1. Take Five Systems, a new start-up, is developing a new iPhone application (“app”) and provides you with the following assumptions: a. Development and testing of the new app will take four months. Month five is the first month of revenue generation. b. Initial monthly app sales of 5,000 downloads at a price of $2.99 c. Unit sales will grow at 15% per month for months six through twelve and then will be flat thereafter d. The app will become obsolete and will need to be revised/replaced after month 18 Use the data provided to forecast Take Five’s monthly revenue for Months 1-18
2. Take Five Systems is concerned about the accuracy of their revenue estimates in Question 1. Specifically, they wish to use sensitivity analysis to evaluate the impact on Month 18 revenue of the following: a. Variations in 2% increments between 9-21% in the growth rate of unit sales in Months 5-12 (that is, 9%, 11%,…, 19%, 21%) b. Variation in 500 unit increments between 2,500 and 7,500 in the level of initial sales (that is, 2,500, 3,000,…, 7,000, 7,500)
could you please show me how to do question 2 on excel? Thank you
In: Finance
New Orleans Shipping. If the share price of Emaline, a New Orleans-based shipping firm, rises from $12.13 to $15.96 over a one-year period, calculate the rate of return to the shareholder given each of the following:
a. The company paid no dividends.
b. The company paid a dividend of $1.01 per share.
c. The company paid the dividend and the total return to the shareholder is separated into the dividend yield and the capital gain.
In: Finance
Oscar’s Corp. is considering starting a new business involving bicycle production. This new business involves purchases of $8 million of new equipment. This new business is anticipated to generate net income of $1.45 million per year for 6 years. The company uses straight-line depreciation to zero salvage value for tax purposes. Assuming a 28 percent tax rate calculate the project's IRR.
In: Finance
In: Operations Management
Mystic Beverage Company is considering purchasing a new bottling machine. The new machine costs $230,000, plus installation fees of $10,000 and will generate earning before interest and taxes of $60,000 per year over its 6-year life. The machine will be depreciated on a straight-line basis over its 6-year life to an estimated salvage value of 0. Mystic's marginal tax rate is 40%. Mystic will require $50,000 in NWC if the machine is purchased.
(a) determine the initial outlay
(b) determine the annual cash flows in years 1-6
(c) assume the discount rate is 7%, what is the NPV of this
project?
(d) What is the IRR of this project
€ should the project be accepted or rejected?
In: Finance
S11 Managing New Product Development
Please answer questions in a paragraph, thank you!
In: Operations Management
8. Suppose New York wants to build a new facility to replace Madison Square Garden. Assume that the cost of building a new arena in midtown Manhattan is $2.5 billion and that all the costs occur right away. Also assume that New York will receive annual benefits of $110 million for the next 25 years, after which the new arena becomes worthless. Does it make financial sense to build the new facility if interest rates are 6 percent? At what interest rate will we be indifferent between accepting and rejecting this project?
In: Finance
Gun Murders - Texas vs New York - Significance
Test
In 2011, New York had much stricter gun laws than Texas. For that
year, the proportion of gun murders in Texas was greater than in
New York. Here we test whether or not the proportion was
significantly greater in Texas. The table below
gives relevant information. Here, the p̂'s are population
proportions but you should treat them as sample proportions. The
standard error (SE) is given to save calculation time if
you are not using software.
Data Summary
| number of | total number | Proportion | |
| State | gun murders (x) | of murders (n) | p̂ = (x/n) |
| Texas | 689 | 1079 | 0.63855 |
| New York | 455 | 784 | 0.58036 |
Standard Error (SE) = 0.02285
The Test: Test the claim that the proportion of gun murders was significantly greater in Texas than New York in 2011. Use a 0.01 significance level.
(a) Letting p̂1 be the proportion of gun murders in Texas and p̂2 be the proportion from New York, calculate the test statistic using software or the formulaz =
| (p̂1 − p̂2) − δp |
| SE |
where δp is the hypothesized
difference in proportions from the null hypothesis and the standard
error (SE) is given with the data. Round your
answer to 2 decimal places.
z =
To account for hand calculations -vs- software, your answer
must be within 0.01 of the true answer.
(b) Use software or the z-table to get the P-value of the test
statistic. Round to 4 decimal places.
P-value =
(c) What is the conclusion regarding the null hypothesis?
reject H0
fail to reject H0
(d) Choose the appropriate concluding statement.
The data supports the claim that the proportion of gun murders was significantly greater in Texas than New York.
While the proportion of gun murders in Texas was greater than New York, the difference was not great enough to be considered significant.
We have proven that the stricter gun laws in New York actually decreased the proportion of gun murders below the rate in Texas.
We have proven there was no difference in the proportion of gun murders between Texas and New York.
In: Math
|
“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 Global Electronics Company, concluded a meeting she had called with the firm’s top management. Global 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, Global Electronics’ 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. Global’s projected balance sheet as of December 31, 20x0 is as follows: |
| Cash | $ | 50,000 | |
| Accounts receivable | 324,000 | ||
| Marketable securities | 15,000 | ||
| Inventory | 198,000 | ||
| Buildings and equipment (net of accumulated depreciation) | 633,000 | ||
| Total assets | $ | 1,220,000 | |
| Accounts payable | $ | 283,500 | |
| Bond interest payable | 12,500 | ||
| Property taxes payable | 6,000 | ||
| Bonds payable (10%; due in 20x6) | 300,000 | ||
| Common stock | 500,000 | ||
| Retained earnings | 118,000 | ||
| Total liabilities and stockholders’ equity | $ | 1,220,000 | |
| 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 $450,000. Credit sales typically are 80 percent of total sales. Global’s credit experience indicates that 10 percent of the credit sales are collected during the month of sale, and the remainder are collected during the following month. |
| 2. |
Global Electronics’ cost of goods sold generally runs at 80 percent of sales. Inventory is purchased on account, and 25 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 Global’s other monthly expenses will be as follows: |
| Sales Salaries | 10,000 | |
| Advertising & Promotion | 5,000 | |
| Administrative Salaries | 10,000 | |
| Depreciation | 30,000 | |
| Interest on bonds | 2,500 | |
| Property taxes | 1,500 | |
| In addition, sales commissions run at the rate of 1 percent of sales. |
| 4. |
Global Electronics’ president, Davies-Lowry, has indicated that the firm should invest $125,000 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 the company 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. |
| 5. |
Global Electronics’ board of directors has indicated an intention to declare and pay dividends of $50,000 on the last day of each quarter. |
| 6. |
The interest on any short-term borrowing will be paid when the loan is repaid. Interest on Global Electronics’ bonds is paid semiannually on January 31 and July 31 for the preceding six-month period. |
| 7. | Property taxes are paid semiannually on February 28 and August 31 for the preceding six-month period. |
| Required: | |
|
Prepare Global Electronics Company’s master budget for the first quarter of 20x1 by completing the following schedules and statements. |
| 5. | 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). |
| 6. |
Calculation of required short-term borrowing. |
| 7. |
Prepare Global Electronics’ budgeted income statement for the first quarter of 20x1. (Ignore income taxes.) |
| 8. | Prepare Global Electronics’ budgeted statement of retained earnings for the first quarter of 20x1. |
| 9. |
Prepare Global Electronics’ budgeted balance sheet as of March 31, 20x1. (Hint: On March 31, 20x1, Bond Interest Payable is $5,000 and Property Taxes Payable is $1,500.) |
In: Accounting
Choosing a Source of Credit: The Costs of Credit Alternatives Jamie Lee Jackson, age 27, full-time student and part-time bakery employee, is busy setting up her new home. Her budget is a little tight now as she made the decision to move in to a place of her own, which gives her privacy and independence, but all of the expenses are now her responsibility. Jamie Lee applied for three store credit cards when she was shopping for her furnishings. The excitement of making selections and the attractiveness of percentages off her purchases made the credit card offers too good to pass up. It was all too easy to select the new furnishings when the cash was not immediately coming from her pocket. “The payments will not be due for at least 45 days from now, by the time all the accounts are opened and the grace periods are factored in. I am sure I will have enough to cover the balances by then,” Jamie Lee convinced herself. Jamie Lee’s new furnishings have been delivered, and she is quite happy with her choices. The bungalow is comfortable, and Jamie is now getting into a routine balancing the new move with work and school obligations. Unfortunately, the bills have begun to arrive in Jamie Lee’s mailbox; payments are soon due for all the new furniture and appliances. The corresponding annual interest rates on the credit card purchases were not something Jamie Lee factored in when she applied for the store credit cards. “Wow, 18.5 percent on one, and the other two have interest rates of 19 percent per year. Those interest fees can really add up quickly. The disclosure said that by making the minimum payments, I could be paid off in 14 years! I am not sure my appliances will still be working at that time, nor will the furniture still be in style 14 years from now.” Jamie Lee was starting to feel the consequences of overspending and knew she must develop a plan to pay off the purchases quickly! Assets: Checking account: $1,800 Savings account: $7,200 Emergency fund savings account: $2,700 IRA balance: $410 Car: $2,800 Liabilities: Student loan balance: $10,800(Jamie is still a full-time student, so no payments are required on the loan until after graduation) Credit card balance: $4,250(total of the three store credit cards) Income: Gross Monthly salary from the bakery: $2,750(Net Income: $2,175) Monthly Expenses: Rent: $350 Utilities: $70 Food: $125 Gas/maintenance: $130 Credit card payment: $0
Questions 1. Jamie Lee received an offer to transfer the balance of all her store credit cards to her bank credit card in the mail. It offered zero percent finance charges/interest for the first three months(90 days), and 18.5 percent interest rate thereafter until the balance is paid in full. Upon reading the fine print, there was a $50 transaction fee and interest accrued from the day the balance transfer was made if the balance is paid in full within the first 90 days. How could Jamie Lee use this balance transfer offer to her advantage? How is this offer a major disadvantage to Jamie Lee?
2. Based on Jamie Lee's current financial situation, could she possibly transfer option work?
3. What solution would you recommend for Jamie Lee to get her credit cards paid off as soon as possible? What are the advantages of your choices? What are the disadvantages of your choices?
In: Finance