Analyzing Cash Dividends on Preferred and Common Stock Everett Company has outstanding 30,000 shares of $50 par value, 6% preferred stock and 70,000 shares of $1 par value common stock. During its first three years in business, it declared and paid no cash dividends in the first year, $310,000 in the second year, and $90,000 in the third year. (a) If the preferred stock is cumulative, determine the total amount of cash dividends paid to each class of stock in each of the three years. Distibution to Preferred Common Year 1 $ Answer $ Answer Year 2 $ Answer $ Answer Year 3 $ Answer $ Answer (b) If the preferred stock is noncumulative, determine the total amount of cash dividends paid to each class of stock in each of the three years. Distibution to Preferred Common Year 1 $ Answer $ Answer Year 2 $ Answer $ Answer Year 3 $ Answer $ Answer

The Wheat producers of North America are expecting to match their supply to meet the change in the market demand during coming year that is expected to change. The current year market supply and supply function is assumed to be:

Q_D= 62.5 - 0.125P

Q_S= 0.5P - 100

Please predict either a rise or fall in the demand of wheat as a percentage change from the current year demand based on your observations from the website and derive a new demand function with the predicted percentage change (EITHER INCREASE OR DECREASE) in demand, (i.e. the quantity demanded will increase or decrease by THE PERCENTAGE for each level of price). (Please restrict your change in demand within ± 25%)

Please compute the following:

1. Market Equilibrium Price for current year and next year with percentage change.
2. Market Equilibrium Quantity for current year and next year with percentage change
3. Producer Surplus and Consumer Surplus for current year and following year with percentage change

Rotorua Products, Ltd., of New Zealand markets agricultural products for the burgeoning Asian consumer market. The company’s current assets, current liabilities, and sales over the last five years (Year 5 is the most recent year) are as follows: Year 1 Year 2 Year 3 Year 4 Year 5 Sales $ 4,519,650 $ 4,743,420 $ 4,986,130 $ 5,404,630 $ 5,644,150 Cash $ 83,903 $ 94,914 $ 91,997 $ 79,973 $ 72,599 Accounts receivable, net 403,668 425,131 432,904 506,860 563,814 Inventory 818,643 875,531 829,934 890,369 897,953 Total current assets $ 1,306,214 $ 1,395,576 $ 1,354,835 $ 1,477,202 $ 1,534,366 Current liabilities $ 317,903 $ 330,463 $ 343,668 $ 328,804 $ 392,334 Required: 1. Express all of the asset, liability, and sales data in trend percentages. Use Year 1 as the base year. (Round your percentage answers to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

BLC offers its customers two lawn maintenance services. One service is for a one-year maintenance plan at a cost of $180. Customers can earn a 5% discount from this price if they pay before BLC’s calendar fiscal year for maintenance services to be performed in the following year. The second service offered by BLC is a three-year maintenance plan that sells for $500. The first year’s maintenance service for this three-year plan will be delivered before BLC’s fiscal year end. No discount for early payment is offered for the second plan.

a) Prepare the summary journal entry for the cash sale of 180 one-time plans for the current year, 100 discounted one-time plans for the following year, and 280 three-year maintenance plans.

b) Determine the statement of financial position (SFP) classification of the unearned portion of the revenue collected.

An analyst evaluating securities has obtained the following information. The real rate of interest is 2.9% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.6% next year, 3.6% the following year, 4.6% the third year, and 5.6% every year thereafter. The maturity risk premium is estimated to be 0.1 × (t – 1)%, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5-year securities is 1%

a. What is the yield on a 1-year T-bill? Do not round intermediate calculations. Round your answer to one decimal place.

  b. What is the yield on a 5-year T-bond? Do not round intermediate calculations. Round your answer to one decimal place.

   c. What is the yield on a 5-year corporate bond? Do not round intermediate calculations. Round your answer to one decimal place.

Victoria Company purchased a $100,000 conveyor belt for use in its main factory. It has a 4 year useful life and a $0 salvage value. For the following 4 years Victoria recorded sales revenue of $300,000 each year and $200,000 in expenses, NOT INCLUDING DEPRECIATION nor INCOME TAX EXPENSE. Victoria uses straight-line depreciation method for financial accounting (“book”) purposes and MACRS for tax accounting purposes. Under MACRS, Victoria can apply accelerated depreciation for the asset using the following percentages:

YEAR 1 - 50%, YEAR 2 - 30%, YEAR 3 - 15%, and YEAR 4 - 5%. The income tax rate is 40%

a. Prepare the complete JOURNAL ENTRY to record income tax expense for YEAR 2.

b. Prepare the complete JOURNAL ENTRY to record income tax expense for YEAR 4.

c. What is the BALANCE of the Deferred Tax Asset or Liability account at the end of YEAR 3?

Assume monetary benefits of an information system of $50,000 the first year and

increasing benefits of $5,000 a year for the next four years (year 1 = 50,000; year 2-

55,000; year 3 = 60,000; year 4 = 65,000; year 5 – 70,000). One-time development

costs were $90,000 and recurring costs beginning in year 1 were $40,000 over the

duration of the system’s life. The discount rate for the company was 10 percent.

Using a 5-year horizon, calculate the net present value of these costs and

benefits. Also calculate the overall return on investment of the project and then

present a break-even analysis. At what point does break-even occur?

Deliverables:

1. Prepare a worksheet (in MS Excel) for the economic analysis. Choose

appropriate format for the worksheet. Use currency symbols for the numbers

indicating monetary values. You must use formula (MS Excel) for your

calculations in the worksheet.

Question 4/ Firm D is planning its first dividend in 3 years from now. The dividend per share by the end of year 3 is $1.4. Firm C has an equity Beta of 1.2. The T-bill rate is 2.5% and the return on the equity market index is 7.5%. The dividends are expected to grow from year 3 to years 6 by 13.5% and during year 6 by 9.5%. From year 6 to year 11 they are expected to grow by 10%. However starting from year 11 there will be no growth of dividends forever.

a/ Compute the intrinsic value of the stock now? (Show your steps)
b/ Compute the intrinsic value of the stock at the end of year 2? (Show your steps)

c/ Compute the intrinsic value of the stock at the end of year 8? (Show your steps)

d/ Compute the intrinsic value of the stock at the end of year 50? (Show your steps)

An analyst evaluating securities has obtained the following information. The real rate of interest is 2.3% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.1% next year, 3.1% the following year, 4.1% the third year, and 5.1% every year thereafter. The maturity risk premium is estimated to be 0.1 × (t – 1)%, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5-year securities is 1%.

a. What is the yield on a 1-year T-bill? Round your intermediate calculations and final answer to two decimal places.
  %

   b. What is the yield on a 5-year T-bond? Round your intermediate calculations and final answer to two decimal places.
  %

   c. What is the yield on a 5-year corporate bond? Round your intermediate calculations and final answer to two decimal places.
  %

Project cash flow and NPV.  The managers of Classic Autos Incorporated plan to manufacture classic Thunderbirds​ (1957 replicas). The necessary foundry equipment will cost a total of ​$4,000,000 and will be depreciated using a​ five-year MACRS​ life, LOADING... . The sales manager has an estimate for the sale of the classic Thunderbirds. The annual sales volume will be as​ follows: Year​ one:  260 Year​ four:  370 Year​ two:  270 Year​ five:  330 Year​ three:  330 If the sales price is ​$28,000 per​ car, variable costs are ​$20,000 per​ car, and fixed costs are ​$1,100,000 ​annually, what is the annual operating cash flow if the tax rate is 30​%? The equipment is sold for salvage for ​$500,000 at the end of year five. Net working capital increases by ​$500,000 at the beginning of the project​ (year 0) and is reduced back to its original level in the final year. Find the internal rate of return for the project using the incremental cash flows.