1. The following is a simplified duopoly model of competition between two firms. Each firm is restricted to producing 25, 35, 50 or 100 units of output. The details of how the payoffs are derived are unimportant because payoffs are all given in the table below.

                                                                                  FIRM 2

1. Now assume that FIRM 1 is the Stackelberg leader in this market. And FIRM 2 is the follower. Being the leader, FIRM 1 makes the first move in choosing the quantity of output, followed by FIRM 2. Draw the extensive form or the game tree for this sequential form game.

2. Using the game tree, now determine the sub-game perfect Nash equilibrium(s). Describe the process that helps you in determining it.

A T-bill that is 275 days from maturity is selling for $96,010. The T-bill has a face value of $100,000.

a. Calculate the discount yield, bond equivalent yield, and EAR on the T-bill.
b. Calculate the discount yield, bond equivalent yield, and EAR on the T-bill if it matures in 350 days.
  

Calculate the discount yield, bond equivalent yield, and EAR on the T-bill. (Use 360 days for discount yield and 365 days in a year for bond equivalent yield and effective annual return. Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161))

• 
  Required B

Calculate the discount yield, bond equivalent yield, and EAR on the T-bill if it matures in 350 days. (Use 360 days for discount yield and 365 days in a year for bond equivalent yield and effective annual return. Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161))

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Prepare a statement of Cash Flows For the year ended June 30th, 2020

The table below contains data on Fincorp Inc. The balance sheet items correspond to values at year-end 2015 and 2016, while the income statement items correspond to revenues or expenses during the year ending in either 2015 or 2016. All values are in thousands of dollars.

* Taxes are paid in their entirety in the year that the tax obligation is incurred.

^† Net fixed assets are fixed assets net of accumulated depreciation since the asset was installed.

What was the change in net working capital during the year? (Enter your answer in thousands of dollars.)

3.) Condensed financial statements for Dragoon Enterprises follows:

a.) Calculate the amount of dividends Dragoon paid using the information given.

b.) Prepare a statement of cash flows using the indirect method.

                                                                                                              2015                2014

Cash                                                                                                    $1,200             $ 850

Accounts receivable                                                                           1,750               1,200

Inventory                                                                                            1,250               1,360

Plant and equipment                                                                           4,600            3,900

            Accumulated depreciation                                                      (1,200)             (1,100)

Long-term investments                                                                             970             1,110

            Total Assets                                                                               8,570              7,320

Accounts payable                                                                                  1,100               800

Accrued wages payable                                                                         250                  350

Interest payable                                                                                         70                   120

Incomes tax payable                                                                               200                     50

Bonds payable                                                                                    1,100              1,400

Capital stock                                                                                       1,000                   930

Paid-in capital                                                                                         400                     70

Retained earnings                                                                               4,450                 3,600

            Total Liabilities and Equity                                                  $ 8,570                $ 7,320

___________________________________________________________________________________________

Income Statement for Year Ended December 31, 2015

Sales                                                                                                    $ 9,500

Cost of goods sold                                                                                 6,650

Gross profit                                                                                            2,850

Other expenses

            Selling and administrative                                                      1,200

            Depreciation                                                                                 100           

            Interest                                                                                          150

            Income Tax                                                                                   350

Net Income                                                                                         $ 1,050

6. Understanding the NPV profile

If projects are mutually exclusive, only one project can be chosen. The internal rate of return (IRR) and the net present value (NPV) methods will not always choose the same project. If the crossover rate on the NPV profile is below the horizontal axis, the methods will   agree.

Projects W and X are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows.

If the weighted average cost of capital (WACC) for each project is 10%, do the NPV and IRR methods agree or conflict?

The methods conflict.

The methods agree.

A key to resolving this conflict is the assumed reinvestment rate. The NPV calculation implicitly assumes that intermediate cash flows are reinvested at the   , and the IRR calculation assumes that the rate at which cash flows can be reinvested is the   .

As a result, when evaluating mutually exclusive projects, the    is usually the better decision criterion.

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Q5. Case Study: Assume that are the financial manager of a company, which is considering a potential project with a new product that is expected to sell for an average price of $22 per unit and the company expects it can sell 350 000 unit per year at this price for a period of 4 years. Launching this project will require purchase of a $2 000 000 equipment that has residual value in four years of $200 000 and adding $ 600 000 in working capital which is expected to be fully retrieved at the end of the project. Other information is available below:
Depreciation method: straight line
Variable cost per unit: $11
Cash fixed costs per year $350 000
Discount rate: 10%
Tax Rate: 30%
Do an analysis with cash flows of the project to determine the sensitivity of the project NPV with the following changes in the value drivers and provide your results in (a) relevant tables:
Unit sales decrease by 10%
Price per unit decreases by 10%
Variable cost per unit increases 10%
Cash fixed cost per year increases by 10%

1 HORIZONTAL ANALYSIS INSTRUCTIONS: Prepare a horizontal analysis of the income statement using 2018 as a base. Neiman Corp. Comparative Balance Sheet For the years ended December 31 2019 2018 Assets Current Assets 360 300 Plant Assets 640 500 Total Assets 1,000 800 Liabilities & Stockholders' Equity Current liabilities 150 120 Long-term debt 240 160 Common stock 350 320 Retained earnings 260 200 Total liabilities & stockholders' equity 1,000 800

2

Your company has placed a bit for a contract with a major air conditioning manufacturer, but the decision will not be made for four months. It cost the manufacturer $10,000 to prepare and submit the bid. The possible states of nature and their probabilities of occurring are as follows: (1) Receive the full contract (30%), (2) Receive a partial contract (20%), or (3) No contract (50%). ideally you would like to be up and running when the contract decision is made, but in order to do that any parts or machinery that will be required for the completion of the contract must be ordered right away. Use the information in this problem and the blank decision tree to answer the questions.

Use the information in this problem and the blank decision tree on the next page to answer the questions.