Statement of cost of goods manufactured for a manufacturing company Cost data for Johnstone Manufacturing Company for the month ended March 31 are as follows: Inventories March 1 March 31 Materials $236,400 $217,370 Work in process 490,700 574,550 Finished goods 659,900 693,310 Direct labor $3,940,000 Materials purchased during March 3,001,370 Factory overhead incurred during March: Indirect labor 360,220 Machinery depreciation 236,400 Heat, light, and power 197,000 Supplies 39,280 Property taxes 33,770 Miscellaneous costs 51,450 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet Prepare a cost of goods manufactured statement for March. Round your answers to the nearest dollar. Johnstone Manufacturing Company Statement of Cost of Goods Manufactured For the Month Ended March 31 $ Direct materials: $ $ $ Factory overhead: $ Total factory overhead Total manufacturing costs incurred during March Total manufacturing costs $ Cost of goods manufactured $ Determine the cost of goods sold for March. Round your answer to the nearest dollar.

Opportunity cost of capital. Explain why we refer to the opportunity cost of capital, instead of just “cost of capital” or discount rate”. While you’re at it, also explain the following statement: “The opportunity cost of capital depends on the proposed use of cash, not the source of financing”.

1)The current cost of graduate school tuition is $15,000 per year.
The cost of tuition is rising at 6.00% per year.
You plan to attend graduate school for 2 years starting 2 years from now.

How much do you have to invest today if your savings account earns 3.00% APR compounded annually to just fund your tuition?

Group of answer choices

A) $31,323

B) $32,754

C) $32,236

D) $30,437

2) You would like to purchase a vacation home in 6 years.
The current price of such a home is $500,000 but the price of these types of homes is rising at a rate of 3% per year.
How much would you have to invest today in nominal terms to exactly pay for the vacation home if your investments earn 5% APR (compounded annually) in nominal terms?

Group of answer choices

A) $445,510

B) $461,548

C) $373,108

D) $597,026

What is significant about the difference between Budgeted Cost of Work Performed and Actual Cost of Work Performed (i.e., BCWP - ACWP)? How is it different than Budget vs. Actuals? (4 pts)

4.

Statement of Cost of Goods Manufactured for a Manufacturing Company

Cost data for Disksan Manufacturing Company for the month ended January 31 are as follows:

a. Prepare a cost of goods manufactured statement for January.

b. Determine the cost of goods sold for January.
$

Nealon Energy Corporation engages in the​ acquisition, exploration,​ development, and production of natural gas and oil in the continental United States. The company has grown rapidly over the last 5 years as it has expanded into horizontal drilling techniques for the development of the massive deposits of both gas and oil in shale formations. The​ company's operations in the Haynesville shale​ (located in northwest​ Louisiana) have been so significant that it needs to construct a natural gas gathering and processing center near Bossier​ City, Louisiana, at an estimated cost of ​$70 million.

To finance the new​ facility, Nealon has ​$20 million in profits that it will use to finance a portion of the expansion and plans to sell a bond issue to raise the remaining ​$50 million. The decision to use so much debt financing for the project was largely due to the argument by company CEO Douglas Nealon Sr. that debt financing is relatively cheap relative to common stock​ (which the firm has used in the​ past). Company CFO Doug Nealon Jr.​ (son of the company​ founder) did not object to the decision to use all debt but pondered the issue of what cost of capital to use for the expansion project. There was no doubt that the​ out-of-pocket cost of financing was equal to the new interest that must be paid on the debt.​ However, the CFO also knew that by using debt for this project the firm would eventually have to use equity in the future if it wanted to maintain the balance of debt and equity it had in its capital structure and not become overly dependent on borrowed funds.

The following balance​ sheet reflects the mix of capital sources that Nealon has used in the past. Although the percentages would vary over​ time, the firm tended to manage its capital structure back toward these proportions. The firm currently has one issue of bonds outstanding. The bonds have a par value of ​$

1,000 per​ bond, carry a coupon rate of 8 ​percent, have 16 years to​ maturity, and are selling for ​$1,035. ​Nealon's common stock has a current market price of $32​, and the firm paid a ​$2.00 dividend last year that is expected to increase at an annual rate of 7 percent for the foreseeable future.

Balance Sheet:

Source of Fincancing Target Capital Strucure Weights

Bonds 40%               

Common Stock 60%

a. What is the yield to maturity for​ Nealon's bonds under current market​ conditions?

b. What is the cost of new debt financing to Nealon based on current market prices after both taxes​ (you may use a marginal tax rate of 24 percent for your​ estimate) and flotation costs of ​$35 per bond have been​ considered?

Note​: Use N=16 for the number of years until the new bond matures.

c. What is the​ investor's required rate of return for​ Nealon's common​ stock? If Nealon were to sell new shares of common​ stock, it would incur a cost of ​$2.50 per share. What is your estimate of the cost of new equity financing raised from the sale of common​ stock?

d. Compute the weighted average cost of capital for​ Nealon's investment using the weights reflected in the actual financing mix​ (that is, ​$20 million in retained earnings and ​$50 million in​ bonds).

e. Compute the weighted average cost of capital for Nealon where the firm maintains its target capital structure by reducing its debt offering to

40 percent of the ​$70 million in new​ capital, or ​$28 ​million, using ​$20 million in retained earnings and raising ​$22 million through a new equity offering.

f. If you were the CFO for the​ company, would you prefer to use the calculation of the cost of capital in part d or e to evaluate the new​ project? Why?

Nealon Energy Corporation engages in the​ acquisition, exploration,​ development, and production of natural gas and oil in the continental United States. The company has grown rapidly over the last 5 years as it has expanded into horizontal drilling techniques for the development of the massive deposits of both gas and oil in shale formations. The​ company's operations in the Haynesville shale​ (located in northwest​ Louisiana) have been so significant that it needs to construct a natural gas gathering and processing center near Bossier​ City, Louisiana, at an estimated cost of ​$60 million. To finance the new​ facility, Nealon has ​$10 million in profits that it will use to finance a portion of the expansion and plans to sell a bond issue to raise the remaining ​$50 million. The decision to use so much debt financing for the project was largely due to the argument by company CEO Douglas Nealon Sr. that debt financing is relatively cheap relative to common stock​ (which the firm has used in the​ past). Company CFO Doug Nealon Jr.​ (son of the company​ founder) did not object to the decision to use all debt but pondered the issue of what cost of capital to use for the expansion project. There was no doubt that the​ out-of-pocket cost of financing was equal to the new interest that must be paid on the debt.​ However, the CFO also knew that by using debt for this project the firm would eventually have to use equity in the future if it wanted to maintain the balance of debt and equity it had in its capital structure and not become overly dependent on borrowed funds. The following balance​ sheet, LOADING...​, reflects the mix of capital sources that Nealon has used in the past. Although the percentages would vary over​ time, the firm tended to manage its capital structure back toward these proportions. The firm currently has one issue of bonds outstanding. The bonds have a par value of ​$1,000 per​ bond, carry a coupon rate of 11 ​percent, have 15 years to​ maturity, and are selling for ​$1,045. ​Nealon's common stock has a current market price of $ 41​, and the firm paid a ​$2.80 dividend last year that is expected to increase at an annual rate of 4 percent for the foreseeable future.

a. What is the yield to maturity for​ Nealon's bonds under current market​ conditions?

b. What is the cost of new debt financing to Nealon based on current market prices after both taxes​ (you may use a marginal tax rate of 35 percent for your​ estimate) and flotation costs of ​$30 per bond have been​ considered? Note​: Use Nequals15 for the number of years until the new bond matures.

c. What is the​ investor's required rate of return for​ Nealon's common​ stock? If Nealon were to sell new shares of common​ stock, it would incur a cost of ​$2.00 per share. What is your estimate of the cost of new equity financing raised from the sale of common​ stock?

d. Compute the weighted average cost of capital for​ Nealon's investment using the weights reflected in the actual financing mix​ (that is, ​$10 million in retained earnings and ​$50 million in​ bonds).

e. Compute the weighted average cost of capital for Nealon where the firm maintains its target capital structure by reducing its debt offering to 30 percent of the ​$60 million in new​ capital, or ​$18 ​million, using ​$10 million in retained earnings and raising ​$32 million through a new equity offering.

f. If you were the CFO for the​ company, would you prefer to use the calculation of the cost of capital in part ​(d​) or ​(e​) to evaluate the new​ project? Why?

Nealon Energy Corporation engages in the​ acquisition, exploration,​ development, and production of natural gas and oil in the continental United States. The company has grown rapidly over the last 5 years as it has expanded into horizontal drilling techniques for the development of the massive deposits of both gas and oil in shale formations. The​ company's operations in the Haynesville shale​ (located in northwest​ Louisiana) have been so significant that it needs to construct a natural gas gathering and processing center near Bossier​ City, Louisiana, at an estimated cost of ​$80 million. To finance the new​ facility, Nealon has ​$20 million in profits that it will use to finance a portion of the expansion and plans to sell a bond issue to raise the remaining ​$60 million. The decision to use so much debt financing for the project was largely due to the argument by company CEO Douglas Nealon Sr. that debt financing is relatively cheap relative to common stock​ (which the firm has used in the​ past). Company CFO Doug Nealon Jr.​ (son of the company​ founder) did not object to the decision to use all debt but pondered the issue of what cost of capital to use for the expansion project. There was no doubt that the​ out-of-pocket cost of financing was equal to the new interest that must be paid on the debt.​ However, the CFO also knew that by using debt for this project the firm would eventually have to use equity in the future if it wanted to maintain the balance of debt and equity it had in its capital structure and not become overly dependent on borrowed funds. The following balance​ sheet, Bonds = 30% Common Stock = 70% reflects the mix of capital sources that Nealon has used in the past. Although the percentages would vary over​ time, the firm tended to manage its capital structure back toward these proportions. The firm currently has one issue of bonds outstanding. The bonds have a par value of ​$1,000 per​ bond, carry a coupon rate of 8 ​percent, have 14 years to​ maturity, and are selling for ​$1,070. ​Nealon's common stock has a current market price of $ 36​, and the firm paid a ​$2.60 dividend last year that is expected to increase at an annual rate of 6 percent for the foreseeable future. a. What is the yield to maturity for​ Nealon's bonds under current market​ conditions? b. What is the cost of new debt financing to Nealon based on current market prices after both taxes​ (you may use a marginal tax rate of 34 percent for your​ estimate) and flotation costs of ​$30 per bond have been​ considered? Note​: Use N= 14 for the number of years until the new bond matures. c. What is the​ investor's required rate of return for​ Nealon's common​ stock? If Nealon were to sell new shares of common​ stock, it would incur a cost of ​$3.50 per share. What is your estimate of the cost of new equity financing raised from the sale of common​ stock? d. Compute the weighted average cost of capital for​ Nealon's investment using the weights reflected in the actual financing mix​ (that is, ​$20 million in retained earnings and ​$60 million in​ bonds). e. Compute the weighted average cost of capital for Nealon where the firm maintains its target capital structure by reducing its debt offering to 30 percent of the ​$80 million in new​ capital, or ​$24 ​million, using ​$20 million in retained earnings and raising ​$36 million through a new equity offering. f. If you were the CFO for the​ company, would you prefer to use the calculation of the cost of capital in part ​(d​) or ​(e​) to evaluate the new​ project? Why?

Given the following information, determine the feasibility of this investment.

Veronika has a great idea for a new online game for mobile devices. The game allows players to destroy alien invaders, which is nothing new, but it also serves as a social engagement app that will allow gamers to connect with other gamers that share their interest, similar to existing dating services. By combining game playing with dating, she thinks she can reach a new market, but she fully expects that others will copy her. Therefore, she assumes that this is a limited time opportunity.

Veronika estimates that it will cost about $175,000 to hire a game engineering contractor to build the app. Once it is built, the engineering firm will receive $0.18 per download as a royalty. The cloud hosting platform firm will charge them $0.12 per month per active user. Veronika will have to spend $25,000 each of the first         two years to market the game. She projects that the game will probably last only about four years, with           downloads and users dropping off after the first two years. There will be no salvage costs (terminal value) after the end of the four years. Downloading the app will cost users $1.99 as a one-time fee. In addition to the   revenue from the downloads, she expects to earn about $0.78 per month per active user in advertising and promotion revenue. Her annual projections for downloads and average monthly users are shown below.

She also expects to incur $240,000 per year in other operating costs the first year, but that amount should decrease to $200,000 in the second year and then down to $100,000 per year in years three and four.

The $175,000 of development costs are amortized for tax purposes for three years under a special tax incentive law. She can claim 60 percent of the development cost in Year 1, 35 percent in year 2, and the final 5 percent in year 3. The cost of capital to discount the future cash flows is 15 percent, and the average tax rate is 30 percent.

Create a spreadsheet named LastName_FirstName_HW03.xlsx to compute the NPV, IRR, PI, and Payback for this project and interpret the results. You will have to calculate the initial investment at time zero and the after-tax operating cash flows for Years 1 through 4 to calculate the NPV, IRR, PI, and Payback. Remember to convert "monthly" into "annual" when computing revenue and expense per year. After computing the relevant financial metrics, make a recommendation to Veronika and justify that recommendation by citing the information you have generated in your spreadsheet. Set up your spreadsheet so that the instructor can follow your calculations.