CompanyCompany A exchanges machinery with a cost of 400.000 and accumulated depreciation of 315.000. The fair value of the machine is 200.000 The machine is exchanged for a new machine having a fair value of 160.000 and cash of 400.000.

a) Prepare the journal entry needed, assuming the exchange has commercial substance.

b)Prepare the journal entry needed, assuming the exchange lacks commercial substance.  

Use the information below to determine the security prices and cost of capital for the ABC Inc that uses the following capital structure.

Debt: the firm has 43,094 bonds which have 15 years to maturity, pay an annual coupon of 12% and have a face value of $1000. The current YTM on comparable bonds is 9%.

Equity: the firm has 1,000,000 shares of common stock, which is expected to pay a dividend per share of $1.00 in year 1, a dividend per share of $2.00 in year 2, and a dividend of $3.00 in year 3. After year 3, dividends are expected to grow at the rate of 3% per year indefinitely. The market risk premium (rm-rf) is 7% and the risk free rate is 3%. The firm’s equity beta is 1.5. The relevant tax rate is 30%

What is the market value of the firm’ bonds and stock, and its total market value?

What is the firm’s WACC (Weighted Average Cost of Capital)?

Amy wishes to determine if the mean cost of new Volkswagen vehicles is the same for the five Volkswagen dealerships in her city. The same seven vehicles (year, make, and model) were priced at the five dealerships.Complete the One-Way ANOVA table below testing the null hypothesis of no difference in the true mean cost for the five dealerships. Can you reject the null hypothesis? Carry out the appropriate six step procedure using ?? = 0.05. [Hint: Think of how RBD ANOVA relates to One-Way ANOVA.]
Source DF Sum of Squares Mean Square F Value   

Dealership

Error

Corrected Total 34 1278.0246

Only corrected df of 34 and corrected sum of squares 1278.0246 was given. The remaining anova table has to be filled in  

Estimates of the marginal cost of Daraprim are $100 for a 100 pill bottle. If Turing Pharmaceuticals charged $75,000 per bottle, what is the elasticity of demand that Turing believe it faced? A spreadsheet to support answer if possible and simple analysis for answer.

1. Suppose that the FDA does not regulate Imprimis and allows its drug to immediately compete with Daraprim. Under Cournot competition and the assumption that the competitor faces the same marginal cost of $100 / bottle, what is the profit maximizing market price of the drug?
2. Should Martin Shkreli lower the price for Daraprim?

The owner of a factory wants to estimate the mean cost of manufacturing a product. She takes a random sample of 36 products and finds the sample mean cost to be $90. Suppose the population standard deviation is known to be σ = $10.

A) Create a 90% confidence interval for the population mean.

B) Interpret your confidence interval from part (a).

C) Without calculating another confidence interval, if the sample of 36 products instead had a mean of $200, would a 90% confidence interval be narrower, wider or the same width as your confidence interval from part a)? Briefly explain.

Differentiate between traditional cost allocation methods and activity-based costing.

The approximate after tax cost of debt to a firm in the 40% tax bracket for a 20 year, 12% coupon, $1000 par value bond selling for $950 is:

1. The length of time required to recover the original cost of an investment is known as the investment's _____.

2.

Which of the following capital budgeting techniques has experienced the greatest increase in usage by firms since the 1970s?

3. Which of the following methods gives a direct measure of the dollar benefit on a present value basis to the firm's shareholders?

4. Which of the following is required to compute the internal rate of return (IRR) of a project?

5. A capital budgeting project should be accepted if its NPV is:

A firm is evaluating whether to build a new factory. The proposed investment will cost the firm $1 million to construct and provide cash savings of $200,000 per year over the next 10 years.

(1) What rate of return does the investment offer?

(2) What is the maximum risk-free rate under which the firm is willing to make this investment?

(3) If the firm were to invest another $500,000 in the facility at the end of 5 years, it would extend the life of the project for 4 years, during which time it would continue receiving cash savings of $150,000. What is the internal rate of return for this additional investment?

Estimates of the marginal cost of Daraprim are $100 for a 100 pill bottle. If Turing Pharmaceuticals charged $75,000 per bottle, what is the elasticity of demand that Turing believe it faced? Suppose that the FDA does not regulate Imprimis and allows its drug to immediately compete with Daraprim. Under Cournot competition and the assumption that the competitor faces the same marginal cost of $100 / bottle, what is the profit maximizing market price of the drug? What is the responsibility of the CEO to the shareholders of Turing and to society? Should Martin Shkreli lower the price for Daraprim?