Stock Valuation

Rue Company is a great corporation going through some good times. It has never paid a dividend in the past and is not planning on ever doing so. The CFO, Dr. Rue, expects that the inflation in Europe will be higher than the one in Asia due to the recovery. The main product of Rue Co is a mechanical pencil which is made in the US and sold in South America, Europe and Asia

Recently he (Dr. Rue) was interviewed by the Partition Street Journal. When asked about the free cash flows for the current year (FCF0), Dr. Ruesaid: “The company expects that the after-tax operating income, EBIT(1-T) will be $300 million next year. The depreciation will be $45 million and given the growth prospects, capital expenditures will reach $25million. Net operating working capital will increase by $5million”. In the same interview, he said that investors should expect this FCF0 to grow by and astonishing 50% for the next 2 years, then at 25% for years 3, 4 and 5, after which FCFs are expected to grow at a boring but constant rate of 3% forever.

You searched on Bloomberg and discovered that similar companies have a WACC of 12% and you plan to use it as the discount rate in your calculations. You found out that Rue Co has $5,000 million (5 billion) in debt and $200 million in non-operating assets. The company has 500 million shares outstanding.

You want to invest in this company but you are very concerned about the results of the US election next week. Depending on who wins, you expect EBIT to fluctuate between $275m to $325m and the WACC to fluctuate between 10% to 14%. For this reason, you to have to answer the following questions before investing

1. Under the base case assumptions, what should be the current stock price for Rue Company?

2.   Complete the table below with the changes to EBIT and WACC:

Price of Rue Co under different assumptions

3. Explain how EBIT(1-T) and WACC effect stock prices?

Subject: Tourism and Transport

From the planning stage to the opening of the Kai Tak Cruise Terminal in 2013, the Hong Kong Government have been working hard to promote the development of cruise industry in Hong Kong.

1. Discuss why the Hong Kong government is doing so and if Hong Kong is up for the challenge.   
2. What potential benefits it might bring to Hong Kong.
3. What potential environment problems it might create and suggest potential solutions.

Harold and Maude plan to take a cruise together, but they live in separate cities. The cruise departs from Miami, and they each book a flight to arrive in Miami an hour before they need to be on the ship. Their travel planner explains that Harold's flight has an 83% chance of making it on time for him to get to the ship and that Maude's flight has a 93% chance of making it on time.

a)Whether realistic or not, assuming that the probabilities are independent, what is the probability that one of the two will be cruising alone?

Joe Exotic Inc. is considering expanding into the cruise line business. To finance the expansion project, Joe Exotic will issue a 3-year, zero coupon bond with face value of $500 million for $450.97 million. Joe’s consultants have analyzed the cruise line market and produced the following scenarios for the expansion project for each of the next three years:

Joe’s consultants have determined that the unlevered cost of capital in the cruise line industry is 6%. The expected return on the market portfolio is 4.75% and the risk-free rate is 1.50%. Joe Exotic Inc. has a D/E ratio of 0.75 and is subject to a 35% corporate tax. (Note: When EBIT is less than debt interest, a firm is unable to get a tax deduction.)

a) Use the APV approach to evaluate Joe’s expansion project. Should Joe Exotic invest into the cruise line business if the initial cost is $800 million?

b) List three scenarios in which you would prefer to use the APV approach over the WACC approach.

Note: Show your work in detail

A 2003 Gallup poll asked 804 American adults who ate at fast food restaurants at least monthly, if they would choose a healthier menu option or stick with their current favorite item.

350 said they would choose a healthier menu option.

When the researchers report this result, what margin of error should they state (for 95% confidence)?

lower limit = ____________________

Upper limit = ____________________

Margin of error = ± __________________________   (express as a decimal to 4 decimal places)

Chapter 4

1. Violent offenders make up more than half of the prison population. How can violence be curtailed in the United States? What public policies may have the effect of reducing the rate of violence in American civil society? Finally, how can the incarceration rates be explained in terms of race and gender? Why are African Americans and Latino Americans more likely to be jailed in the United States?

Minimum 350 word count.

In order to get a better idea of just how significant the issue of cybersecurity is, including the protection employee's personal information in the hands of employers.

You can easily find other articles like: Cybersecurity Threats; Cybersecurity in American business; Digital security in America.

You'll probably be amazed at how big this problem is. Let's discuss what kind of problem these threats might pose for employers, from the release of all kinds of personal employee data, to the loss of company proprietary information, to the possibility the company's whole computer system could be shut down or jeapordized.

The following items were selected from among the transactions completed by Aston Martin Inc. during the current year:

Apr 15 - Borrowed $225,000 from Audi Company, issuing a 30-day, 6% note for that amount.

May 1 - Purchased equipment by issuing a $320,000, 180-day note to Spyder Manufacturing Co., which discounted the note at the rate of 6%.

May 15 - Paid Audi Company the interest due on the note of April 15 and renewed the loan by issuing a new 60-day, 8% note for $225,000. (Record both the debit and credit to the notes payable account.)

July 14 - Paid Audi Company the amount due on the note of May 15.

August 16 - Purchased merchandise on account from Exige Co., $90,000, terms, n/30

September 15 - Issued a 45-day, 6% note for $90,000 to Exige Co., on account.

October 28 - Paid Spyder Manufacturing Co. the amount due on the note of May 1

October 30 - Paid Exige Co. the amount owed on the note of September 15.

November 16 - Purchased store equipment from Gallardo Co. for $450,000, paying $50,000 and issuing a series of twenty 9% notes for $20,000 each, coming due at 30-day intervals.

December 16 - Paid the amount due Gallardo Co. on the first note in the series issued on November 16.

December 28 - Settled a personal injury lawsuit with a customer for $87,500, to be paid in January. Aston Martin Inc. accrued the loss in a litigation claims payable account.

Instructions

1. Journalize the transactions.

2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year:

a. Product warranty cost, $26,800.

b. Interest on the 19 remaining notes owed to Gallardo Co.

using python

In the directory rootdir some of the files contain randomly generated content while others are written by human authors. Determine how many of the files contained in the directory are written by human authors. Store your answer in the variable number_human_authored.