Today you observe the following NYMEX Crude Oil ('CL') futures prices, and discount factors associated with each payment date:

Explain how you would calculate the fixed price of a swap from a strip of floating futures prices and discount factors associated with each payment date. What is the value of the swap at the time of entering the contract? (Please use your own language and no calculation is needed.)

Explain how you would value a swap that is the exchange of a strip of floating futures prices for a given fixed futures price. (Please use your own language and no calculation is needed.)

Determine the fixed price in a 12 month swap with a floating price based on the NYMEX CL futures price, and payment dates corresponding to first 12 discount factors in the table.

Determine the fixed price in a 24 month CL swap based on these futures prices.

Value a long position in 24 month CL swap with a fixed price of $95.00/bbl and a notional quantity of 10,000 bbl (i.e., 10 NYMEX contracts/month). Discuss why the value of this swap is different from zero.

6. Buffalo Company manufactures and sells adjustable canopies that attach to motor homes and trailers. For its budget, Buffalo estimated the following: Selling price$420Variable cost per canopy $205Annual fixed costs $180,000Net Income$250,000Income Tax Rate30% The May financial statements reported that sales were not meeting expectations. For the first 5 months of the year, only 350 units had been sold at the established price with variable costs as planned. It was clear that the net income projection for the year would not be reached unless some actions were taken. A management committee presented the following mutually exclusive alternatives to the president: A. Reduce the selling price by $60 per unit. The sales forecast that at this significantly reduced price is which 2,850 units can be sold during the remainder of the year. Total fixed costs and variable costs per unit will stay as budgeted. B. Lower variable cost per unit by $10 using less expensive direct materials and slightly modified manufacturing techniques. The selling price will also be reduced by $30 and sales of 2,200 units are expected for the remainder of the year. C. Reduce fixed costs by $15,000 and lower the selling price by 5%. Variable costs per unit will be unchanged and sales of 2,000 units are expected for the remainder of the year. Required: (1) If no changes are made to the selling price or cost structure, determine the number of units that Buffalo must sell to break even and achieve its net income objective.(2) Determine which alternative Buffalo should select to achieve maximum net income.

Materials Variances

Cinturon Corporation produces high-quality leather belts. The company's plant in Boise uses a standard costing system and has set the following standards for materials and labor:

During the first month of the year, the Boise plant produced 92,000 belts. Actual leather purchased was 271,500 strips at $3.30 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 79,200 hours at $14.00 per hour.

Required:

1. Break down the total variance for materials into a price variance and a usage variance using the columnar and formula approaches. Enter favorable values as negative numbers and unfavorable values as positive numbers.

2. CONCEPTUAL CONNECTION Suppose the Boise plant manager investigates the materials variances and is told by the purchasing manager that a cheaper source of leather strips had been discovered and that this is the reason for the favorable materials price variance. Quite pleased, the purchasing manager suggests that the materials price standard be updated to reflect this new, less expensive source of leather strips. Should the plant manager update the materials price standard as suggested? Why or why not?

1. No , The suggestion of the purchasing manager is premature. A favorable materials price can produce an effect on both materials usage and labor variances.
2. Yes, the purchasing manager is correct. This will improve the overall profitability of the company.
3. No , The suggestion of the purchasing manager is incorrect. The matierals are not available and so changes to the price standard should not be made

The price per share of stock for a sample of 25 companies was recorded at the beginning of 2012 and then again at the end of the 1st quarter of 2012. How stocks perform during the 1st quarter is an indicator of what is ahead for the stock market and the economy. The sample data are provided in the Excel Online file below. Construct a spreadsheet to answer the following questions.

a. Let  denote the change in price per share for company i where  1st quarter of 2012 price per share minus the beginning of 2012 price per share. Use the sample mean of these values to estimate the dollar amount a share of stock has changed during the 1st quarter

$  (to 2 decimals)

b. What is the 95% confidence interval estimate of the population mean change in the price per share of stock during the first quarter? Interpret this result.

The mean price per share has increase between % and % over the three-month period (to 1 decimal

The current price of a stock is $65.88. If dividends are expected to be $1 per share for the next five years, and the required return is 10%, then what should the price of the stock be in 5 years when you plan to sell it? If the dividend and required returns remained the same; and the stock price is expected to increase by $1 five years from now, does the current stock price also increase by $1? Why or why not?

I only need d) to be solved, thanks

(a) Derive the answer to price of the stock in 5 years (i.e. Find: Ps.) The question does not specify expected dividends or the required rate of return for beyond five years. Assume that following the fifth year (i.e. in the 6th year) that dividends grow at a constant rate forever and that the required rate of return remains at 10%

b) Find the growth rate of dividends that is consistent with your answer in part (a) to Ps. (Hint: use the Gordon growth model.) Now suppose instead that Ps-101.

c) What is the price of the stock today? Finally, suppose that dividends stay at S1 forever.

d）Unlike question b) above, consider a “two-stage Gordon growth model” where the growth rate of dividends is greater than required rate of return over the first five years. As before, suppose D1 =1 and ke =.1. However, now dividends grow from year 1 until year 5 at 20%, and after year 5 they stop growing. What is the price of the stock today?

Part I:

1. Have a program class named TestArrays This class should have a main() method that behaves as follows:
2. Have an integer array of size 10.
3. Using a loop, fill the elements with increments of 5, starting with 5 in the first element.
4. Using the array elements, sum the second, fifth and seventh elements.
5. Display the sum with a label.
6. Change the fourth element to 86.
7. Subtract 9 from the ninth element.
8. Using a loop, display the elements of the array.
9. Compile and execute the code to ensure correct results.
10. Don't forget to include descriptive and detailed comments in your code!!!

Part II

1. have a toString() method for the Vehicle class that would display the attributes of the class.
2. have an array of 7 elements that will hold Vehicle references.
3. Using a loop, assign the first 4 elements to Vehicle objects using the null constructor.
4. Instantiate a Vehicle object with a base price of $37,000 and additional features of $400.
5. Assign the object to the 5th element of the array.
6. Assign the 6th element of the array to a Vehicle object with a base price of $24,000 and additional features of $5500.
7. Assign the 7th element of the array to a Vehicle object with a base price of $53,000 and additional features of $9000.
8. Calculate the total price for the 5th, 6th and 7th vehicles in the array.
9. Using an array, display the attributes of the objects in the array calling the toString().

//import statements

import java.util.Scanner;

public class Vehicle

{

//Attributes of class Vehicle

private double basePrice;

private double otherFeatures;

private double totalPrice;

//constructors

//no argument constructors

public Vehicle(){

  basePrice = 25000;

  otherFeatures = 3000;

  totalPrice = basePrice + otherFeatures;

}

//one argument constructor

public Vehicle(double basePrice){

  basePrice = basePrice;

otherFeatures = 0;

  totalPrice = basePrice + otherFeaturese;

}

//two argument constructor

  public Vehicle(double basePrice,double otherFeatures){

   basePrice = basePrice;

   otherFeatures = otherFeatures;

totalPrice = basePrice + otherFeaturese;

  }

  //getters

  public double getBestPrice(){

   return basePrice;

  }

  public double getOtherFeaturese(){

   return otherFeatures;

  }

  public double getTotalPrice(){

   return totalPrice;

  }

  //setters

  public void setBasePrice(double basePrice){

   basePrice = basePrice;

  }

  public void setotherFeatures(double additionalPrice){

  otherFeatures = otherFeatures;

  }

  public void calcTotalPrice(){

    totalPrice = basePrice + otherFeatures;

  }

}//End of class Vehicle

class testVehicle{

public static void main(String[] args){

//creating instances of class Vehicle

Vehicle Ford = new Vehicle();

Vehicle Toyota = new Vehicle(36000);

Vehicle Porsche = new Vehicle(64000,7000);

//changing base price of Ford to 28000

Ford.setBasePrice(28000);

//changing additional price of Toyota to 4500

Toyota.setOtherFeatures(4500);

//changing base price of Porsche to 72000

Porsche.setBasePrice(72000);

//Calculating total price for each vehicles.

Ford.calcTotalPrice();

Toyota.calcTotalPrice();

Porsche.calcTotalPrice();

//Calculating total price of 3 vehicles.

double totalCost = Ford.getTotalPrice()+Toyota.getTotalPrice()+Porsche.getTotalPrice();

  //displaying prices of vehicles

  System.out.println("Vehicle: Ford, Base Price: $ "+Ford.getBestPrice()

           +", otherFeatures: $ "+Ford.getOtherFeatures()

           +", Total cost: $ "+Ford.getTotalPrice());

  System.out.println("Vehicle: Toyota, Base Price: $ "+Toyota.getBestPrice()

           +", otherFeatures Cost: $ "+Toyota.getotherFeatures()

           +", Total cost: $ "+Toyota.getTotalPrice());

  System.out.println("Vehicle: Porsche, Base Price: $ "+Porsche.getBestPrice()

           +", otherFeatures: $ "+Porsche.getOtherFeatures()

           +", Total cost: $ "+Porsche.getTotalPrice());

  //displaying total cost of all 3 vehicles

  System.out.println("Total cost of all 3 Vehicles: "+totalCost);

}//End of main() function

}//End of class testVehicle

Russell Industries is considering replacing a fully depreciated machine that has a remaining useful life of 10 years with a​ newer, more sophisticated machine. The new machine will cost $ 207,000 and will require $ 30,500 in installation costs. It will be depreciated under MACRS using a​ 5-year recovery period​ (see the table for the applicable depreciation​ percentages).

A $ 27,000 increase in net working capital will be required to support the new machine. The​ firm's managers plan to evaluate the potential replacement over a​ 4-year period. They estimate that the old machine could be sold at the end of 4 years to net $ 14,800 before​ taxes; the new machine at the end of 4 years will be worth $ 75,000 before taxes. Calculate the terminal cash flow at the end of year 4 that is relevant to the proposed purchase of the new machine. The firm is subject to a 40 % tax rate. The terminal cash flow for the replacement decision is shown​ below:  ​(Round to the nearest​ dollar.)

Proceeds from sale of new machine $

Tax on sale of new machine

Total after-tax proceeds-new asset $

Proceeds from sale of old machine $

Tax on sale of old machine

Total after-tax proceeds-old asset $

Change in net working capital

Terminal cash flow $

Johnson Transformers Inc.

Following is the seven-year forecast for a new venture called Johnson Transformers: (all amounts in $000)

Beginning after year 2026 the annual growth in EBIT is expected to be 1.5%, a rate that is projected to be constant over Johnson Transformers remaining life as an enterprise.   Beginning in 2026 Johnson's Transformers capital expenditures and depreciation are expected to offset each other (capex - depreciation = 0) and year to year changes in working capital are expected to be zero (working capital levels remain constant year over year). For discounting purposes consider 2020 as year 1.

Assume a tax rate is 21% and a cost of capital of 7.75%

Question 1: Determine the NPV of Johnson Transformers Free Cash Flow for the years 2020 -2026. HINT: Remember to account for loss carry-forwards when determining income taxes. The answer to this question was determined in Excel. Your answer may deviate slightly depending upon differences in truncation and rounding. Answers below are in $000.

Answer: $2105

Calculate the fair market value (NPV) for Johnson Transformers. For this problem assume that the Net Present Value of Johnson Transformers free cash flow for the period 2020 - 2026 is $3000 (NOTE its not $3000 but make this assumption in case the answer you determined in the first question was incorrect. Assume no underlying changes to any of the data in the problem. DO NOT USE YOUR ANSWER FROM THE QUESTION ABOVE. All ANSWERS ARE IN $000

Part 1

Johnson Transformers Inc. Following is the seven-year forecast for a new venture called Johnson Transformers: (all amounts in $000) 2020 2021 2022 2023 2024 2025 2026 EBIT $(1000) $(900) $200 $1,200 $2,500 $3000 $3,050 Capital Expenditures $550 $350 $200 $175 $175 $160 $150 Changes in Working Capital $400 $300 $200 $100 $100 ($100) ($100) Depreciation $40 $80 $125 $150 $150 $150 $150 Beginning after year 2026 the annual growth in EBIT is expected to be 1.5%, a rate that is projected to be constant over Johnson Transformers remaining life as an enterprise. Beginning in 2026 Johnson's Transformers capital expenditures and depreciation are expected to offset each other (capex - depreciation = 0) and year to year changes in working capital are expected to be zero (working capital levels remain constant year over year). For discounting purposes consider 2020 as year 1. Assume a tax rate is 21% and a cost of capital of 7.75% Question 1: Determine the NPV of Johnson Transformers Free Cash Flow for the years 2020 -2026. HINT: Remember to account for loss carry-forwards when determining income taxes. The answer to this question was determined in Excel. Your answer may deviate slightly depending upon differences in truncation and rounding. Answers below are in $000.

Part 2

Calculate the fair market value (NPV) for Johnson Transformers. For this problem assume that the Net Present Value of Johnson Transformers free cash flow for the period 2020 - 2026 is $3000 (NOTE its not $3000 but make this assumption in case the answer you determined in the first question was incorrect. Assume no underlying changes to any of the data in the problem. DO NOT USE YOUR ANSWER FROM THE QUESTION ABOVE. All ANSWERS ARE IN $000