There is a bond with FV = 1000, coupon rate of 10% paid annually and 5 year maturity. At year 0, YTM = 8%.

Given constant YTM, what is the bond price at time 1?

What is capital gain yield and current yield?

What are the prices of the bond in year 2, 3, 4, and 5?

If at year 1, YTM becomes 12%, what is a bond price in year 1?

Consider a project that has a 10% cost of capital that requires an initial investment of $10,000. The year 1 net cash inflow is $2,450; the year 2 net cash inflow is $2,850; the year 3 net cash inflow is $3,350; the year 4 net cash inflow is $3,750; and the year 5 net cash inflow is $5,250. What is the project's discounted payback? NPV? AND IRR?

Richter Manufacturing has a 10% unlevered cost of equity. Richter forecasts the following free cash flows (FCFs), which are expected to grow at a constant 3% rate after Year 3. Year 1 Year 2 Year 3 FCF $715 $750 $805

a. What is the horizon value of the unlevered operations?

b. What is the total value of unlevered operations at Year 0?

Assume that 25 years ago your dad invested $340,000, plus $25,000 in years 2 through 5, and $49,000 per year from year 6 on.

At a very good interest rate of 14% per year

A) determine the CC value.

B) The annual retirement amount the he can withdraw forever starting next year (year 26), if no additional investments are made.

Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: Year 1, $16,000; Year 2, $32,000; Year 3, $112,000; Year 4, $122,000; Year 5, $134,000; and Year 6, $148,000. During the entire period ended December 31 of each year, the outstanding stock of the company was composed of 20,000 shares of cumulative preferred 2% stock, $100 par, and 100,000 shares of common stock, $20 par. Required: 1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of Year 1. Summarize the data in tabular form. Note: If required, round your answers to two decimal places. If the amount is zero, enter "0". Preferred Dividends Common Dividends Year Total Dividends Total Per Share Total Per Share Year 1 $ 16,000 $ $ $ $ Year 2 32,000 Year 3 112,000 Year 4 122,000 Year 5 134,000 Year 6 148,000 $ $ 2. Determine the average annual dividend per share for each class of stock for the six-year period. If required, round your answers to two decimal places. Average annual dividend for preferred $ per share Average annual dividend for common $ per share 3. Assuming a market price per share of $120 for the preferred stock and $14 for the common stock, determine the average annual percentage return on initial shareholders' investment, based on the average annual dividend per share for preferred stock and for common stock. Use the rounded amounts from part 2 in future computations. And round your final answers to two decimal places. Preferred stock % Common stock % Feedback 1. Is the preferred stock cumulative or non-cumulative? How will the preferred stock being cumulative or non-cumulative affect the distribution of dividends? Determine what amount of current dividends the preferred stock should receive per year. Recall the definition of dividends "in arrears". How much in dividends would each share of preferred stock receive each year? How much in dividends would each share of common stock receive each year? 2. Remember you are calculating the average per share for each class of stock, not in total. 3. What would the preferred and common stockholder receive as a return on their initial investment based on the average annual dividend? Learning Objective 2. Check My Work

Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: Year 1, $16,000; Year 2, $32,000; Year 3, $112,000; Year 4, $122,000; Year 5, $134,000; and Year 6, $148,000. During the entire period ended December 31 of each year, the outstanding stock of the company was composed of 20,000 shares of cumulative preferred 2% stock, $100 par, and 100,000 shares of common stock, $20 par. Required: 1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of Year 1. Summarize the data in tabular form. Note: If required, round your answers to two decimal places. If the amount is zero, enter "0". Preferred Dividends Common Dividends Year Total Dividends Total Per Share Total Per Share Year 1 $ 16,000 $ $ $ $ Year 2 32,000 Year 3 112,000 Year 4 122,000 Year 5 134,000 Year 6 148,000 $ $ 2. Determine the average annual dividend per share for each class of stock for the six-year period. If required, round your answers to two decimal places. Average annual dividend for preferred $ per share Average annual dividend for common $ per share 3. Assuming a market price per share of $120 for the preferred stock and $14 for the common stock, determine the average annual percentage return on initial shareholders' investment, based on the average annual dividend per share for preferred stock and for common stock. Use the rounded amounts from part 2 in future computations. And round your final answers to two decimal places. Preferred stock % Common stock % Feedback 1. Is the preferred stock cumulative or non-cumulative? How will the preferred stock being cumulative or non-cumulative affect the distribution of dividends? Determine what amount of current dividends the preferred stock should receive per year. Recall the definition of dividends "in arrears". How much in dividends would each share of preferred stock receive each year? How much in dividends would each share of common stock receive each year? 2. Remember you are calculating the average per share for each class of stock, not in total. 3. What would the preferred and common stockholder receive as a return on their initial investment based on the average annual dividend? Learning Objective 2.

AnimalChin! Co. has decided to sell a new line of longboards: "The Veloce." These longboards will be sold for $462 per unit and have variable costs of $350 per unit. The company has spent $750,000 for a marketing study which determined that the company will sell 4,000,000 boards in year 1. Sales will stay the same until the project is discontinued in year 8. The same marketing study also mentioned that some old clients are likely to switch to the new board. Sales of the other AnimalChin! board The Classic are likely to decrease by 800,000 units each year, the price of The Classic price $400, and variable costs are $300. Space rental, marketing and advertisement costs, and administrative expenses will total $60,000,000 per year. A few months ago, the company has also spent $7,000,000.00 to test new wheels and shock pads and they recently repaired some of their machines for $5,000,000.00. Three of these machines are currently not in use, they could be used for the production of The Veloce or could be sold today for $80,000,000.00 total (their initial cost 3 years ago was $500,000,000.00 (the company is currently depreciating these assets straight-line to zero book value over 5 years). The plant and equipment investment required for this project is $1,700,000,000.00 and will be depreciated on a straight-line basis to a zero book value over the next 8 years. Despite depreciating to zero for tax reasons, the company believes that the market value of the equipment in 8 years will be $90,000,000.00. The company will sell the equipment. The production of The Veloce will require an immediate increase in inventory of $ 145,000,000.00 that will be returned at the end of the project. The tax rate is 40%.

1. Read the project's description very carefully. Which cash-flows are “relevant” for our project? Remember you are looking for incremental cash flows. List which cash-flows are relevant (or not relevant) and briefly explain why. Relevant NOT relevant Why?

2. Based on your answer to question 1. Calculate the annual operating cash-flow (OCF) for the project for year 1 to year 8.

3. Now focus on year 0. Based on your answer to question 1. What should you take into account as inflow/outflow of cash for year 0 when you start the project?

4. Finally, focus on year 8, the termination year of your project. What should you take into account as inflow/outflow of cash besides year 8 OCF?

? 5. Based on points 1-4 fill the CFFA table and compute the Cash-flow from assets (CFFA) for Year 0 to year 8. Copy and paste from excel if needed.

What are the answers to questions 13, 14, and 15 and how do I do them?

Below is are balance and income numbers for three companies. Answer the questions below. ​

• ● The balance sheet items may not balance perfectly (they may be out ~$1) due to rounding error.

• ● USE EXCEL to calculate the solutions and do the math – calculators may throw off your rounding

• ● Submit percentages as the percentage followed by two decimals. A number that appears as .04567 in excel should be

  submitted as 4.57%.

• ● Responses will be marked correct if they are within 5% of the answer I calculated in Excel

  (Questions on next page)

1. Which company has the best liquidity (highest current ratio) in Year 2?

2. Which company does the best job generating profits for shareholders in Year 2? (ROE)

3. Which company does the best job generating profits with its total investment in Year 2? (ROA)

4. Which company is the most leveraged (high long-term debt to equity) in Year 2?

5. Which company has the biggest current threat of being illiquid (lowest current ratio) in Year 2?

6. Which company saw the biggest increase in its net profit margin from Year 1 to Year 2 (or smallest decrease if NI all

   negative)?

7. What is company 2's ROA in Year 2?

8. What is company 1's ROA in Year 1?

9. What is company 3's ROA in Year 2?

10. Which company has the highest gross margin in Year 2?

11. What is company 1's quick ratio in Year 1?

12. What is company 2's current ratio in Year 2?

13. What is company 3's net margin in Year 2?

14. What is company 2's inventory turnover in Year 2?

15. What is company 3's long-term debt to assets ratio in Year 1?

On December 31, Year 5, Par Company purchased 70% of the outstanding common shares of Sub Company for $8,750,000 million in cash. On that date, the shareholders’ equity of Sub consisted of $2 million in common shares and $6 million in retained earnings. For the year ended December 31, Year 10, the income statements for Par and Sub were as follows:

At December 31, Year 10, the condensed balance sheets for the two companies were as
follows:

Other information
1. On December 31, Year 5, Sub had inventory with a fair value that was $150,000 less
than its carrying value.
2. On December 31, Year 5, Sub had equipment with a fair value that was $600,000
greater than its carrying value. The equipment had an estimated remaining useful life of
8 years.
3. Each year, goodwill is evaluated to determine if there has been a permanent
impairment. Goodwill had a recoverable value of $3,470,000 at December 31, Year 9
and $3,200,000 at December 31, Year 10.
4. On January 2, Year 8, Sub sold land to Par for $1,200,000. Sub purchased the land
on January 1, Year 3 for $800,000. In Year 10, Par sold 30% of this land to an outsider.
5. During Year 10, Sub sold merchandise to Par for $600,000, 75% of which remains in
Par’s inventory at December 31, Year 10. On December 31, Year 9, the inventory of Par
contained $100,000 of merchandise purchased from Sub. Sub earns a gross margin of
30% on its sales.
6. During Year 10, Par declared and paid dividends of $2,600,000, while Sub declared
and paid dividends of $800,000.
7. Par accounts for its investment in Sub using the cost method.
8. Both companies pay income tax at the rate of 40%.

Required
a. Calculate the consolidated net income for Year 10
b. Calculate the consolidated retained earnings at January 1, Year 10.
c. Prepare the consolidated financial statements for the year ended
December 31, Year 10.
d. Prepare the working paper eliminating journal entries for the intercompany sale of
inventory for Year 10
Hints: Goodwill = $4,050,000; AD left Dec. 31, Year 10 = $3,425,000; Total
Consolidated assets $64,226,000

What are the answers to questions 5, 6, 7, and 8 and how do I do them?

Below is are balance and income numbers for three companies. Answer the questions below. ​

• ● The balance sheet items may not balance perfectly (they may be out ~$1) due to rounding error.

• ● USE EXCEL to calculate the solutions and do the math – calculators may throw off your rounding

• ● Submit percentages as the percentage followed by two decimals. A number that appears as .04567 in excel should be

  submitted as 4.57%.

• ● Responses will be marked correct if they are within 5% of the answer I calculated in Excel

  (Questions on next page)

1. Which company has the best liquidity (highest current ratio) in Year 2?

2. Which company does the best job generating profits for shareholders in Year 2? (ROE)

3. Which company does the best job generating profits with its total investment in Year 2? (ROA)

4. Which company is the most leveraged (high long-term debt to equity) in Year 2?

5. Which company has the biggest current threat of being illiquid (lowest current ratio) in Year 2?

6. Which company saw the biggest increase in its net profit margin from Year 1 to Year 2 (or smallest decrease if NI all

   negative)?

7. What is company 2's ROA in Year 2?

8. What is company 1's ROA in Year 1?

9. What is company 3's ROA in Year 2?

10. Which company has the highest gross margin in Year 2?

11. What is company 1's quick ratio in Year 1?

12. What is company 2's current ratio in Year 2?

13. What is company 3's net margin in Year 2?

14. What is company 2's inventory turnover in Year 2?

15. What is company 3's long-term debt to assets ratio in Year 1?