Davie  Corp is considering acquiring Enterprise Inc and you are on the team that is valuing the potential target firm.  Tiger Inc’s revenue growth rate is 10.2%, its COGS is 58% of sales, SG&A is 22% of sales, and NWC is 25% of sales.  The forecast period for the valuation is 5 years, after which your team will apply a steady state growth rate is 6%.  You are using a WACC rate of 13.5% and a tax rate is 32%.  Initial year zero revenue is $10,000.  Depreciation is $1350 per year, CAPEX is $1300 per year.  The forecast period is 5 years.  

1. What are free cash flows per year?
2. What is the terminal value (steady state value)?
3. What is Enterprise Value for this firm?
4. The firm has cash of $550, debt of $2000, and preferred stock of $750.  What is the value of equity?
5. If there are 120 shares outstanding, what is stock price?

Suppose that there are drastic technological improvements in shoe production in Home such that shoe factories can operate almost completely with computer-aided machines. Consider the following data for the Home country:

Computers Shoes Sales revenue = PCQC = 100 Sales revenue = PSQS = 100 Payments to labor = W LC = 50 Payments to labor = W LS = 10 Payments to capital = RKC = 50 Payments to labor = RKS = 90 Percentage increase in the price = ∆PC PC = 0% Percentage increase in the price = ∆PS PS = 40%

a. Which industry is capital-intensive?

b. Given the percentage changes in output prices in the data provided, calculate the percentage change in the rental on capital.

c. How does the magnitude of this change compare with that of change in the earnings of labor?

d. Which factor gains in real terms, and which factor loses? Are these results consistent with the Stohlper-Samuelson theorem?

MyOriental is a new supermarket chain that specialises in imported Asian products. It has opened branches in several Australian cities over the past three years. The Chief Financial Officer (CFO) is keen to estimate and compare the daily revenue achieved in Perth, Darwin, Melbourne and Sydney where MyOriental has invested the most. Due to data availability, the CFO does not have the full record of daily revenues. A random sample of daily revenues for each location is all she has. Having understood that working with the population is not possible, the CFO asks you to apply statistical inference to conduct the analysis. (The dataset is given in the fourth sheet named “Daily revenue” in the provided Excel file Data.xlsx). Your answers should try to address the following:

1. Choose appropriate approaches to summarise the dataset and in non-technical terms, briefly discuss why you think the chosen approaches are appropriate.

1- The following chart is data over an 8 month period that shows how much a company spent in advertising and the sales revenue for that month

E.) What sales revenue would the company expect for the following advertising spending? Round to nearest cent

1. 3000
2. 2100
3. 1300

F.) If you were in charge of the advertising department how much would you spend on each of the next 4 months on advertising and how and why did you arrive at your decision?

Nov

Jan

Feb

March

Please give a short explanation as to how and why you came up with your advertising spending for the above 4 months

The following account balances were taken from the accounting records of the Senior Citizen Alternative Living Center.

Calculate the total current assets, total long-term assets, total current liabilities, and total long-term liabilities. Prepare a statement of financial position and an operating statement.

(Please show work so I can learn how to do it)

c.) For each company, compute net income as a percentage of revenue in 2017.              

d.) For each company, calculate working capital and current ratio for 2017 and 2016. How did they change from 2016 to 2017 (improve or worsen)? What may have caused those changes?    

Suppose that the owner and CEO of a firm that operates in a PERFECTLY COMPETITIVE market environment comes to see you for help. She has question to ask you as her best Economist friend.

(i)    After talking to another economist friend, Mary, my question, she says, is: “And then this morning Mary said that after the market responds to our current extra-ordinary economic profit, that we may be in a position where our Total Revenue, TR is less that our Total Cost, TC. I said that was awful, we would have to Shut Down! But Mary said, no we won’t because our Total Revenue will still be greater than our Total Variable Cost, TVC. Can you explain WHY this result matters to me and what I should do, please?

Can you please explain the answer thoroughly and in detail for my understanding?

1. Suppose that there are drastic technological improvements in shoe production in Home such that shoe factories can operate almost completely with computer-aided machines. Consider the following data for the Home country:

Computers:       Sales revenue = ?_c?_? = 100

Payments to labor = ??_? = 50

Payments to capital = ??_? = 50

Percentage decrease in the price = ∆?_?⁄?_? = -10%

Shoes:                 Sales revenue = ?_??_? = 100

Payments to labor = ??_? = 20

Payments to capital = ??_? = 80

Percentage increase in the price = ∆?_?⁄?_? = 30%

1. Which industry is capital-intensive? Is this a reasonable question, given that some industries are capital-intensive in some countries and labor-intensive in others?
2. Given the percentage changes in output prices in the data provided, calculate the percentage change in the rental on capital.
3. How does the magnitude of this change compare with that of labor?
4. Which factor gains in real terms, and which factor loses? Are these results consistent with the Stolper–Samuelson theorem?

(TCOs C and D) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below. (20 points)

Part A) (5 points) What is the marginal product of the second worker?. (Part B) (5 points) What is the marginal revenue product (MRP) of the fourth worker? (Part C) (5 points) What is the marginal cost (MC) of the first worker? (Part D) (5 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer.

The Delaware River Joint Toll Bridge Commission increased the tool on the bridges on Route 22 and Interstate 78 from New Jersey to Pennsylvania from $0.50 to $0.75 in December. In November, the Route 22 bridge had 519,337 crossings and the Interstate 78 bridge had 728,002. Suppose that the price elasticity of demand for the Route 22 bridge was .2696 and that for the Interstate 78 bridge was 1.556. (Assume nothing other than the toll change occurred during the months that would affect consumer demand.)

a) How did the revenue from the two bridges change in December? (Be specific.)

b) Suppose that the Commission wanted to increase total revenue from each bridge and could set different prices for the two bridges. Should they be the same or different? If they are the same, should they increase? If they are different, how should they change the prices? (You don’t need to provide a specific price, but just the direction.)