1-The capital budgeting method that calculates the discount rate at which the present value of expected cash inflows from a project equals the present value of expected cash outflows is the ________.

We investigate the effect on the economy of a negative shock to consumer confidence. Assume that the behavior of the economy is given by the following equations:

Goods Market:

Y = C + I + G (Goods Market equilibrium)

C = Z + 0.5(Y − T) (Consumer Demand)

I = 60 − 50r (Investment Demand)

G = T = 100 (Government Budget)

Money Market:

M/P = L(Y, r + e) (Money Market Equilibrium)

L(Y, r + e) = 0.1Y − 50(r + e) (Real Money Demand)

M = 100 (Money Supply)

Labor Market: Y bar = 200

Variable Z is an index of consumer confidence: a positive Z means that consumers are optimistic about the future, a negative Z means that they are pessimistic. We assume initially that Z = 0. The shock we wish to consider in this exercise is a sudden drop in consumer confidence: Z < 0.

1. Derive the IS curve for any Z.

2. Plot the IS curve. How does the IS curve shift in response to changes in confidence?

3. Derive the LM curve.

4. Assume the economy has been at the long-run equilibrium for a long time with Z = 0 and e = 0. Compute the corresponding output, real interest rate and the price level.

5. Assume now that confidence Z suddenly drops from 0 to -5. Show what happens to the economy in the short run and in the long run on a graph with IS, LM and FE curves. Explain what happens to output, interest rates and the price level? (Graphically only)

6. Using the IS, LM and FE curves, compute the output, interest rate and the price level

a. In the short run

b. In the long run

Part A). The Bradley family owns 410 acres of farmland in North Carolina on which they grow corn and tobacco. Each acre of corn costs $105 to plant, cultivate, and harvest; each acre of tobacco costs $210. The Bradleys have a budget of $52,500 for next year. The government limits the number of acres of tobacco is $520. The Bradleys want to know how many acres of each crop to plant to maximize their profit.

Formulate a linear programming model for this problem.

Part B). Solve the linear programming model formulated in Part A for the Bradley family farm graphically.

a.) How many acres of farmland will not be cultivated at the optimal solution? Do the Bradleys use the entire 100-acre tobacco allotment?

b.) What would the profit for corn have to be for the Bradleys to plant only corn?

c.) If the Bradleys can obtain an additional 100 acres of land, will the number of acres of corn and tobacco they plan to grow change?

d.) If the Bradleys decide not to cultivate a 50-acre section as part of a crop recovery program, how will it affect their crop plans?

Part C). Solve the linear programming model formulated in Part A for the Bradley farm by using the computer.

A.) The Bradleys have an opportunity to lease some extra land from a neighbor. The neighbor is offering the land to them for $110 per acre. Should the Bradleys lease the land at that price? What is the maximum price the Bradleys should pay their neighbor for the land, and how much land should they lease at that price?

B.) The Bradleys are considering taking out a loan to increase their budget. For each dollar they borrow, how much additional profit would they make? If they borrowed an additional $1,000, would the number of acres of corn and tobacco they plant change?

Curse of the Bambino Entertainment (CotBE) had the following securities outstanding and other information for 2017:

Preferred Stock:

Issue A Preferred Stock, cumulative and nonconvertible, 5%, $100 par: $1,000,000

Dividend payments are in arrears for three (3) years.

Issue B Preferred Stock, non-cumulative and convertible, 6%, $100 par: $4,000,000

Conversion rate is 4 common shares for every preferred share.

Common Stock:

Class A Common Stock, $1 par, 5,000,000 shares authorized, 1,000,000 shares

issued and outstanding at January 1, 2017 $1,000,000

Repurchased 120,000 shares on March 1, 2017
Repurchased 60,000 shares on July 1, 2017
Sold 100,000 of repurchased (treasury) shares on September 1, 2017

Stock Warrants - warrants are exchangeable for 100,000 common shares. The warrants were issued on October 1, 2016 and have a $15 exercise price per warrant. The average market price per share during 2017 was $20.

Stock Options – CotBE’s issued 100,000 stock options to key executives on January 1, 2017 which vest on December 31, 2019 and have an exercise price of $16 per option.

Convertible Bonds - 8% Convertible Bonds of $5,000,000 were sold at face value on July 1, 2017. Each $1,000 of bond is convertible into 120 shares of common stock.

Other Information:

- Net Income for 2017 was $1,700,000

- Income Tax Rate was 40% for 2017

- CotBE’s declared and paid a cash dividend of $200,000 on common stock during 2017.

REQUIRED- Calculate CotBE’s Basic and Diluted EPS for the year ended December 31, 2017, show all calculations.

Improving Decision Making: Making the Rent vs. Buy Decision for Hardware and Software

This project provides an opportunity for you to help a real-world make a decision about whether to rent or buy new technology. You’ll use spreadsheet software to compare the total three-year cost of licensing and maintaining new manufacturing software or renting the software from an application service provider.

Dirt Bikes would like to implement new production planning, quality control, and scheduling software for use by 25 members of its manufacturing staff. Management is trying to determine whether to purchase the software from a commercial vendor along with any hardware required to run the software, or to use a hosted software solution from an application service provider. (The hosted software runs on the ASP’s computer.) You have been asked to help management with the rent-versus-buy decision by calculating the total cost of each option over a three-year period.

The costs of purchasing the software (actually for purchasing a license from the vendor to use its software package) include the initial purchase price of the software (licensing fee of $100,000 paid in the first year), the cost of implementing and customizing the software in the first year ($20,000), one new server to run the software (a first-year purchase of $4,000), one information systems specialist devoting half or his or her time to supporting the software ($55,000 in full-time annual salary and benefits with a 3% annual salary increase each year after the first year), user training in the first year ($10,000), and the cost of annual software upgrades ($5,000).

The cost of renting hosted software are the rental fees ($2,500 annually per user), implementation and customization costs ($12,000 in the first year), and training ($10,000 in the first year).

Use your spreadsheet software to calculate the total cost of renting or purchasing this software over a three-year period. Identify the lowest price alternative that meets Dirt Bike’s requirements.

What other factors should Dirt Bikes consider besides costs in determining whether to rent or buy the software?

Please Use Excel to solve this problem.. Please list the steps used in your solution.

Financial Accounting Research Assignment

Acorn Limited is a listed company based in Vermont. On January 1, 2018, the company granted 1,000 share units to its CFO. Each share unit has a contractual service period of three years and a vesting condition based on the details below. At the end of 2020, each share unit is convertible into 100 common shares of Acorn Limited if both of the following criteria are met:

2018-2020 Accumulated company net income is greater than $5 million.

2018-2020 Stock price increase is greater than 25%.

On the grant date, the company’s common shares had a fair value of $6 per share and the company was expected to meet both of the criteria above.

During 2018 and 2019, the company was expected to meet both of the criteria above. However, during 2020 the company’s stock price decreased and the company did not meet the stock price increase criteria at the end of the year.

The company’s accountant has asked for your help to check the compensation costs recorded for these share units during 2018-2019 and record the appropriate journal entry at the end of 2020.

Ignore the effects of taxes.

The answer should have these parts:

1.The first part of your report is the Question. In this section, you must identify the accounting problem. Be brief and precise. Try to write your question in one sentence. This section should not exceed two sentences.

2. The second part of your report is the Solution. In this section, you must clearly communicate your proposed solution to the accounting problem you identified in section one. Explain and lay out all of the steps involved in your solution. This will usually involve calculations and journal entries. Be sure to adequately answer the question from part one, including calculations and working. Your solution should be clear and understandable such that the reader does not have to read the authoritative literature for himself/herself. Please use in-text citations!

3. The third part of your report is the Authoritative Citation(s). In this section, you must list the titles of the citation(s) from the professional accounting literature upon which you based your solution.

1.    The president of Receding Airlines has asked you to calculate the company's cost of capital. To start, you have gathered the following information: RecedingAir has the following securities outstanding:

$1,000 face value, 8% annual coupon bonds with 15 years remaining to maturity and a current market price of $1,150.

$100 par value preferred stock that pays an 11% annual dividend and has a current market price of $92.

Common stock with a current market price of $50/share. Investors expect the next annual dividend to be $4.00 and to grow after that at a constant rate of 7% per year into the foreseeable future. If RecedingAir were to issue new securities today:

New bonds would pay interest annually, have a 15-year life, and incur a flotation cost of 3%.

A new issue of preferred stock would pay annual dividends and incur flotation costs of 6%

A new issue of common stock would incur flotation costs of 8%.

RecedingAir’s income is taxed at a 35% marginal rate.

RecedingAir’s target capital structure is 35% long-term debt, 15% preferred stock, and 50% common equity.

RecedingAir forecasts it will retain $25,000,000 of earnings in the coming year.

1.    What is the required rate of return of RecedingAir’s bondholders?
2.    What is RecedingAir’s cost of debt?
3.    What is the required rate of return of RecedingAir’s preferred stockholders?
4.    What is RecedingAir’s cost of preferred stock financing?
5.    What is the required rate of return of RecedingAir’s common stockholders?
6.     What is RecedingAir’s cost of retained earnings financing?
7.    What is RecedingAir’s cost of a new common stock issue?           
8.    What is RecedingAir’s weighted-average cost of capital (WACC) for its first dollar of new financing?
9.     How much total new financing can RecedingAir raise before its supply of new retained earnings financing is exhausted and there is a break in the cost of capital schedule?
10.     What would RecedingAir’s weighted-average cost of capital (WACC) become should it require more financing this year than the amount you calculated in part i, above?

1. Structured Cabling is defined as building or campus telecommunications cabling infrastructure that consists of a number of standardized smaller elements (hence structured) called subsystems.

With the aid of detailed and fully labelled diagrams, describe how you would use the principles of structured cabling to setup a professional computer network for the user who posted their request online (…see below).

We have a small three-story building. My husband is a small-business owner. We have decided to network all three floors of this building. We still don't know how to network all three floors of the main office…

We are going to set up a small wired networks (LAN, Fast Ethernet) in each floor. There are 8 PCs and a printer on the first floor. There are 4 PCs and a printer on the second floor. There are 2 PCs and a printer on the top floor.

We still don't know how to network all three floors of this building...??? We are thinking of Power-line, Phone-line Networking, however they are still slower than Fast Ethernet, aren't they???
We don't mind for running cables across the floor between computer in the same room.
We have to hire a professional and install the Cat 5 cabling in the walls of the main office, and connect the cable to special RJ-45 wall boxes, haven't we...?

I don't know what to do any more... Please tell us the way to network all three floor of this small building, if you know the best! If somebody else here knows the price to install cables in a small building, please tell us approximately. Based on your information, we will budget again for hiring a professional.

That's why I am asking you guys here about our building before we actually hire a cable installer.
Am I right or wrong...? Would you please check them together with me.

   1. There 8 PCs and a printer on the first floor.

I connect 3 desktop computers, a printer to a switch.?@?@I connect this switch to a router.?@?@Then I plug a Wireless Access Point like Linksys (BEFW11S4) 802.11b Wireless Access Point for 5 laptop computers into a router.?@?@Finally I connect this router to ISP provided broadband modem, which let our LAN connect to Internet.

I will have several computers hooked together on a Fast Ethernet network and want to add a wireless hotspot to the mix.?@?@It will be nice to have laptop computers for 5 marketing personnel, I think.

2. There are 4 PCs on the second floor.
I connect a server, 4 PCs and a printer to a switch. Then I connect this switch to a router. And then I connect this router to a modem, which connect our LAN to Internet.

3. There are 2 PCs on the top floor

Simply, I connect 2 desktop computers and a printer to a switch. Then I connect this switch to a router, and then I connect this router to ISP provided broadband Modem which connect to Internet.
What do you think...?

You have just turned 22 years old, received your bachelor's degree, and accepted your first job. Now you must decide how much money to put into your retirement plan. The plan works as follows: Every dollar in the plan earns 7% per year. You cannot make withdrawals until you retire on your 65th birthday. After that, you can make withdrawals as you see fit. You decide that you will plan to live to 100 and work until you turn 65. You estimate that to live comfortably in retirement, you will need $100,000 per year, starting at the end of the first year of retirement and ending on your 100th birthday. You will contribute the same amount to the plan at the end of every year that you work. How much do you need to contribute each year to fund your retirement?

On a popular air route, an airline offers two classes of service: business class (B) and economy class (E). The respective inverse demands are given by

PB = 540 - 0.5QB and PE = 380 - QE.

Because of ticketing regulations, business passengers cannot take advantage of economy’s low fares.

Each flight has a capacity of 200 passengers, The cost per full flight is $20,000, so you may assume the marginal cost per passenger is $100.

1. What is the difference between constrained optimization and unconstrained optimization.

2. Write down the optimization problem this airline is faced with. Set it up as an unconstrained optimization problem with two variables.

3. Write down the first order condition(s).

4. Solve the first order condition(s) to find out the optimal number of flights.

5. Write down the second order condition(s) and check whether it/they is/are satisfied.