Questions
all Question QUESTION 2 A magazine publisher offers its customers three option on subscriptions: Option A:...

all Question

QUESTION 2
A magazine publisher offers its customers three option on subscriptions:
Option A: $50 today for three years.
Option B: A two-year rate of $38 paid immediately, followed by a one-year rate of $17 paid
at the beginning of the third year.
Option C: $17 paid at the beginning of each of the three years.
a) From the perspective of the company, which option is best if the company’s opportunity cost of funds is 8%? Explain.
b) From the perspective of the subscriber, which option is best in terms of minimizing the cost of subscription if the subscriber’s opportunity cost of funds is 5%? Explain.


QUESTION 3
Bart Simpson, now age 10, wants to be able to buy a really cool new car when he turns 16. His really cool car costs $15,000 today, and its cost is expected to increase 3% annually. Bart wants to make one deposit today (he can sell his original collection of The Spiderman comic books) into an account paying 8% annually in order to buy his dream car. How much will Bart’s car cost? And how much does Bart have to save today in order to buy this car at age 16?

QUESTION 4
Lisa Simpson is planning to attend college when she graduates from high school 7 years from now. She anticipates that she will need an amount of $35,770.97 for her 4-year college to pay for tuition and fees, and have some spending money. Lisa has made an arrangement with her father to do the household chores if her dad deposits $3,500 at the end of each year for the next 7 years in a bank account paying 8 percent interest. Will there be enough money in the account for Lisa to pay for her college expenses?

In: Finance

In a marketing context, Market Penetration means: developing new markets for existing products developing new products...

In a marketing context, Market Penetration means:

developing new markets for existing products

developing new products for existing markets

increasing sales of existing products in existing markets

developing new products for new markets

In: Finance

Apollo is considering a new expansion project, Project S. Project S is a new health-food product...

Apollo is considering a new expansion project, Project S. Project S is a new health-food product that Allied is thinking of introducing to the market. Along the way, Allied’s finance staff has received a lot of information, the highlights of which are summarized below:
 Project S will require Apollo to purchase $900,000 of equipment in 2013 (t = 0).
 Inventory will increase by $175,000 and accounts payable will rise by $75,000. All other working capital
components will stay the same, so the change in net operating working capital (NOWC) is $100,000 at t = 0.
 The project will last for 4 years. The company forecasts that they will sell 2,685,000 units in 2014, 2,600,000
units in 2015, 2,525,000 units in 2016, and 2,450,000 units in 2017. Each unit will sell for $2.
 The fixed cost of producing the product is $2 million each year, and the variable cost of producing each unit
will rise from $1.018 in 2014 to $1.221 in 2017. (assume it is $1.078 in 2015 and $1.046 in 2016).
 The company will use accelerated depreciation and write off 33% of the basis during Year 1, 45% in year 2,
15% in Year 3 and 7% in Year 4.
 When the project is completed in 2017 (t = 4), the company expects it will be able to salvage the equipment for
$50,000, and it expects that it will fully recover the NOWC of $100,000.
 The estimated tax rate is 40%.
 Based on the perceived risk, the project’s WACC is estimated to be 10%.
Evaluate the project’s NPV, IRR, MIRR and payback.

In: Finance

How do the Spanish Conquistadors bringing disease to the new world compare/contrast with new disease outbreaks...

How do the Spanish Conquistadors bringing disease to the new world compare/contrast with new disease outbreaks in today's society?

In: Nursing

1.  In order to meet new Homeland Security guidelines, the Eagles install new facial recognition technology that...

1.  In order to meet new Homeland Security guidelines, the Eagles install new facial recognition technology that can instantly identify all patrons entering Lincoln Financial Field.  Installing the new security system costs the team $150 million.  Once installed, it is essentially costless to operate.  Use the appropriate economic framework to derive the impact of installing this system on ticket prices to Eagles games.

In: Finance

Dr. Victor Frankenstein has been developing a new operation table for advanced surgery. This new table...

Dr. Victor Frankenstein has been developing a new operation table for advanced surgery. This new table will be available to sell to the market in the near future. He expects the first annual cash flow from the technology to be $295,000, received four years from today. Subsequent annual cash flows will grow at 1.75% p.a. forever. If an appropriate discount rate is 10% p.a. compounded semi-annually, what is the value today of this new operation table?

Potential Answers:

$2,601,248.68

$2,589,806.38

$2,569,324.53

$2,698,356.87

$2,458,391.15

In: Finance

Forwards, Inc., recently issued new securities to finance a new TV show. The project cost $35...

Forwards, Inc., recently issued new securities to finance a new TV show. The project cost $35 million, and the company paid $2.2 million in flotation costs. In addition, the equity issued had a flotation cost of 7 percent of the amount raised, whereas the debt issued had a flotation cost of 3 percent of the amount raised. If the company issued new securities in the same proportion as its target capital structure, what is the company’s target debt-equity ratio?

In: Finance

What major new reforms did the federal government adopt during the Second New Deal and how...

What major new reforms did the federal government adopt during the Second New Deal and how did they mark a change from the earlier policies?

In: Economics

Answer the following questions Al Safa Inc. plans to issue new bonds to finance its new...

Answer the following questions
Al Safa Inc. plans to issue new bonds to finance its new project. In its efforts to price the issue, Al-Safa has identified a company of similar risk with an outstanding bond issue that has an 8 percent coupon rate having a maturity of ten years. This firm's bonds are currently selling for $1,091.96. If interest is paid annually for both bonds, what must the coupon rate of the new bonds be in order for the issue to sell at par?

Answer 1
Sbitany has an issue of $1,000 par value bonds with a 14 percent annual coupon interest rate. The issue has ten years remaining to the maturity date. Bonds of similar risk are currently selling to yield a 12 percent rate of return. The current value of each Sbitany's bond is

Answer 2
Sbitany has an issue of $1,000 par value bonds with a 14 percent coupon interest rate outstanding. The issue pays interest semiannually and has 10 years remaining to its maturity date. Bonds of similar risk are currently selling to yield a 12 percent rate of return. What is the value of these bonds?

Please Solve As soon as
Solve quickly I get you two UPVOTE directly
Thank's
Abdul-Rahim Taysir

In: Accounting

“We really need to get this new material-handling equipment in operation just after the new year...

“We really need to get this new material-handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short-term loan down at MetroBank.” This statement by Beth Davies-Lowry, president of Intercoastal Electronics Company, concluded a meeting she had called with the firm’s top management. Intercoastal is a small, rapidly growing wholesaler of consumer electronic products. The firm’s main product lines are small kitchen appliances and power tools. Marcia Wilcox, Intercoastal’s General Manager of Marketing, has recently completed a sales forecast. She believes the company’s sales during the first quarter of 20x1 will increase by 10 percent each month over the previous month’s sales. Then Wilcox expects sales to remain constant for several months. Intercoastal’s projected balance sheet as of December 31, 20x0, is as follows:

Cash

$

35,000

Accounts receivable

252,000

Marketable securities

10,000

Inventory

231,000

Buildings and equipment (net of accumulated depreciation)

670,000

Total assets

$

1,198,000

Accounts payable

$

220,500

Bond interest payable

22,500

Property taxes payable

4,800

Bonds payable (15%; due in 20x6)

360,000

Common stock

400,000

Retained earnings

190,200

Total liabilities and stockholders’ equity

$

1,198,000

Jack Hanson, the assistant controller, is now preparing a monthly budget for the first quarter of 20x1. In the process, the following information has been accumulated:

  1. Projected sales for December of 20x0 are $600,000. Credit sales typically are 60 percent of total sales. Intercoastal’s credit experience indicates that 30 percent of the credit sales are collected during the month of sale, and the remainder are collected during the following month.
  2. Intercoastal’s cost of goods sold generally runs at 70 percent of sales. Inventory is purchased on account, and 50 percent of each month’s purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next month’s projected cost of goods sold.
  3. Hanson has estimated that Intercoastal’s other monthly expenses will be as follows:

Sales salaries

$

45,000

Advertising and promotion

25,000

Administrative salaries

45,000

Depreciation

15,000

Interest on bonds

4,500

Property taxes

1,200

In addition, sales commissions run at the rate of 2 percent of sales.

  1. Intercoastal’s president, Davies-Lowry, has indicated that the firm should invest $115,000 in an automated inventory-handling system to control the movement of inventory in the firm’s warehouse just after the new year begins. These equipment purchases will be financed primarily from the firm’s cash and marketable securities. However, Davies-Lowry believes that Intercoastal needs to keep a minimum cash balance of $25,000. If necessary, the remainder of the equipment purchases will be financed using short-term credit from a local bank. The minimum period for such a loan is three months. Hanson believes short-term interest rates will be 10 percent per year at the time of the equipment purchases. If a loan is necessary, Davies-Lowry has decided it should be paid off by the end of the first quarter if possible.
  2. Intercoastal’s board of directors has indicated an intention to declare and pay dividends of $50,000 on the last day of each quarter.
  3. The interest on any short-term borrowing will be paid when the loan is repaid. Interest on Intercoastal’s bonds is paid semiannually on January 31 and July 31 for the preceding six-month period.
  4. Property taxes are paid semiannually on February 28 and August 31 for the preceding six-month period.

Prepare Intercoastal Electronics Company’s master budget for the first quarter of 20x1 by completing the following schedules and statements:

1A) Sales budget:

1B) Cash receipts budget:

1C) Purchases budget:

1D) Cash disbursements budget:

1E) Complete the first three lines of the summary cash budget. Then do the analysis of short-term financing needs in requirement (6). Then finish requirement (5).

1F) Calculation of required short-term borrowing.

1G) Prepare Intercoastal Electronics’ budgeted income statement for the first quarter of 20x1. (Ignore income taxes.)

1H) Prepare Intercoastal Electronics’ budgeted statement of retained earnings for the first quarter of 20x1.

1I) Prepare Intercoastal Electronics’ budgeted balance sheet as of March 31, 20x1. (Hint: On March 31, 20x1, Bond Interest Payable is $9,000 and Property Taxes Payable is $1,200.)

In: Accounting