Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded more than 70 years ago. Over the years, the company expanded, and it is now a reputable manufacturer of various specialty electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company in its finance department. One of the major revenue-producing items manufactured by Conch Republic is a smartphone. Conch republic currently has one smartphone model on the market and sales have been excellent. The smartphone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smartphone has limited features in comparison with new models. Conch Republic spent $1.2 million to develop a prototype for a new smartphone that has all the features of the existing one but adds new features such as Wifi tethering. The company has spent a further $250,000 for a marketing study to determine the expected sales figures for the new smartphone. Conch Republic can manufacture the new smartphone for $210 each in variable costs. Fixed costs for the operation are estimated to run $5.3 million per year. The estimated sales volumes are 64,000, 106,000, 87,000, 78,000, and 54,000 per year for each of the next five years, respectively. The unit price of the new smartphone will be $515. The necessary equipment can be purchased for $38.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $5.8 million. Net working capital for the smartphones will be 20 percent of sales and will occur with the timing of the cash flows for the year (i.e., there is no initial outlay for NWC). Changes in NWC thus will occur first in year 1 with the first year’s sales. Conch Republic has a 22 percent corporate tax rate and a required return of 12 percent. Shelly has asked Jay to prepare a report that answers the following questions:

6) what is the payback period of the project?

7) What is the profitability index of the project?

8) What is the IRR of the project?

9) What is the NPV of the project?

10) How sensitive is the NPV to changes in the price of the new smartphone?

11) How sensitive id the NPV to changes in the quantity sold?

12) Should Conch Republic produce the new smartphone?

Case 8: Case Problem 10, p. 1112 (Mallor 16^th Ed. Chap 42) (No citation is available.) EZStreet.com, Inc.

Josh Thomas, Jack Wiley, and Will Regis are three close friends who have been offered the opportunity to invest $100,000 each and to become 10 percent shareholders each in a closely held corporation that will be controlled by their friends Leone and Teddy Battat, who will own the remaining the 70 percent of the shares. The business, to be named EZStreet.com, Inc., will be an online business networking site. Leone and Teddy's plan is to amass at least 500 million users worldwide, which they estimate will take five to seven years, after which they would like to take the company public or sell it to another company, like Google. Josh is a CPA with 10 years experience in business consulting and investment management. Jack is a software engineer who has designed more than 50 websites. Will has an MBA in consumer and business marketing with 12 years experience in public relations and ad sales.

Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded more than 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company in its finance department.

One of the major revenue-producing items manufactured by Conch Republic is a smartphone. Conch Republic currently has one smartphone model on the market and sales have been excellent. The smartphone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smartphone has limited features in comparison with newer models. Conch Republic spent $750,000 to develop a prototype for a new smartphone that has all the features of the existing one but adds new features such as wifi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smartphone.

Conch Republic can manufacture the new smartphone for $205 each in variable costs. Fixed costs for the operation are estimated to run $5.1 million per year. The estimated sales volume is 64,000, 106,000, 87,000, 78,000, and 54,000 per year for the next five years, respectively. The unit price of the new smartphone will be $485. The necessary equipment can be purchased for $34.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be $5.5 million.

Networking capital for the smartphones will be 20 percent of sales and will occur with the timing of the cash flows for the year (i.e., there is no initial outlay for NWC). Changes in NWC will thus first occur in Year 1 with the first year's sales. Conch Republic has a 35 percent corporate tax rate and a required return of 12 percent.

Shelly has asked Jay to prepare a report that answers the following questions:

How sensitive is the NPV to changes in the price of the new smartphone?

How sensitive is the NPV to changes in the quantity sold?

Should Conch Republic produce the new smartphone?

Suppose Conch Republic loses sales on other models because of the introduction of the new model. How would this affect your analysis?

On January 1, 2018, Labtech Circuits borrowed $190,000 from First Bank by issuing a three-year, 8% note, payable on December 31, 2020. Labtech wanted to hedge the risk that general interest rates will decline, causing the fair value of its debt to increase. Therefore, Labtech entered into a three-year interest rate swap agreement on January 1, 2018, and designated the swap as a fair value hedge. The agreement called for the company to receive payment based on an 8% fixed interest rate on a notional amount of $190,000 and to pay interest based on a floating interest rate tied to LIBOR. The contract called for cash settlement of the net interest amount on December 31 of each year. Floating (LIBOR) settlement rates were 8% at inception and 9%, 7%, and 7% at the end of 2018, 2019, and 2020, respectively. The fair values of the swap are quotes obtained from a derivatives dealer. These quotes and the fair values of the note are as follows: January 1 December 31 2018 2018 2019 2020 Fair value of interest rate swap 0 $ (2,659 ) $ 1,835 $ 0 Fair value of note payable $ 190,000 $ 187,341 $ 191,835 $ 190,000 Required: 1. Calculate the net cash settlement at the end of 2018, 2019, and 2020. 2. Prepare the journal entries during 2018 to record the issuance of the note, interest, and necessary adjustments for changes in fair value. 3. Prepare the journal entries during 2019 to record interest, net cash interest settlement for the interest rate swap, and necessary adjustments for changes in fair value. 4. Prepare the journal entries during 2020 to record interest, net cash interest settlement for the interest rate swap, necessary adjustments for changes in fair value, and repayment of the debt. 5. Calculate the book values of both the swap account and the note in each of the three years. 6. Calculate the net effect on earnings of the hedging arrangement in each of the three years. (Ignore income taxes.) 7. Suppose the fair value of the note at December 31, 2018, had been $187,000 rather than $187,341 with the additional decline in fair value due to investors’ perceptions that the credit worthiness of Labtech was worsening. How would that affect your entries to record changes in the fair values?

If you were the U.S. government policy maker, what types of fiscal policy measures you will introduce to deal with the coronavirus pandemic and the coronavirus recession? What are the impacts of these fiscal policies on the U.S. economy in the short-run and long-run?

Fiscal policy is the government’s policy with respect to spending and taxation.

Select two areas in the U.S. healthcare delivery system that need to be more competitive. How can the U.S. healthcare delivery system fix these areas and become more competitive? Provide examples to support your findings. I need APA style references at where the information was found also.

Ashley Stores, Inc., sells gift cards for use at its stores. The following data pertains to 2019, 2020, and 2021, the company’s first three years of operation: 2019 2020 2021 Gift card sales $ 30,000 $ 45,000 $ 50,000 Gift card usage 12,000 28,000 37,000 As of December 31, 2019, Ashley estimates that 1.0% of its gift cards will never be redeemed. As of December 31, 2020, Ashley has revised its estimate, and now believes 1.5% of all gift cards, including those issued in 2019, will not be redeemed. As of December 31, 2021, its estimate remains at 1.5%. Ashley is not required to remit unused gift card amounts to the state. Required: What amount of breakage revenue should Ashley recognize in 2019, 2020, and 2021? (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) What amount of gift card liability should be reported on Ashley’s balance sheet at December 31, 2019, 2020, and 2021?

Millington Materials is a leading supplier of building equipment, building products, materials, and timber for sale, with over 200 branches across the Mid-South. On January 1, 2021, management decided to change from the average inventory costing method to the FIFO inventory costing method at each of its outlets.

The following table presents information concerning the change. The income tax rate for all years is 25%.

   
Required:
1. Prepare the journal entry to record the change in accounting principle.
2. Determine the net income to be reported in the 2021–2020 comparative income statements.
4. Indicate the affect of the change in the 2021–2020 comparative statements of shareholders’ equity assuming cash dividends were $2 million each year and that no dividends were paid prior to 2020.