Calculate the dollar amount required to record the allowance amount.
2. Prepare the adjusting journal entry for the Allowance for Doubtful Accounts:

3. Calculate the Net Accounts Receivable Balance

1. Consider a five year bond with a 10% coupon that is presently trading at a yield to maturity of 8%. If market rates do not change, one year from now the price of this bond _____________.
   1. Will be higher
   2. Will be lower
   3. Will be the same
   4. Cannot be determined from the information given

2. A bond’s sensitivity to interest rate changes _____________ at a(n) _______________ rate as maturity lengthens.
   1. increases; decreasing
   2. decreases; decreasing
   3. increases, increasing
   4. decreases, decreasing

A company manufactures and sells one product. At the end of the year, the managers were disappointed that the profit had decreased. The details are:-

                                                            BUDGET                                ACTUAL

                                                                              £                                             £

Sales                                        1 200 units      36 000           1 000 units      40 000

Material (variable cost)              500 kg              3 000              500 kg             3 600

Labour (variable cost)             1 200 hours       12 000           1 100 hours      12 100

Fixed overheads                                                 9 000                                     7 000

Total costs                                                       24 000                                   22 700

Profit / (Loss)                                                  12 000                                   17 300

(a)        Calculate the following variances:_

1. Material price and usage
2. Labour rate and efficiency
3. Overhead spending and volume
4. Sales volume and price

(b)       Prepare a report to explain the difference between the expected profit of £12 000 and        the actual reported profit of £22 700 for the year.

2. Discuss the reports that should be provided to the managers of:-
   1. cost centres
   2. profit centres
   3. investment centres

for the coming year (2020). The budget will detail each quarter’s activity and the activity for the year in the total. The master budget will be based on the following information:

1. Fourth-quarter sales for 2019 are 82,000 units and 65,000 for the first quarter of 2021.
2. Unit sales by quarter (for 2020) are projected as follows:

First quarter                       66,000

Second quarter                  68,000

Third quarter                     75,000

Fourth quarter                   85,000

The selling price is $86 per unit. Cash sales make up 25% of all sales. Quaint collects 75 percent of the credit sales within the quarter in which they are realized; the other 25 percent are collected in the following quarter. There are no bad debts.

3. The beginning inventory of finished goods is 13,000 units. Required ending inventory is 25% of the next quarter’s sales in units.
4. Each stemware unit uses one and a half hours of direct labor and two units of direct materials. Laborers are paid $23.00 per hour, and one unit of direct materials costs $12.
5. There are 10,400 units of direct materials in beginning inventory as of January 1, 2019. At the end of each quarter, Quaint plans to have 10 percent of the direct materials needed for next quarter’s unit sales. The ending unit of direct materials on hand at the end of the year was 19,500.
6. Quaint buys direct materials on account. Half of the purchases are paid for in the quarter of acquisition, and the remaining half are paid for in the following quarter. Wages and salaries are paid on the 15th and 30th of each month.
7. Fixed overhead totals $671,600 for each of the first three quarters. Of this total, $255,000 represents depreciation. During the fourth quarter, the depreciation and total fixed overhead increases by $18,575. All fixed expenses other than depreciation are paid for in cash in the quarter incurred. The fixed overhead rate is computed by dividing the Quaint Stem Company is a high-end glassware manufacturer that produces fine stemware of the highest quality. The company is completing its fourth year of operations and is preparing to build its master budget year’s total fixed overhead by the year’s expected actual units produced.
8. Variable overhead is budgeted at $5.50 per direct labor hour. All variable overhead expenses are paid for in the quarter incurred.
9. Fixed selling and administrative expenses total $285,000 per quarter, including $50,000 depreciation.
10. Variable selling and administrative expenses are budgeted at $6
11. per unit sold. All selling and administrative expenses are paid for in the quarter incurred.
12. The balance sheet as of December 31, 2019, is as follows:

ASSETS                                                                LIABILITIES and STOCKHOLDERS’EQUITY    

Cash                                              $      52,000     Accounts Payable                                $    680,000

Accounts Receivable                     1,275,000    

Raw Materials Inventory                   124,800

Finished Goods Inventory                 656,500     Capital Stock                                         9,750,000

Plant and equipment, net              9,360,000     Retained Earnings                                 1,038,300     Total Assets                                $11,468,300                Total Liab. & Equity              $11,468,300

13. Quaint has a required cash balance of $50,000. An operating line of credit is available up to $250,000 at 8% interest. All borrowings and payments must be made in increments of $10,000 and interest is paid when principal is paid. All borrowings take place at the beginning of the quarter and all payments take place at the end of the quarter.
14. Quaint will pay quarterly dividends of $55,000. At the end of the third quarter, $525,000 of equipment will be purchased and at the end of the fourth quarter, $225,000 of equipment will be purchased.
15. The income tax rate is 30%.

Required

Prepare a master budget for Quaint Stem Company for each quarter of 2019 and for the year in total. The following component budgets must be included:

1. Cost of goods sold budget
2. Selling and administrative expenses budget
3. Pro forma income statement
4. financial budget (cash collection, cash payment and cash budget )
5. Pro format balance sheet

You are the audit senior on the audit for the year ended 30 June 2019 of Neptune Pty Ltd, a large manufacturer of lighting accessories. This is the first year that your firm has performed Neptune’s audit. As part of the planning work, you have annualised Neptune’s interim financial accounts and performed analytical procedures on the annualised figures and compared the results to industry averages and last year’s audited financial information. The results are given below.

Industry Average Neptune Pty Ltd

RATIO 2019 2018 2019 2018

Current ratio 2.51 2.72 2.15 2.55

Net profit ratio 0.08 0.07 0.063 0.05

Gross profit ratio 0.24 0.29 0.24 0.21

Inventory turnover ratio 3.41 3.52 4.24 4.53

Receivables turnover ratio 6.02 5.81 6.38 7.17

Return on total assets 8.4% 6.0% 15.0% 11.0%

Required

Providing a brief explanation of each of the above ratios, outline what conclusions can be drawn about Gleam’s financial position and identify potential audit risks to be investigated further.

(1).     What is the payback period of an investment with the following cash flows?

            Year      Cash Flow

            0            -60,000

            1            30,000

            2            20,000

            3            15,000

            4            10,000

            5            5,000

(2). A project has the following cash flows:

Year                     Cash Flow

0                          -$4,000

1                            2,000

2                            2,000

3                            2,000

4                            2,000

Its cost of capital is 10 percent. What is the project’s discounted payback period?