1)    Use the below table of share price for TSLA and index level for the S&P 500 for the CAPM questions that follow related to TSLA. You can copy this table and paste it completely into Excel to avoid typing it out. Calculate the beta of TSLA.  

2) Using the beta you just calculated above, a risk free rate of 0.70%, and a market return of 5.5%, what is the required rate of return for TSLA?

3) If the current share price of TSLA is $380, it pays no dividend, and the consensus estimated share price in one year is $400, what is the estimated return for this stock? Should you invest in it based on comparing the estimated return you just calculated to its required return?  

Jen and Larry’s Frozen Yogurt Company

     In 2019, Jennifer (Jen) Liu and Larry Mestas founded Jean and Larry’s Frozen Yogurt Company, which was based on the idea of applying the microbrew or microbatch strategy to the production and sale of frozen yogurt. Jen and Larry began producing small quantities of unique flavors and blends in limited editions. Revenues were $600,000 in 2019 and were estimated to be $1.2 million in 2020.

     Because Jen and Larry were selling premium frozen yogurt containing premium ingredients, each small cup of yogurt sold for $3, and the cost of producing the frozen yogurt averaged $1.50 per cup. Administrative expenses, including Jen and Larry’s salary and expenses for an accountant and two other administrative staff, were estimated at $180,000 in 2020. Marketing expenses, largely in the form of behind-the-counter workers, in-store posters, and advertising in local newspapers, were projected to be $200,000 in 2020.

     An investment in bricks and mortar was necessary to make and sell the yogurt. Initial specialty equipment and the renovation of an old warehouse building in lower downtown (known as LoDo) occurred at the beginning of 2019. Additional equipment needed to make the amount of yogurt forecasted to be sold in 2020 was purchased at the beginning of 2020. As a result, depreciation expenses were expected to be $50,000 in 2020. Interest expenses were estimated at $15,000 in 2020. The average tax rate was expected to be 25% of taxable income.

1. Refer to the Mini Case above involving Jen and Larry’s Frozen Yogurt Company.
   1. Calculate the dollar amount of NOPAT if Jen and Larry’s venture achieves the forecasted $1.2 million in sales in 2020. What would NOPAT be as a percent of sales?
   2. Calculate the NOPAT breakeven point for 2020 in terms of NOPAT breakeven revenues for Jen and Larry’s venture. How many cups of frozen yogurt would have to be sold to reach NOPAT breakeven?

Below table2 shows monthly closing share prices (adjusted to include dividends) of 5 companies, and the adjusted closing prices for the ASX200 index. Table 1 is the dividends per share of the 5 companies in the past 5 years.

Calculate the average annual growth in dividends over the last five years. Use this information, along with Gordon’s Growth Model to estimate the implied expected return for each REIT at the current market price（use past 12 months as an example）. Show your analysis process.

From inception of operations to December 31, 2020, Metlock Corporation provided for uncollectible accounts receivable under the allowance method. The provisions are recorded, based on analyses of customers with different risk characteristics. Bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account, and no year-end adjustments to the allowance account were made. Metlock’s usual credit terms are net 30 days.

The balance in Allowance for Doubtful Accounts was $114,400 (Cr.) at January 1, 2020. During 2020, credit sales totaled $7,920,000, the provision for doubtful accounts was determined to be $158,400, $79,200 of bad debts were written off, and recoveries of accounts previously written off amounted to $13,200. Metlock installed a computer system in November 2020, and an aging of accounts receivable was prepared for the first time as of December 31, 2020. A summary of the aging is as follows.

Based on the review of collectibility of the account balances in the “prior to 1/1/20” aging category, additional receivables totaling $52,800 were written off as of December 31, 2020. The 80% uncollectible estimate applies to the remaining $79,200 in the category. Effective with the year ended December 31, 2020, Metlock adopted a different method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging analysis of accounts receivable.

Prepare a schedule analyzing the changes in Allowance for Doubtful Accounts for the year ended December 31, 2020. Show supporting computations in good form. (Hint: In computing the 12/31/20 allowance, subtract the $52,800 write-off.)

Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2018, recording any necessary amortization and reflecting all balances accurately as of that date. (Ignore income tax effects.)

P12-2 (LO1,2,4,5) EXCEL (Accounting for Patents) Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products and processes which it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells a patent. The history of Fields patent number 758-6002-1A is as follows.

Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2016, it revised its useful life estimate downward to 5 remaining years. Amortization is computed for a full year if the cost is incurred prior to July 1, and no amortization for the year if the cost is incurred after June 30. The company's year ends December 31.

Instructions

Compute the carrying value of patent No. 758-6002-1A on each of the following dates:

(a)December 31, 2011.

(b)December 31, 2015.

(c)December 31, 2018.

Rainmaker Environmental Consultants is just finishing its second year of operations. The company’s unadjusted trial balance at October 31, 2011 follows:

Rainmaker prepares adjustments each October 31. The following additional information is available on October 31, 2011:

a.It was determined that $12,000 of the unearned Consulting fees had not yet been earned.

b.It was discovered that $6,000 of the balance in consulting fees earned was for services to be performed in November.

c.The balance in the prepaid rent account represented three months of rent beginning September 1, 2011.

d.Accrued wages at October 31 totaled $6,800.

e.The office furniture was purchased on March 1, 2010, and has an estimated useful life of two years. After two years, it is expected that the furniture will be worthless.

f.Accrued consulting fees at year-end totaled $4,200.

g.Interest of $200 had accrued on the note receivable for the month of October.

h.The balance in the prepaid insurance account represents the remaining balance of a two-year policy purchased on April 1, 2010.

i.A count of the supplies on October 31 revealed a balance remaining of $900.

Required

Prepare adjusting journal entries on October 31, 2011 based on the above.

Kaelea, Inc., has no debt outstanding and a total market value of $90,000. Earnings before interest and taxes, EBIT, are projected to be $8,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 20 percent higher. If there is a recession, then EBIT will be 30 percent lower. The company is considering a $34,000 debt issue with an interest rate of 6 percent. The proceeds will be used to repurchase shares of stock. There are currently 3,600 shares outstanding. Assume the company has a market-to-book ratio of 1.0.

a. Calculate return on equity, ROE, under each of the three economic scenarios before any debt is issued, assuming no taxes.

b. Calculate the percentage changes in ROE when the economy expands or enters a recession, assuming no taxes.

Assume the firm goes through with the proposed recapitalization and no taxes.
c. Calculate return on equity, ROE, under each of the three economic scenarios after the recapitalization.

d. Calculate the percentage changes in ROE for economic expansion and recession.

Assume the firm has a tax rate of 35 percent.
e. Calculate return on equity, ROE, under each of the three economic scenarios before any debt is issued. Also, calculate the percentage changes in ROE for economic expansion and recession.

f. Calculate return on equity, ROE, under each of the three economic scenarios after the recapitalization. Also, calculate the percentage changes in ROE for economic expansion and recession, assuming the firm goes through with the proposed recapitalization.

per company policy. 9-24 l!:IJ The auditor has provided a preliminary assessment of control risk of lo,v in the revenue cycle accounts of Acco, Inc. for each of the relevant assertions. The auditor selected a sample of sales transactions for control testing. Each of the following types of control or transaction- processing deficiencies uncovered in the sample was significant enough to cause the auditor to increase control risk assessment from lo,v to moderate. For each deficiency, labeled as (a) though (i), discuss the type of financia l statement misstatement that may result, the assertion(s) affected, and the effect on the nature, timing, and/or extent of related substantive tests. Consider each deficiency independently from the others. a. No evidence that price and quantity on the invoice ,vere compared ,vith the supporting documents b. Failure to approve customer credit before shipping the merchandise on open account c. Recording sales before they ,vere shipped d. Recording sales several days after they should have been recorded e. Recording sales several days before and several days after they should have been recorded f. Lack of customer orders; items ,vere shipped g. Lack of shipping documents; customer order ,vas found h. Incorrect invoice price i. Quantity shipped differed from the quantity billed

A four-wheel cart of mass M = 95 kg is moving along a horizontal surface with a constant velocity V = 3.5 m/s relative to the ground. A person of mass m1 = 65 kg carrying a backpack of m2 = 8 kg runs and catches up to the cart, and then jumps onto the cart. Just before landing on the cart, the person is moving parallel to the ground and the velocity of the center of mass of the system including the person, backpack and cart is VCM = 5 m/s.

What is the speed of the person just before landing on the cart?

v₀ = 5.3 m/s

v₀ = 12 m/s

v₀ = 0.45 m/s

v₀ = 7 m/s

v₀ = 8.8 m/s

2)

What is the horizontal momentum of the person after landing on the cart?

p_f = 325 kg m/s

p_f = 455 kg m/s

p_f = 228 kg m/s

3)

Compare the total kinetic energy of the system including the person, backpack and cart before the person has landed on the cart to after.

KE_before = KE_after

KE_before > KE_after

KE_before < KE_after

4)

The person now holds the backpack off the back of the cart and lets go. The backpack falls to the ground. What happens to the speed of the cart when the backpack is dropped?

increases

decreases

stays the same

(Note: Answers are D, A, B, C. Please show work and reasoning.)

34. On 1 November 2019 Pippen Ltd contacts Jordan Inc to enquire about US$20m worth of machinery that Jordan Inc is manufacturing. By the 30 November the two companies have agreed sale terms after making extensive enquiries, including those on finance terms, exchange rates and forward rates. The eventual sale is concluded on 1 December 2019, whereby Jordan Inc of the USA sells machinery to Pippen Ltd of Portugal for the payment amount of €20m to be made on 1 March 2020.

On the sale date of 1 December, Jordan Inc also enters into a forward contract with its bank to sell €20m in exchange for US Dollars on 1 March 2020.

The relevant spot and forward exchange rates for the Euro/US$ on the various dates are as follows:

1-Dec-19: Spot €1=US$1 & Forward Rate to 1-Mar-20 €1=US$1.04

31-Dec-19: Spot €1=US$1.05 & Forward Rate to 1-Mar-20 €1=US$1.10

1-Mar-20: Spot €1=US$1.12

Jordan Inc’s incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent (1 percent per month) is 0.9803.

Assume that the forward contract discount or premium is allocated on a straight-line basis.

1. How many US$ does Jordan Inc expect to receive under the Forward Contract on 1 March 2020? [2 marks]

2. Assuming that Jordan Inc designates the forward contract as a cash flow hedge of a foreign currency receivable, provide the journal entries for these transactions in US$ on each of the dates (1-Dec-19, 31-Dec-19 (year-end) and 1-Mar-20). [6 marks]

3. Show the impact on Net Income for these transactions in 2019 and 2020 under Cash Flow Hedge accounting. [4 marks]

4. Now assume that Jordan Inc designates the forward contract as a fair value hedge of a foreign currency receivable. In this case, prepare the journal entries for these transactions in US$ on each of the dates (1-Dec-19, 31-Dec-19 (year-end) and 1-Mar-20). [6 marks]

5. Show the impact on Net Income for these transactions in 2019 and 2020 under Fair Value Hedge accounting. [4 marks]