On August 1 of year 0, Dirksen purchased a machine for $28,500 to use in its business. On December 4 of year 0, Dirksen sold the machine for $24,250. Use MACRS Table. (Loss amounts should be indicated by a minus sign. Do not round percentages used for calculations. Round other intermediate computations to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)

a. What is the amount and character of the gain or loss Dirksen will recognize on the sale?

On the first day of the new year to get her business started, the owner/photographer of Exquisite Portraits Inc. paid $200 for business cards, $1,000 for a listing in Yellow Pages, and $250 for an annual business license. She also leased a professional portrait camera and studio lighting equipment by signing an agreement to pay a monthly lease of $1,000 each month for the next 12 months. This lease is ironclad: She must pay for all 12 months, and she cannot sublease to anyone else. She rents her office and studio for $1,400 per month that must be paid at the beginning of each month. She does not have a lease on the office/studio, so she can vacate the office/studio at the end of any month should she decide to move to a new location or to go out of business. After she opens the office/studio on the first day of each month, her monthly cost of electricity for lighting the office and running her coffee machine is constant at $45 per month, because she always keeps the lights on in the office and drinks the same amount of coffee no matter how many photos she shoots each month. Additional electricity is required for the portrait studio lights, which varies directly with the number of hours the lights are used each month for photo sessions. Last year, before starting this business, the owner of Exquisite Portraits Inc. earned a salary of $5,000 per month working at a bank. Answer the following questions about the costs for Exquisite Portraits Inc.: • What are monthly fixed costs, quasi-fixed costs, and variable costs for Exquisite Portraits Inc.? • If the owner of Exquisite Portraits Inc. wants to close her studio and go out of business at the end of August, identify her sunk costs and avoidable costs. • At the end of August, what role would the sunk costs play in the owner /photographer's decision to go out of business? • In making her decision to start her own business, would her decision have been more or less difficult to make if sunk costs were zero at Exquisite Portraits? Explain and show your numbers

A 5-year bond with a yield of 10% (continuously compounded), with a face value of $100, pays an 10% coupon at the end of each year.

What is the bond’s price?

A 5-year bond with a yield of 10% (continuously compounded) pays an 10% coupon at the end of each year.

What is the bond’s duration?

A 5-year bond with a yield of 10% (continuously compounded),   with a face value of $100, pays an 10% coupon at the end of each year.

Use the duration from the previous question to calculate the effect on the bond’s price of a 0.1% decrease in its yield. What is the new bond price?

(Remember if the yield goes down what happens to the the bond price?)

A 5-year bond with a yield of 10% (continuously compounded) pays an 10% coupon at the end of each year.

Check the results from your previous duration calculation the long way.  Recalculate the bond’s price on the basis of a 9.9% per annum yield and verify that the result is in agreement with your answer to the previous question.

Consider an investment that costs $100,000 and has a cash inflow of $25,000 every year for 5 years. The required return is 9%. What is the net present value of this investment?

A) $ -2,758.72

B) $ -857.65

C) $1217.70

D) $10,525

E) $25,000

1. Consider a 5-year bond with a current yield of 8% and a coupon rate of 10% (compounded yearly). One year from now this bond will have a quoted price which is most likely:

1. Higher
2. Lower
3. The same
4. Possibly higher or lower

5. Calculate the price of a 3-year bond with a face value of $50,000, an annual coupon rate of 8% and an annual market yield of 6%. Coupon payments are made semi-annually.
Select one:
a. $52,673
b. $47,379
c. $54,917
d. $52,709

21.On 3rd June, Treasurer of Australia, Josh Frydenberg announced that Australia is in recession after the economy was badly hit by bushfires and the coronavirus pandemic. According to the Bureau of Statistics, Australia’s GDP figures shrank 0.3% in the March quarter, the first quarter of negative growth in nine years.
To deal with recession, which monetary policy do you think the Reserve Bank of Australia (RBA) will use and why? Based on what you have learned in this unit, what effects will this policy have on cash rate, economic activities and inflation rate?

24.Last year, Cooper Technologies Ltd initiated an ambitious research and development (R&D) project aiming to create a unique technology to boost their competitive advantage against peer firms in the field of geospatial surveying. The R&D project was largely financed by the issuance of corporate bonds worth $350 million. The COVID-19 outbreak has caused severe disruptions to the progress of the project, which hence requires an extra funding of $250 million.
To meet the additional budget requirement, Cooper Technologies Ltd has decided to conduct an equity issuance in the form of a renounceable rights issue to shareholders. The issue price of a new share is at 12.18% discount of the current share price of $20.00.
Required (Please label your answers according to parts):
(a) Given that each right is currently traded at $2.03, what is the pro rata basis of the rights issue offer ? (i.e., how many existing shares does it take to obtain the right to subscribe for a new share ?).
(b) What is the theoretical ex-rights share price of Cooper Technologies Ltd?

Markus Company’s common stock sold for $5.50 per share at the end of this year. The company paid a common stock dividend of $0.77 per share this year. It also provided the following data excerpts from this year’s financial statements:     

4. What is the return on total assets (assuming a 30% tax rate)? (Round percentage answer to 1 decimal place. i.e., 0.123 should be considered as 12.3%)

5. What is the return on equity? (Round your answer to the nearest whole percentage place. i.e., 0.1234 should be considered as 12%.)

6. What is the book value per share at the end of this year? (Round your answer to 2 decimal places.)  

7. What is the amount of working capital and the current ratio at the end of this year? (Round "Current ratio" to 2 decimal places.)      

8. What is the acid-test ratio at the end of this year? (Round your answer to 2 decimal places.)

9. What is the accounts receivable turnover and the average collection period? (Use 365 days in a year. Round your intermediate and final answers to 2 decimal places.)

10. What is the inventory turnover and the average sale period? (Use 365 days in a year. Round your intermediate and final answers to 2 decimal places.

11. What is the company’s operating cycle? (Round your intermediate and final answers to 2 decimal places.)  

12. What is the total asset turnover? (Round your answer to 2 decimal places.)      

13. What is the times interest earned ratio? (Round your answer to 2 decimal place.)

14. What is the debt-to-equity ratio at the end of this year? (Round your answer to 2 decimal places.)      

15. What is the equity multiplier? (Round your answer to 2 decimal places.)      

For a recent year, the numbers of homicides that occurred each month in New York City are: 38, 30, 46, 40, 46, 49, 47, 50, 50, 42, 37, 37. Use a 0.05 sig level to test the claim that homicides in New York City are equally likely for each of the 12 months. Is there sufficient evidence to support the police commissioner’s claim that homicides occur more often in the summer when the weather is better?

Sheridan Cosmetics Inc. had a number of transactions during the year relating to the purchase of various inventory items as noted below.

For each of the below independent transactions determine what amount should be included in inventory.

Lipstick products counted in the physical inventory amount to $21,500 which include $1,100 of duty charges for importing the goods and $2,600 of recoverable taxes (i.e. HST). (If an answer is zero, please enter 0. Do not leave any fields blank.)

Makeup kits held on consignment by a retailer with a cost of $14,700 (inclusive of $1,200 of commissions to the retailer). (If an answer is zero, please enter 0. Do not leave any fields blank.)

Costs of $4,600 to store makeup products in Sheridan Cosmetic’s warehouse. (If an answer is zero, please enter 0. Do not leave any fields blank.)

Wonderland Corp. will pay a dividend of $3.5 next year. The company plans to maintain a constant growth rate of 5 percent a year forever. Investors’ required rate of return is 12 percent.
Robinson Corp. will pay the following dividends over the next four years: $20, $18, $15 and $3. Afterwards the company pledges to maintain a constant 5 percent growth rate in dividends, forever. Investors’ required rate of return is 12 percent.

Required:
(a) How much will you pay for these two stocks?

(b) If both companies change its policy to maintain a constant growth rate of 4 percent, what is the percentage change of these two stocks?

(c) What does this tell you about the relationship and stock price sensitivity between the dividend growth and the stock price of these two stocks? [within 100 words]