Case Study: Chapter 22

Write an Explanation after each answer

Anthony Draecus is a 72-year-old male with type 2 diabetes mellitus, hypertension, and atherosclerosis. He lives with his oldest daughter and her family. His daughter has six children ranging in age from 7 to 18 years old. Mr. Draecus’s wife of 50 years died a few months ago. Until her death he lived with her in their own home about 100 miles away. The daughter insisted that he move in with her in spite of the fact that her husband felt that her father would be better off in his own home. Anthony’s daughter has brought him to the rural health clinic since the death of his wife, where he sees a family nurse practitioner. He tells the nurse practitioner that he is always tired and short of breath, his strength has decreased, and he is hungry all the time but when he eats it upsets his stomach. His weight has not changed recently. On physical examination, Mr. Draecus is 5 feet 10 inches tall, and he weighs 210 pounds. Today his blood pressure and pulse are 170/92 and 92 beats/min, respectively. He demonstrates atherosclerotic and hypertensive changes in the eye. His lungs are clear, and his bowel sounds are normal. He has dependent edema with strong peripheral pulses. His blood glucose level is high at 210 mg/dl. Cholesterol and triglyceride levels are also high. He takes oral hypoglycemia medication, a diuretic, and an antihypertensive medication. These medications have not been changed in more than 2 years. Until the death of his wife, his diabetes and hypertension were in better control.

1. The nurse practitioner would most likely consider which of the following as the cause of Mr. Draecus’s symptoms? A. Lack of control of his diabetes mellitus B. Age-related body changes C. Stress D. Lack of control of his hypertension.

2. With Selye’s general adaptation syndrome as a foundation. Mr. Draecus’s symptoms would characterize responses of the: A. Alarm reaction B. Stage of resistance C. Stage of exhaustion D. Stress triad

3. Which one of the following actions should the nurse practitioner consider first? A. Change the hypoglycemic medications to insulin. B. Help Mr. Draecus identify his stressors. C. Control his hypertension. D. Teach Mr. Draecus’s daughter how to manage her father’s diseases.

4. Which information from Mr. Draecus’s history is characteristic of the fight-or-flight reaction? A. Diabetes mellitus, hypertension, and atherosclerosis B. Chronic fatigue, blood pressure at 107/92, and pulse at 92 beats/min C. Decreased strength, dependent edema, and clear lungs D. Hunger, normal bowel sounds, and dependent edema.

Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below.

The balance in the firm's cash and equivalents account is needed for operations and is not considered "excess" cash.

Using the financial statements given above, what is Rosnan's 2019 free cash flow (FCF)? Use a minus sign to indicate a negative FCF. Round your answer to the nearest cent.

$  

Devon Limited is a company that has issued corporate bonds with a par value of $100 and a coupon rate of 11%. The Total Statement of Financial Position value of bonds is $50million. The company’s bonds are currently trading at a price of $103. Interest is payable annually in arrears. The maturity date is in four years time. The company has a target capital structure of 25% debt, 15% redeemable preference shares, 10% non-redeemable preference shares, and 50% in ordinary equity financing. Retained earnings and contributed capital amount to $100million. The company has two types of preference shares in issue. There are 0.2 million non-redeemable preference shares which are issued at $100 per share and there are 0.3 million redeemable shares which were also issued at $100 and are redeemable at $100 per share. The maturity date of redeemable shares is in four years’ time. Preference dividends are payable annually in arrears for both issues. Non-redeemable preference shares are currently priced at $107 and the redeemable preference shares are currently priced at $104. The coupon rates are 9% for each issue and coupon payments were recently paid.The company’s beta is 1.20 and the risk free rate is 8%. The market premium is expected to be 5.5%. The corporation tax rate is 28%.

Required:

(a)What is Devon’s after tax cost of debt?

(b)What is the cost of the two types of preference shares?

(c)What is the cost of equity?

(d)What is the company’s weighted average cost of capital?

f) If this firm shuts down in the Short Run, determine its profit maximizing/loss minimizing profit amount. Please explain your answer.

g) What should this firm do in the Short Run in order to maximize its profits/minimize its loss (produce or shut down)? Please explain your answer using numbers.

h) Explain what this firm should do in the Long Run. Why?

Declare whether each below is True or False. If you say False for any statement, you must explain clearly your reason for answering False in order to receive credit.

f) Since Monopolies have no competition, they will not pay for advertising.

g) The market sets the price for Oligopolies.

h) Product Differentiation provides no benefit to society.

In c++ format please

ABC Delivery promises to deliver any package from one location in Miami Dade County to another in 2 to 24 hours. They can handle packages from 0.1 to 100 pounds. Their rate table is below:

• Flat rate for all deliveries = $50
• To that they add $0.50 per pound
• To that they add a speed surcharge of $100 if request is between 2 and 4 hours and $50 if request is between 5 to 7 hours.

Write a program that asks the user for the package weight. If the range is acceptable, ask for the delivery speed. If the range is acceptable, proceed with calculating the delivery cost.

Prompt:

Enter a shipping weight (in pounds) up to 100 lbs:

How soon do you need this delivered? Enter a number of hours between 2 and 24:

Possible Outputs (the numbers do not output, they are for clarification only)

1) Invalid weight

2) Invalid number of hours

3) We can make that delivery!
The total price of your 100-pound package delivered within 5 hours is $150

Notes and Hints:

1) Nothing weighs zero pounds. Reject that type of entry.

2) Hours must be a whole number entry from user. Weight can include decimal.

3) There are many ways to solve this. You only need what you learned in class today (nothing from future lessons). The best solutions are those that minimize CPU time by reducing how many conditions it has to check. Be creative and think this through before you start coding!

Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $183,000. The trial balances for the two companies on December 31, 20X7, included the following amounts:

Part 1: Capital Budgeting Analysis Adams, Incorporated would like to add a new line of business to its existing retail business. The new line of business will be the manufacturing and distribution of animal feeds. This is a major capital project. Adams, Incorporated is aware you an in an MBA program and would like you to help analysis the viability of this major business venture based on the following information: • The production line would be set up in an empty lot the company owns. • The machinery’s invoice price would be approximately $200,000, another $10,000 in shipping charges would be required, and it would cost an additional $30,000 to install the equipment. • The machinery has useful life of 4 years, and it is a MACRS 3-year asset. • The machinery is expected to have a salvage value of $25,000 after 4 years of use. • This new line of business will generate incremental sales of 1,250 units per year for 4 years at an incremental cost of $100 per unit in the first year, excluding depreciation. Each unit can be sold for $200 in the first year. The sales price and cost are expected to increase by 3% per year due to inflation. • Net working capital would have to increase by an amount equal to 12% of sales revenues. The firm’s tax rate is 40%, and its overall weighted average cost of capital is 10%. Required:

1. If the company spent $40,000 last year in the upkeep of the empty lot, should this cost be included in the analysis? Why or why not?

2. Disregard the assumptions in part 1 above. What is the machinery’s depreciable basis? What are the annual depreciation expenses?

3. Calculate the annual sales revenues and costs (other than depreciation).

4. Construct annual incremental operating cash flow statements.

5. Estimate the required net working capital for each year based on sales for the following year. Working capital will be recovered at the end of year 4.

6. Calculate the after-tax salvage cash flow.

7. Calculate the net cash flows for each year. Based on these cash flows, what are the project’s NPV, IRR, Profitability Index (PI), and payback?

8. Can you use the Payback method to decide whether this is a good project or not? Why or why not?

9. Interpret what NPV, IRR, and Profitability Index (PI) mean. Based on your interpretation, do these indicators suggest the new business line should be undertaken?

Comprehensive Problem (Tax Return Problem). David and Doris Kelley were divorced on February 3, 2018. They lived apart during 2018. The divorce decree required David to make the following payments:

a. Transfer full title to their jointly owned family home to Doris. Fair market value of the home is $180,000, basis $150,000 .

b. $1,000 per month mortgage payments on the house, above. The mortgage has 20 years remaining before being fully paid off, but the payments would end on her death.

c. $2,000 per month for 10 years’ support payments to Doris, of which $600 per month is child support.

d. Doris insisted that the children attend private schools. In 2018, David paid $1,500 in tuition for the children’s private high school. David paid his lawyer $5,000 to represent him in the divorce proceedings. David and Doris agreed that Doris would maintain a home for the children. Further, Doris agreed to allow David to claim one child as a dependency exemption. This agreement was put in writing and signed by Doris.

Besides the divorce, David has had a big year financially. He owns an apartment house and he requires each new tenant to place a $750 security deposit with him before moving into the apartment. When the tenant ultimately vacates the apartment, David will refund the deposit. In 2018, David collected $3,750 in security deposits and rental income of $15,000.

David entered a local raffle in 2018. David won first prize, which was a new automobile with a window price of $20,000. He checked with several local car dealers and was positive that if he had purchased a similar car on his own, the price would have been $18,200.

David loaned his sister Lois $5,000. Lois was repaying the loan at $100 per month plus interest of $40. Since Lois was about to depart on an extended vacation on December 2, 2018, she gave David $200 plus interest of $80 to cover the months of December and January.

David has a good job that pays an annual salary of $50,000. In 2018, business was very good and in December 2018 bonuses were announced for the employees. David earned a $4,000 bonus for 2018. Bonuses would be mailed to the employees during the first week of January 2019. David has itemized deductions of $20,000. Determine David’s 2018 taxable income.