Calculate:

1) Covariance

2) Expected return on a portfolio XY

2) Risk on a portfolio XY

Weight of each asset is 50%.

Average annual return:

asset X: 11.74%

asset Y: 11.14%

Standard deviation:

asset X: 8.9

asset Y: 2.78

Can a human fly with wings? In order for a 70?? person to hover in the air by beating two wings at 1??, how large does each wing have to be? Assume that the up-stroke and the down-stroke motions take the same amount of time, and that the amplitude of wing beat equals the distance of free fall (i.e. “hovering”). Treat the wings as horizontal in the entire down-stroke. Ignore the air resistance during the up-stroke. Also assume that the lifting force is completely provided by a constant force of air resistance during the down- stroke. Estimate the area of each wing that is facing down during the down-stroke.

Write the adjusting entry for the following transactions: Insurance expense: On February 28, 2020 Stark Industries paid $1,212 for a sixmonth insurance policy on the automobile purchased that date; on March 31, 2020, Stark Industries renewed and paid for the one-year policy on the equipment at a cost of $960.

Xentia Technologies Group (XTG) is considering investing in developing new 4D television technology. The CEO of XTG, Ms Jane Smith, has appointed you to evaluate the proposal for the board. If the new project goes ahead it is expected that it be operational at the beginning of year 2 (with the first revenues generated by the end of that year). Once the new project is operational it will render the company’s existing 2D technology project obsolete. The new project is then expected to have an operating life of six years.

To assist you in evaluating the project the following information has been prepared:

Existing 2D technology project:

Constant annual earnings before depreciation and taxes (EBDIT)       $400,000

Annual depreciation expense on equipment                            $0

(Equipment fully depreciated)

Annual working capital balance                                  $200,000

Expected salvage value of equipment if rendered obsolete           $0

New 4D technology project:

New equipment outlays (immediate)                                 $10,000,000

Expected constant EBDIT                                   $3,800,000

(In the first year of operation)

Annual depreciation rate on equipment (straight line)             10% p.a.

Expected salvage value of equipment at the end of the project     $3,500,000

Working capital requirement (once project is operational)              $300,000

a. compounded semi-annually

The long term market risk premium (including franking credits) is 9.75% p.a.

The current yield on Commonwealth Bonds is 4.25% p.a.

Xentia operates in an imputation tax system.

Required:

What is the appropriate discount rate that should be used to evaluate the project?  Explain your decision.         

(can you put detailed calculation including formula in the answer plz?)

Additional Information:

Company tax rate is 30%

Xentia is financed with $25 million in market value of debt and $50 million in market value of equity.

Xentia has a beta of 1.6.

Revolutionary Technology Corporation (RTC) is currently using technology that is similar in risk profile to the new 4D project.

RTC is financed with $40 million in market value of debt and $40 million in market value of equity.

RTC has a beta of 1.75

Xentia borrows debt capital at a cost of 8% p.a. compounded semi-annually

The long term market risk premium (including franking credits) is 9.75% p.a.

The current yield on Commonwealth Bonds is 4.25% p.a.

Xentia operates in an imputation tax system.

1. The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows:

   	Warehouse					Tracking Technology
   Year	Income from Operations		Net Cash Flow			Income from Operations		Net Cash Flow
   1	$ 61,400		$135,000			$ 34,400		$108,000
   2	51,400		125,000			34,400		108,000
   3	36,400		110,000			34,400		108,000
   4	26,400		100,000			34,400		108,000
   5	(3,600)		70,000			34,400		108,000
   Total	$172,000		$540,000			$172,000		$540,000

   Each project requires an investment of $368,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 15% for purposes of the net present value analysis.

   Present Value of $1 at Compound Interest
   Year	6%	10%	12%	15%	20%
   1	0.943	0.909	0.893	0.870	0.833
   2	0.890	0.826	0.797	0.756	0.694
   3	0.840	0.751	0.712	0.658	0.579
   4	0.792	0.683	0.636	0.572	0.482
   5	0.747	0.621	0.567	0.497	0.402
   6	0.705	0.564	0.507	0.432	0.335
   7	0.665	0.513	0.452	0.376	0.279
   8	0.627	0.467	0.404	0.327	0.233
   9	0.592	0.424	0.361	0.284	0.194
   10	0.558	0.386	0.322	0.247	0.162

   Required:

   1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place.

   	Average Rate of Return
   Warehouse	%
   Tracking Technology	%

   1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, use the minus sign to indicate a negative net present value. If required, round to the nearest dollar.

   	Warehouse	Tracking Technology
   Present value of net cash flow total	$	$
   Amount to be invested	$	$
   Net present value	$	$

   2. The

   • warehouse
   • tracking technology
   net present value exceeds the selected rate established for discounted cash flows (15%), while the
   • warehouse
   • tracking technology
   does not. Thus, considering only quantitative factors, the
   • warehouse
   • tracking technology
   investment should be selected.

Amortization and Impairment Testing of Identifiable Intangible Assets

During the year ended July 30, 2016, Cisco Systems, Inc. acquired the following identifiable intangible assets through its purchase of two companies (in thousands):

Cisco acquired Lancope, Inc. in December 2015, and Jasper Technologies, Inc. in March 2016. Cisco separately tests identifiable intangibles acquired from each company for impairment, and collects the following information to conduct impairment tests at the end of fiscal 2016 (in thousands):

Required

a. Calculate amortization expense for the above identifiable intangibles for fiscal 2016. Intangibles are amortized on a straight-line basis starting in the month following acquisition.

• Round answers to the nearest whole number.
• Enter answers in thousands.

b. Calculate impairment losses for fiscal 2016.

• Round answers to the nearest whole number.
• Enter answers in thousands.

c. Determine the amounts reported on Cisco’s fiscal 2016 balance sheet for technology, customer relationships, and in-process R&D.

• Round answers to the nearest whole number.
• Enter answers in thousands.

Amortization and Impairment Testing of Identifiable Intangible Assets

During the year ended July 30, 2016, Cisco Systems, Inc. acquired the following identifiable intangible assets through its purchase of two companies (in thousands):

Cisco acquired Lancope, Inc. in December 2015, and Jasper Technologies, Inc. in March 2016. Cisco separately tests identifiable intangibles acquired from each company for impairment, and collects the following information to conduct impairment tests at the end of fiscal 2016 (in thousands):

Required

a. Calculate amortization expense for the above identifiable intangibles for fiscal 2016. Intangibles are amortized on a straight-line basis starting in the month following acquisition.

• Round answers to the nearest whole number.
• Enter answers in thousands.

b. Calculate impairment losses for fiscal 2016.

• Round answers to the nearest whole number.
• Enter answers in thousands.

c. Determine the amounts reported on Cisco’s fiscal 2016 balance sheet for technology, customer relationships, and in-process R&D.

• Round answers to the nearest whole number.
• Enter answers in thousands.