Required

a) Prepare the journal to record the purchase of the patent.

b) Prepare the journal to record the purchase of the franchise.

c) Prepare the journal at 31 December 2019 to record the amortisation of the:

                i) patent

                ii) franchise

(Enter debit entries first followed by credit entries. Please include Dr and Cr as appropriate. Narrations are not required).

“Diamond Company” is preparing a budget for the first quarter of year 2020. The following information is available:

• Total expected sales for last two months of 2019 and four months of 2020 are (in 000’s LE)

  	November	December	January	February	March	April
  Sales	200	200	160	160	180	150

• All sales are on credit and collections from sales are 60% in the month of sales, 30% in the next month, and 10% in the following month.
• Cost of goods sold is 70% of sales.
• The desired ending inventory every month is 30% of the next month's cost of goods sold.
• It is expected that ending inventory of December, 2019, will be valued at LE 33 600.
• All purchases are paid in the month of purchases.
• All cash operating expenses are paid when incurred and the following are the budgeted expenses per month:

• Wages LE 31 000, Advertising LE 5 000, Depreciation LE 16 000, Rent 12 000.

• It is planned to pay, for other cash operating expenses, the amount of LE 16 000 in January and LE 43 800 in February 2020.required : prepare cash pudget

PLEASE SHOW YOUR WORK WITH FORMULAS.

1.At the end of the year 2017 the assets of the company X were 400 mill EUR and equity was 300 mill EUR. At the end of the year 2018 assets in the same company   were 500 mill EUR and equity was 400 mill. The net profit in 2018 was 100 mill EUR.

a)Calculate ROA and ROE for the year 2018.

b)What was indebtedness in the years 2017 and 2018?

c)What is the change in indebtedness in 2018 compared with 2017 expressed in index and index points (interpretation is required as well).

2. In the income statement of the company “Astra, Ltd.” for 2010 you have found that the company had € 40 mill of income before tax (profit before tax) and the net profit (after tax) was € 35 mill. The national income tax rate is 20%. How much was the effective income tax rate and the income tax base for this company in 2010? (4 points)

a) The effective tax rate was 12.5%, the tax base was € 40 mill.

b) The effective tax rate was 20%, the tax base was € 25 mill.

c) The effective tax rate was 12.5%, the tax base was € 35 mill.

d) The effective tax rate was 12.5%, the tax base was € 25mill.

e) The effective tax rate was 20%, the tax base was € 35 mill.

3. A company produced 50,000 products last year, but sold only 30,000 of them. The selling price of a product was € 200 and the cost per unit was € 100. How much were revenues, costs, expenses and profit? (4 points)

a) Revenues were € 6 mill., costs were € 3 mill, expenses were € 5 mill and profit was € 1 mill.

b) Revenues were € 6 mill., costs were € 5 mill., expenses were € 3 mill and profit was € 3 mill.

c) Revenues were € 10 mill., costs were € 5 mill, expenses were € 3 mill and profit was € 5 mill.

d) Revenues were € 10 mill., costs were € 3 mill, expenses were € 5 mill and profit was € 5 mill.

e) Revenues were € 6 mill., costs were 5 mill., expenses were € 5 mill and profit was € 1mill.

4.

Company Z has production capacities that allow production of 20.000 units of product per year. Market analysis showed that 8.000 products could be sold in the domestic market at 50 EUR per piece. Total fixed costs are 80.000 EUR per year, total variable costs increase proportionally up to 10.000 produced units, beyond this production limit they increase progressively. Total variable costs for 8.000 products are 240.000 EUR. Company Z could increase the capacity usage rate by exporting 2.000 products in Croatia. The problem is that the price in Croatia would have to be lower, only 35 EUR per piece.

Which of the following statement is correct?

1. A company should not accept the proposed export deal because the selling price (35 EUR) is lower than the unit cost (40 EUR).
2. A company should not accept the proposed export deal because the revenues generated in Croatian market (70,000 EUR) are not enough to cover all the variable costs (60,000 EUR) plus corresponding portion of fixed costs (16,000 EUR).
3. A company should not accept the proposed export deal because the revenues generated in Croatian market (70,000 EUR) are not enough to cover all fixed costs (80,000) and therefore the existing net income will decrease for 10,000 EUR.
4. A company should accept the proposed export deal because the revenues generated in Croatian market (70,000 EUR) are enough to cover all additional costs related to the deal (60,000 EUR) and therefore the existing net income will increase for 10,000 EUR.
5. A company should accept the proposed export deal because the revenues generated in Croatian market (70,000 EUR) are enough to cover fixed costs related to the deal (16,000 EUR) and therefore the existing net income will increase for 16,000 EUR

5. a)Derive the equation for the break-even point assuming linear variable costs, draw a corresponding graph, and explain the importance of cost management on the basis of this equation. (7 points)

b)Explain how we determine and use the break-even point in the case of heterogeneous production. (6 points)

Periodic Inventory by Three Methods The units of an item available for sale during the year were as follows:

Jan. 1 Inventory 1,060 units @ $128

Feb. 17 Purchase 1,440 units @ $129

Jul. 21 Purchase 1,575 units @ $130

Nov. 23 Purchase 1,150 units @ $131

There are 1,225 units of the item in the physical inventory at December 31. The periodic inventory system is used. Do not round intermediate calculation and round final answer to nearest whole value.

a. Determine the inventory cost by the first-in, first-out method. $

b. Determine the inventory cost by the last-in, first-out method. $

c. Determine the inventory cost by the weighted average cost method. $

In year​ 1, AMC will earn ​$ before interest and taxes. The market expects these earnings to grow at a rate of per year. The firm will make no net investments​ (i.e., capital expenditures will equal​ depreciation) or changes to net working capital. Assume that the corporate tax rate equals ​%. Right​ now, the firm has ​$ in​ risk-free debt. It plans to keep a constant ratio of debt to equity every​ year, so that on average the debt will also grow by ​% per year. Suppose the​ risk-free rate equals ​%, and the expected return on the market equals ​%. The asset beta for this industry is .

a. If AMC were an​ all-equity (unlevered)​ firm, what would its market value​ be?

b. Assuming the debt is fairly​ priced, what is the amount of interest AMC will pay next​ year? If​ AMC's debt is expected to grow by ​% per​ year, at what rate are its interest payments expected to​ grow?

c. Even though​ AMC's debt is riskless​ (the firm will not​ default), the future growth of​ AMC's debt is​ uncertain, so the exact amount of the future interest payments is risky. Assuming the future interest payments have the same beta as​ AMC's assets, what is the present value of​ AMC's interest tax​ shield?

d. Using the APV​ method, what is​ AMC's total market​ value, VL​? What is the market value of​ AMC's equity?

e. What is​ AMC's WACC? ​(Hint​: Work backward from the FCF and VL​.)

f. Using the​ WACC, what is the expected return for AMC​ equity?

g. Show that the following holds for​ AMC: .                                                      h. Assuming that the proceeds from any increases in debt are paid out to equity​ holders, what cash flows do the equity holders expect to receive in one​ year? At what rate are those cash flows expected to​ grow? Use that information plus your answer to part ​(f​) to derive the market value of equity using the FTE method.

The equity beta for Microsoft Inc. is 1.11. The yield on ten-year treasuries is 3%, and the historical returns on S&P 500 has a mean of10% and standard deviation of 11% for the pasts 3 years. The stock volatility of Microsoft is 12%. Further, it issues dividends at an annual rate of $1.84. Its current stock price is $107.71, and you expect dividends to increase at a constant rate of 5% per year. (Sow steps with calcs.)

A) Estimate Microsoft's cost of equity using both CDGM and CAPM.

B) Based on Sharpe ratio estimate, should investors buy in Microsoft or S&P 500 index? (calculate Microsoft's Sharpe ratio using both the returns of the CDGM method and the CAPM method, and compare them with the market index Sharpe Ratio. Then, draw a conclusion in which case we should choose Microsoft and in which case we pick the market index.)

The net income reported on the income statement for the current year was $1061000. Depreciation recorded on plant assets was $200000. Accounts receivable and inventories increased by $56000 and $37000, respectively. Prepaid expenses and accounts payable decreased by $5000 and $51000, respectively. How much cash was provided by operating activities?

1122000

1171000

$1400000.

1078000

A company with a fiscal year ending on December 31 borrowed money with an installment loan of $500,000 on January 1, 2017. The loan agreement requires the company to make five equal annual payments that will fully amortize the loan in exactly five years. The first payment on the loan was made December 31, 2017 and the annual interest rate associated with the loan was 8 percent. The impact of this loan (including both the original proceeds and the annual payment) on cash flows from financing reflected in the 2017 Statement of Cash Flows would be: Multiple Choice $500,000 inflow from financing activities. $414,772 inflow from financing activities. $374,772 inflow from financing activities.

Kristi is considering an investment that will pay $7,500 a year for eight years, starting one year from today. How much should she pay for this investment if she wishes to earn a 6% rate of return? Provide complete calculations in your answer

Kristi was offered three (3) different assets, as listed below:

•  Asset 1 pays annual interest rate of 9% compounding annually.

•  Asset 2 pays annual interest rate of 8.9% compounding semi-annually.

•  Asset 3 pays interest rate 8.95 compounding monthly.

Based on effective annual interest rate calculations, which of the above assets is the best choice for Kristi. Show your calculations for all three (3) assets.

The mean number of sick days an employee takes per year is believed to be about 10. Members of a personnel department do not believe this figure. They randomly survey 8 employees. The number of sick days they took for the past year are as follows: 11; 6; 13; 3; 11; 9; 8; 10. Let X = the number of sick days they took for the past year. Should the personnel team believe that the mean number is about 10? Conduct a hypothesis test at the 5% level.

Note: If you are using a Student's t-distribution for the problem, you may assume that the underlying population is normally distributed. (In general, you must first prove that assumption, though.)

Part (e)What is the test statistic? (If using the z distribution round your answers to two decimal places, and if using the t distribution round your answers to three decimal places.)

Part (i) Construct a 95% confidence interval for the true mean. Sketch the graph of the situation. Label the point estimate and the lower and upper bounds of the confidence interval. (Round your answers to three decimal places.)