Vaughn Inc. had beginning inventory of $12,411 at cost and $19,700 at retail. Net purchases were $99,730 at cost and $153,700 at retail. Net markups were $10,500, net markdowns were $6,400, and sales revenue was $149,700. Assume the price level increased from 100 at the beginning of the year to 105 at year-end. Compute ending inventory at cost using the dollar-value LIFO retail method. (Round ratios for computational purposes to 1 decimal place, e.g. 78.7% and final answer to 0 decimal places, e.g. 28,987.)

BB.co is a construction company that at the moment was fully financed with assets. The new manager suggests that shareholders include debt in their financial structure as this increases the value of the company. The company has an EBIT of $100 each year. Their equity is valued (that is, the price of their shares) so that their expected return is 10% and the corporate tax rate is 20%. The company can indebt at the risk-free rate, 4%. Suppose the EBIT is perpetual and a Modigliani-Miller world with taxes. How much would the value of the company increase if BB.co is indebted permanently so that its debt represents 50% of the value of the assets of the company?

Presented below is information related to Marigold Company.

Compute the ending inventory for Marigold Company for 2014 through 2019 using the dollar-value LIFO method.

Junius Corp is a monopoly company producing digital telematic tools in Malaysia. Based on its observation on the current uncertainty surrounding the economy due to the Covid-19 Pandemic, there is a 50% chance the firm’s demand curve will be P=20-Q and a 50% chance it will be P =100-Q. The marginal cost of the firm is MC = 4Q.

a. Derive the expression for the expected marginal revenue function for the firm.

b. What is the expected profit-maximizing quantity of the firm?

c. What is the expected profit-maximizing price of the firm?

d. What is the expected total profit of the firm?

Kites are manufactured by identical firms in a perfectly competitive environment. Each firm’s long run average cost and marginal cost of production are given by: AC = Q + 100/Q and MC = 2Q where Q is the number of kites produced.

a) In long run equilibrium, how many kites will each firm produce? (2 pts)

b) What will the price of kites (P) be? (1 pt)

c) Suppose the demand for kites is given by formula Q = 8000 - 50*P. How many kites will be sold and how many firms will there be in kite industry? (2 pts)

Henry is planning to purchase a Treasury bond with a coupon rate of 2.67% and face value of $100. The maturity date of the bond is 15 May 2033.

(c) If Henry purchased this bond on 2 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 4.80% p.a. compounded half-yearly. Henry needs to pay 28.3% on coupon payment and capital gain as tax payment. Assume that all tax payments are paid immediately.

Select one:

a. 65.4393

b. 78.5573

c. 56.3634

d. 64.3298

Consider the situation where the maximum temperature in degrees Farenheit for the seven successive days in a certain week is the vector random variable, (T1,..., T7), where T1~U(70; 80); Tj+1 = 14 + 0:8Tj + 3Xj ; j = 1,...6; where X1,...,X6 i.i.d. N(0; 1). A weather derivative pays $100 if there are two or more days with maximum temperatures below 70 degrees. Using Monte Carlo simulation in R, compute the fair price of this derivative with relative error of no more than 1%.

Firms A & B have no debt. Both have invested capital of $4,000,000 and 200,000 shares
outstanding. Both firms have an ROIC of 15% and a WACC of 15%. Firm A pays out 100% of
earnings as dividends and Firm B pays out 30% of its earnings as dividends.

a. What will be the share price of each firm at the end of two years?

b. Will shareholders of Firms A & B earn the same or different rates of return after selling
their shares at end of year two assuming both firms continue to operate as they have and
there are no changes in expectations.