1. Alpha Ltd has appointed you as a manager in the budgeting department. The company has provided the following information to prepare a cash flow budget for the six months from the 1 January 2021 to 30 June 2021.

1. Alpha Ltd produces only one type of product and the projected selling price of the product is £2 for January and February and after that will be fixed at £3 for the foreseeable future.    
2. For the first three months of the year, 2,000 units will be sold per month. For the following three months, 2,500 units will be sold per month. Sales income is to be received in the month of sale.
3. Insurance costs are £200 every two months. The company will pay for insurance on 1 December 2020.
4. The company is paying 20% of sales of each month as bonus to the employees in the following month. The total sales during December 2020 will be £5,000.
5. Alpha Ltd will pay overhead costs of £2,000 each month.
6. The opening cash balance at 1 January 2021 will be £1,000.
7. The monthly cost of direct material and direct labour is estimated to be £500 and the company will pay them during each month.
8. Fixed costs of production are £100 per month, payable in the month.

1. Prepare a cash flow budget for the period 1 January 2021 to 30 June 2021 and indicate the closing balance as at 30 June 2021.

The following information applies to the questions displayed below.]

Portions of the financial statements for Parnell Company are provided below.

Required:
1. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the direct method. (Enter your answers in thousands (i.e., 10,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

Suppose the MPC = .5 when government purchases decrease by $200 billion. How much and in which direction would the aggregate demand curve shift as a result of the shock and all rounds of the multiplier process?

Suppose the MPC = .75 when the stock market values increase causing consumption spending to increase by $50 billion. How much and in which direction would the aggregate demand curve shift as a result of the shock and all rounds of the multiplier process?

Higher interest rates in the U.S. cause

When the U.S. dollar appreciates in the foreign exchange market,

You need to choose Company ABC’s company vehicle. You have two options: Mercedes or Acura.

Once purchased, assume Company ABC keeps purchasing the same type of vehicle as soon as the useful life is over. John Smith (CEO) says both of these vehicles give him the same level of satisfaction and it all depends on the annualized cost of the car.

Mercedes:

Initial Costs = $100,000

Operating Expenses = $15,000 per year

Has a 4 year life, after which it will sell for $15,500

Acura:

Initial Costs = $85,000

Operating Expenses = $17,600 per year

Has a 3 year life, after which it will sell for $10,100

CCA Rate = 42%

Corporate Tax Rate = 43%

Required Rate of Return = 12%

QUESTION: Find the EAC's of these two vehicles? (Take in tax and CCA tax shield into consideration) Which vehicle do you recommend to Alex and why?

PLEASE SHOW CALCULATIONS AND STEP BY STEP WORK!!!

You need to choose Company ABC’s company vehicle. You have two options: Mercedes or Acura.

Once purchased, assume Company ABC keeps purchasing the same type of vehicle as soon as the useful life is over. John Smith (CEO) says both of these vehicles give him the same level of satisfaction and it all depends on the annualized cost of the car.

Mercedes:

Initial Costs = $100,000

Operating Expenses = $15,000 per year

Has a 4 year life, after which it will sell for $15,500

Acura:

Initial Costs = $85,000

Operating Expenses = $17,600 per year

Has a 3 year life, after which it will sell for $10,100

CCA Rate = 42%

Corporate Tax Rate = 43%

Required Rate of Return = 12%

QUESTION: Find the EAC's of these two vehicles? (Take in tax and CCA tax shield into consideration) Which vehicle do you recommend to Alex and why?

PLEASE SHOW CALCULATIONS AND STEP BY STEP WORK!!!

You are a CEO of a national restaurant chain. You are facing an investment proposal of building 20 new hotels across the country. Since hotel is a new business line for your company, the management finds Hilton Hotel corporation as one pure play company to assist the evaluation of this investment proposal. With the following information, what discount rate should you use to evaluate this investment proposal?

1 year government bond return: 0.85%

10 year government bond return: 2.41%

Expected market risk premium: 5%

Info on Hilton

Equity return: 6.20%

Equity beta: .76

Debt to value ratio: 14%

Marginal tax rate: 40%

Info on your company

Book value of long-term debt: $5,000,000

Book value of equity: $5,000,000

Share price: $15

Number of shares outstanding: 1,000,000

Debt rate premium above government bonds is 3%

Marginal tax rate: 40%

The before tax cost of debt is _______________%

A growing concern of employers is time spent in activities like surfing the Internet and e-mailing friends during work hours. The San Luis Obispo Tribune summarized the fundings from a survey of a large sample of workers in an article that ran under the headline "Who Goofs Off 2 Hours a Day? Most Workers, Survey Says" (August 3, 2006). Suppose that the CEO of a large company wants to determine whether the average amount of wasted time during an 8-hour work day for employees of her company is less than the reported 120 minutes. Each person in a random sample of 12 employees was contacted and asked about daily wasted time at work. The resulting data are the following:

108 112 117 128 130 111 131 116 113 113 105 128

Is the following statement "These data provide evidence that the mean wasted time for this company is less than 120 minutes with significance level alpha equals 0.05" true or false?

First and Ten Corporation’s stock returns have a covariance with the market portfolio of .0511. The standard deviation of the returns on the market portfolio is 22 percent and the expected market risk premium is 6.4 percent. The company has bonds outstanding with a total market value of $56.9 million and a yield to maturity of 6.7 percent. The company also has 6.1 million shares of common stock outstanding, each selling for $32. The company’s CEO considers the firm’s current debt-equity ratio optimal. The corporate tax rate is 24 percent and Treasury bills currently yield 4.5 percent. The company is considering the purchase of additional equipment that would cost $58.5 million. The expected unlevered cash flows from the equipment are $19.25 million per year for 5 years. Purchasing the equipment will not change the risk level of the firm. Calculate the NPV of the project. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89)