Momomo is a construction company in Japan. Momomo is concerned on the depreciation of Japanese Yen in the future. The company expected to pay its supplier EUR 950,000 in Germany in three months. At the same time, Momomo is expected to receive a payment of USD1,500,000 from its customer, three months from now. The cost of capital for Momomo is 7.5%. The current spot rate is at JPY 109/USD and JPY120/EUR

The following information was given by Momomo’s bank.

1. How much is the minimum receipt that Momomo able to get if the company decides to perform option market hedge of its account receivable? State your answer in JPY

Answer:

2. Calculate the maximum cost that Momomo has to bear if the company decides to hedge its account payable using option. State your answer in JPY.

Answer:

4. The Antelope Elk Energy Center in Abernathy, Texas, a natural gas power generation plant, is considering an upgrade to its fuel distribution system. The upgrade is expected to increase fuel efficiency thus decrease natural gas consumption to create a savings of $6.5 million per year over a 15-year period. Accounts receivable is expected to increase by 5%, inventory is anticipated to decrease by 20%, and accounts payable to decrease by 10%. MasTech, a leading power generation construction company, estimated the upgrade cost to the fuel distribution system will be $28 million. Use Excel.
   
   

1. (10 points) The company’s marginal tax rate is 35% and uses straight-line depreciation. What is the project’s cash flow in year (t=1)? (10 points)
   

2. (10 points) The company’s cost of capital is 8.0%. Calculate the Net Present Value and determine if the Antelope Elk Energy Center should go forward with the project. Why or why not? Use Excel spreadsheet to calculate.
   

The average rent in a city is $1,440 per month with a standard deviation of $340. Assume rent follows the normal distribution. a. What percentage of rents are between $760 and $2,120? What percentage of rents are less than $760? c. What percentage of rents are greater than $2,460?

The average rent in a city is $1,440 per month with a standard deviation of $340. Assume rent follows the normal distribution. a. What percentage of rents are between $760 and $2,120? What percentage of rents are less than $760? c. What percentage of rents are greater than $2,460?

1. Which of the following situations may result in the discharge of a contact?

a. Performance b. Partial Performance, if agreeable to both parties c. Mutual Agreement of both parties d. Cancellation or Termination of the contract e. All of the above

2. A Deed of Trust transfers title from the trustor to a trustee, who holds it on behalf of a beneficiary. In this situation, the beneficiary is:

a. the borrower b. the seller c. the lender d. the lender’s proxy or representative e. the insurer

3. The true cost of home ownership includes all of the following EXCEPT:

a. the property taxes b. the payment of principal and interest c. the cost of property insurance d. the cost to install a swimming pool after purchase e. the cost of utilities

4. One tool that the Federal Reserve System (the Fed) uses to regulate the flow of money and interest rates in the marketplace is by controlling the rate charged for loans it makes to its member banks. This rate is called the:

a. Prime Rate b. Discount Rate c. Libor Rate d. Principal Rate e. Index Rate

5. The Real Estate Settlement Procedures Act (RESPA) regulations apply to a first-lien residential mortgage loan. The regulations do not apply to which of the following?

a. A Condominium purchase b. Loans for Business or Agricultural purposes c. Loans for large properties (typically more than 25 acres) d. Construction loans or other temporary financing e. b, c and d

11.

Craft Pro Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records.

Additional information on the drivers for its production activities follows.

Required:
5. If the company uses a plantwide overhead rate based on direct labor hours, what is the overhead cost for each unit of Job 3175? Of Job 4286? (Do not round intermediate calculations. Round "OH Cost per unit" answers to 2 decimal places.)

The following activity happened during the current year for Think Big Coprporation:
a) January 1 purchased land with a usable office building thereon for cash of $200,000. Tax assessment values: Land $20,000; building $60,000

b) January 1 purchased land for future building site for a cash cost of $40,000; an old building on this site, appraised at $2,000 at the date of purchase, is to be torn down immediately.

c)Net cash cost of demolishing the old building in (b) above amounted to $2,000.
D) Cash cost of excavation for basement of the new building (b above) was $6,000.

E) Lawyers' fees paid in connection with purchase of real estate in (b) $900.

F)Taxes paid on land purchased in (b) assessed before completion of building, $300.

g)Factory superintendent's salary for the year was $24,000. During the year, the superintendent spent the first six months supervising construction of the new building; the next three months supervising installation of productive machinery in the new building, and the last three months supervising operations in the new building.

h)Cost of grading and paying parking space and walks behind new building, $9,500.

i) Brick work amounting to $900 was performed on the building's exterior. This amount is deemed material and the work is expected to last for 20 years.

Required
Prepare the journal entries for each activity.