Owen’s Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Balance Sheet (in $ millions) Assets Liabilities and Stockholders' Equity Cash $ 9 Accounts payable $ 22 Accounts receivable 27 Accrued wages 9 Inventory 30 Accrued taxes 15 Current assets $ 66 Current liabilities $ 46 Fixed assets 47 Notes payable 17 Common stock 22 Retained earnings 28 Total assets $ 113 Total liabilities and stockholders' equity $ 113 Owen’s has an aftertax profit margin of 7 percent and a dividend payout ratio of 20 percent. If sales grow by 20 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).)

The following table provides data for a project. Use the data to answer the following questions

1. Draw a network to represent the above project.
   
2. What is the critical path? What is the expected completion time? What is the variance of the project completion time? (Complete the expected task time and variance of time calculations.)
3. The project manager realizes that it is best to take at least 20 weeks to complete the project. However, she also thinks that delaying the project past 26 weeks will result in considerable loss for the company. What is the probability that it will take between 20 and 26 weeks to complete the project?
4. For the next two parts, assume that the expected times you calculated are the deterministic single point estimates of time. Because of work in other projects, the manager realizes that is very likely that activity B will take 5 more weeks than initially determined. What is the new completion time for the project, given this information?
5. The manager wants to reduce the project time by two weeks. How can this be achieved? What are the implications? (Answer this question conceptually.)

The following table provides data for a project. Use the data to answer the following questions

1. Draw a network to represent the above project.

2. What is the critical path? What is the expected completion time? What is the variance of the project completion time? (Complete the expected task time and variance of time calculations.)

3. The project manager realizes that it is best to take at least 20 weeks to complete the project. However, she also thinks that delaying the project past 26 weeks will result in considerable loss for the company. What is the probability that it will take between 20 and 26 weeks to complete the project?

4. For the next two parts, assume that the expected times you calculated are the deterministic single point estimates of time. Because of work in other projects, the manager realizes that is very likely that activity B will take 5 more weeks than initially determined. What is the new completion time for the project, given this information?

5. The manager wants to reduce the project time by two weeks. How can this be achieved? What are the implications? (Answer this question conceptually.)

The following table provides data for a project. Use the data to answer the following questions

1. Draw a network to represent the above project.

2. What is the critical path? What is the expected completion time? What is the variance of the project completion time? (Complete the expected task time and variance of time calculations.)

3. The project manager realizes that it is best to take at least 20 weeks to complete the project. However, she also thinks that delaying the project past 26 weeks will result in considerable loss for the company. What is the probability that it will take between 20 and 26 weeks to complete the project?

4. For the next two parts, assume that the expected times you calculated are the deterministic single point estimates of time. Because of work in other projects, the manager realizes that is very likely that activity B will take 5 more weeks than initially determined. What is the new completion time for the project, given this information?

5. The manager wants to reduce the project time by two weeks. How can this be achieved? What are the implications? (Answer this question conceptually.)

Company XYZ decides to invest in a $25,000,000 project. The company will finance the project with 50% debt and 50% equity. The term of the loan is interest only, compounded annually, 5%, and over 5 years. The project will allow the company to produce and sell an additional 100,000 widgets at $130 a widget. The cost of producing each widget is 50% of revenue. Furthermore, the project will fully depreciate in 5 years on a straight-line basis and the project will end. The tax rate is 21%

1. What is 1^st year CF to equity holders?
2. What is the 5^th year CF to equity holders?
3. What is the IRR?
4. If the company’s required rate on this project is 10%, what is the NPV?
5. Would you accept it?

In the following table, the profits from a duopoly model of competition are shown. Firms 1 and 2 simultaneously choose the quantity of outputs to produce. Each firm is restricted to producing 25, 35, 50 or 100 units of output. Is there a Nash equilibrium? What is it? Briefly explain.

Firm 2

Concept of cost of capital and WACC Mace Manufacturing is in the process of analyzing its investment decision-making procedures. Two projects evaluated by the firm recently involved building new facilities in different regions, North and South. The basic variables surrounding each project analysis and the resulting decision actions are summarized in the following table.

1. An analyst evaluating the North facility expects that the project will be financed by debt that costs the firm 7%. What recommendation do you think this analyst will make regarding the investment opportunity?

2. Another analyst assigned to study the South facility believes that funding for that project will come from the firm’s retained earnings at a cost of 16%. What recommendation do you expect this analyst to make regarding the investment?

3. Explain why the decisions in parts a and b may not be in the best interests of the firm’s investors.

4. If the firm maintains a capital structure containing 40% debt and 60% equity, find its weighted average cost of capital (WACC) using the data in the table.

5. If both analysts had used the WACC calculated in part d, what recommendations would they have made regarding the North and South facilities?

6. Compare and contrast the analyst’s initial recommendations with your findings in part e. Which decision method seems more appropriate? Explain why.

Suppose a country trades with three countries: Brazil (20% of trade), China (45%), and France (35%). Over the last year, the currency of this country has depreciated by 4% against the Brazilian real, appreciated by 3% against the Chinese yuan, and depreciated by 7% against the euro. What has happened to the effective exchange rate of the country? (8 points)

Suppose that, for students who are enrolled in college algebra, 72 percent are freshman, 40 percent are female, and 25 percent are female and freshman. Your answers should be entered as decimals and rounded to three decimal places.

(A) one student will be selected at random. What is the probability that the selected student will be a freshman or female (or both)? ___

(B) one student will be selected at random. What is the probability that the selected student will not be a freshman? ___

(C) two students will be independently selected at random. What is the probability that both of the selected students will be female? __