Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment complexes, Windy Acres and Hillcrest Apartments. The anticipated annual cash inflows from each are as follows:

Mr. Backster is likely to hold the apartment complex of his choice for about 20 years and will use this period for decision-making purposes. Either apartment can be purchased for $180,000. Mr. Backster uses a risk-adjusted discount rate approach when evaluating investments. His scale is related to the coefficient of variation (for other types of investments, he also considers other measures).

a. Compute the risk-adjusted net present value for Windy Acres and Hillcrest Apartments. (Round "PV Factor" to 3 decimal places. Enter the answers in thousands of dollars. Do not round intermediate calculations. Round the final answers to nearest whole dollar.)

b-1. Which investment should Mr. Backster accept if the two investments are mutually exclusive?

• Hillcrest

• Windy Acres

• Both

• None

b-2. Which investment should Mr. Backster accept If the investments are not mutually exclusive and no capital rationing is involved?

• Windy Acres

• Hillcrest Apartments

• Both

• None

Aiolos plc. is a small firm that produces and sells industrial machinery. The
following figures of the company are from the most recent financial period:
- Sales €20,000,000
- Earnings before interest and taxes €2,000,000
- Debt €10,000,000
- Interest expenses before tax €1,000,000
- Capital Expenditures €1,000,000
- Depreciation expenses are 50% of capital expenditures
- Book value of equity € 10,000,000
Also, you have collected financial information concerning the industrial
machinery sector of listed companies (all figures are on an average basis):
- Beta coefficient of listed companies of the sector 1.30
- Financial leverage in terms of debt to market value of equity 20%
- Firms in the sector trade three times (3x) their book value of equity.
- Effective tax rate 20% tax rate.
The management of Aiolos plc. expects that the company will experience a twostage
growth pattern. Specifically, during the first period which will last for the
next 5 years, net income, capital expenditures and depreciation will have a 25%
growth rate per annum, whereas during the second period (i.e. steady state),
net income will have a 7% growth rate to infinity and capital expenditures and
depreciation will offset each other.
Working capital requirements are estimated to remain stable during both growth
periods, while the proportion of net capital expenditure changes with debt will
remain to 0.3 for the next five years. The yield-to-maturity of the 10 year
government bond is 3%, while the market risk premium is 5%.

Required:
A. Estimate the cost of equity for this Aiolos plc. (5 points)
B. Estimate the value of the owner's stake in Aiolos plc., using the free cash
flow to equity approach. (15 points)
C. Identify and briefly describe any qualitative aspects of growth. (5 points)

Aiolos plc. is a small firm that produces and sells industrial machinery. The
following figures of the company are from the most recent financial period:
 Sales €20,000,000
 Earnings before interest and taxes €2,000,000
 Debt €10,000,000
 Interest expenses before tax €1,000,000
 Capital Expenditures €1,000,000
 Depreciation expenses are 50% of capital expenditures
 Book value of equity € 10,000,000
Also, you have collected financial information concerning the industrial
machinery sector of listed companies (all figures are on an average basis):
 Beta coefficient of listed companies of the sector 1.30
 Financial leverage in terms of debt to market value of equity 20%
 Firms in the sector trade three times (3x) their book value of equity.
 Effective tax rate 20% tax rate.
The management of Aiolos plc. expects that the company will experience a twostage
growth pattern. Specifically, during the first period which will last for the
next 5 years, net income, capital expenditures and depreciation will have a 25%
growth rate per annum, whereas during the second period (i.e. steady state),
net income will have a 7% growth rate to infinity and capital expenditures and
depreciation will offset each other.
Working capital requirements are estimated to remain stable during both growth
periods, while the proportion of net capital expenditure changes with debt will
remain to 0.3 for the next five years. The yield-to-maturity of the 10 year
government bond is 3%, while the market risk premium is 5%.

Required:

aEstimate the cost of equity for this Aiolos plc
b. Estimate the value of the owner's stake in Aiolos plc., using the free cash
flow to equity approach.
c. Identify and briefly describe any qualitative aspects of growth.

i need the estimation value of AIOLOS using the FCFE method and the c) question as well

1. The Alpha Company had sales of $2,000,000, net operating income of $320,000 and average operating assets of $575,000. What was the return on investment? Round your percentage answer to the nearest whole percent.

Answer:____________

2. ABC Industries is evaluating the amount of time between when a customer places an order and when the order is shipped. For last year, the following data was reported:

Inspection time           0.3 days

Wait time                    7.0 days

Process time             2.6 days

Move time                  0.8 days

Queue time                 3.4 days

What is the delivery cycle time in days? Enter the value with 1 decimal place.

Answer:__________

3. Which of the following activities adds value to the product?
   1. Queue time
   2. Process time
   3. Move time
   4. Inspection time

4. When a company has a manufacturing cycle efficiency ratio of 50%, that means that:
   1. Wait time is equal to 50% of the throughput time
   2. Inspection time is equal to 50% of the throughput time
   3. Process time is equal to 50% of the throughput time
   4. Queue time is equal to 50% of the throughput time

5. The net operating income that an investment center earns above the minimum required return on its average operating assets is:
   1. Net income
   2. Return on investment
   3. Residual income
   4. Gross margin

6. ABC Company had sales of $400,000, net operating income was $112,000, and average operating assets were $520,000. What is the company’s return on investment rounded to 2 decimals?
   1. 28.00%
   2. 21.54%
   3. 76.92%
   4. 21.92%

7. A company is deciding if they should add a new product line that would increase sales by $1,200,000, variable expenses are 45% of sales, and fixed costs are $500,000. The new product line would require an investment that would increase average operating assets by $200,000. What is the company’s return on investment for this new product line?
   1. 32%
   2. 30%
   3. 80%
   4. 75%

Scenario 3: (Chest Pain, Shortness of Breath) Richard is a 65 year old client is admitted to your ward after an acute episode of chest pain. Current diagnosis is Acute episode of Unstable Angina. This is day two in the ward. Past Medical history reveals hypercholesterolemia x 10 years, DMT2 x 5 years, unstable angina x two years, coronary artery disease x two years and hypertension x six years. No relevant social or psychiatric history found. Nurses call bell rings. As an EN you are answering the call bell. Client states that he is having sever chest pain. Verbalise your actions:

Assessment On asking Richard states that the chest pain is squeezing type at the centre of the chest radiating towards his jaw. Pain started as he was in the toilet trying to open his bowels. Richard states that he has not passed stools in the last two days. LOC: alert and oriented.

Vital signs: T= 36.2°C, PR=102/min RR=30/min BP=136/90 SaOz=98% on room air BGL 12.0 Pain: 9 out of 10

Relevant Investigations:

Troponin 1 = 0.9 Troponin 2 = 1.5 Troponin 3 = 0.3 Urea = 4.Smmol/L Creatinine = 126 Micromol/L Na+ = 142 mmol/L K+= 3.1 mmol/L Ca2+ = 1.8 mmol/L Mg2+ = 0.5 MMOl/1.

Current treatment plan: 4/24 Vital Signs BGLs QID + 0200am Daily ECGs Aperients PRN Analgesics and antiemetic's PRN TED stockings Toilet privileges if pain free Inform doctor about each episode of Chest Pain. Morphine and GTN as per protocol.

Based on the above scenario, please write the progress note.

Exercise 3-4 Contrast ABC and Conventional Product Costs [LO3-4]

Problem 13-09 (Algorithmic)

Myrtle Air Express decided to offer direct service from Cleveland to Myrtle Beach. Management must decide between a full-price service using the company’s new fleet of jet aircraft and a discount service using smaller capacity commuter planes. It is clear that the best choice depends on the market reaction to the service Myrtle Air offers. Management developed estimates of the contribution to profit for each type of service based upon two possible levels of demand for service to Myrtle Beach: strong and weak. The following table shows the estimated quarterly profits (in thousands of dollars):

1. What is the decision to be made, what is the chance event, and what is the consequence for this problem?
   
   The input in the box below will not be graded, but may be reviewed and considered by your instructor.
   
   
   
   How many decision alternatives are there?
   
   Number of decision alternatives =
   
   How many outcomes are there for the chance event?
   
   Number of outcomes =
   
2. If nothing is known about the probabilities of the chance outcomes, what is the recommended decision using the optimistic, conservative and minimax regret approaches?
   

   Optimistic approach
   Conservative approach
   Minimax regret approach

3. Suppose that management of Myrtle Air Express believes that the probability of strong demand is 0.7 and the probability of weak demand is 0.3. Use the expected value approach to determine an optimal decision.
   
   Optimal Decision :
   
4. Suppose that the probability of strong demand is 0.8 and the probability of weak demand is 0.2. What is the optimal decision using the expected value approach?
   
   Optimal Decision :
   
5. Use graphical sensitivity analysis to determine the range of demand probabilities for which each of the decision alternatives has the largest expected value. If required, round your answer to four decimal places.
   
   is the best choice if probability of strong demand is less than or equal to .

Scenario: (Chest Pain, Shortness of Breath) Richard is a 65 year old client is admitted to your ward after an acute episode of chest pain. Current diagnosis is Acute episode of Unstable Angina. This is day two in the ward. Past Medical history reveals hypercholesterolemia x 10 years, DMT2 x 5 years, unstable angina x two years, coronary artery disease x two years and hypertension x six years. No relevant social or psychiatric history found.

Nurses call bell rings. As an EN you are answering the call bell. Client states that he is having sever chest pain. Verbalise your actions:

Assessment On asking Richard states that the chest pain is squeezing type at the centre of the chest radiating towards his jaw. Pain started as he was in the toilet trying to open his bowels. Richard states that he has not passed stools in the last two days. LOC: alert and oriented.

Vital signs: T= 36.2°C, PR=102/min RR=30/min BP=136/90 SaOz=98% on room air BGL 12.0 Pain: 9 out of 10

Relevant Investigations: Troponin 1 = 0.9 Troponin 2 = 1.5 Troponin 3 = 0.3 Urea = 4.Smmol/L Creatinine = 126 Micromol/L Na+ = 142 mmol/L K+= 3.1 mmol/L Ca2+ = 1.8 mmol/L Mg2+ = 0.5 MMOl/1.

Current treatment plan: 4/24 Vital Signs BGLs QID + 0200am Daily ECGs Aperients PRN Analgesics and antiemetic's PRN TED stockings Toilet privileges if pain free Inform doctor about each episode of Chest Pain. Morphine and GTN as per protocol.

Based on the above scenario, please briefly write the progress note..