Your company's stock sells for $50 per share, its last dividend (D0) was $2.00, its growth rate is a constant 5 percent, and the company would incur a flotation cost of 15 percent if it sold new common stock. Net income for the coming year is expected to be $500,000, the firm's payout ratio is 60 percent, and its common equity ratio is 30 percent. If the firm has a capital budget of $1,000,000, what component cost of common equity will be built into the WACC for the last dollar of capital the company raises?

Consider the natural join of the relation R(A,B) and S(A,C) on attribute A. Neither relations have any indexes built on them. Assume that R and S have 80,000 and 20,000 blocks, respectively. The cost of a join is the number of its block I/Os accesses. If the algorithms need to sort the relations, they must use two-pass multi-way merge sort.

QUESTION:

Assume that there are 10 blocks available in the main memory. What is the fastest join algorithm for computing the join of R and S? What is the cost of this algorithm?

1. What components of final expenditure (C, I, G, NX) if any, would the following transactions change? (provide numerical values for parts g and k)

a. A U.S. family buys a new refrigerator made in Illinois

b. A U.S. family buys a new refrigerator made in China

c. You buy a new house in Chicago

d. You buy a pizza from Dominos

e. California repaves U.S. highway one.

f. GM sells a car from its inventory of cars

g. You buy a house built in 2000. The house cost $120,000 in 2000, your purchase price is $200,000, of which $10,000 goes to a real estate agent as sales commission.

h. U.S. government spending for unemployment benefits increases because of increasing unemployment.

i. A parent pays $1,000 for daycare for their child.

j. Ben and Jerrys buy milk to make ice cream.

k. You buy $20 of yarn at a craft store. You use the yarn to make a sweater, which would cost $80 if sold at Target.

l. You pay rent for an apartment in a building that was built in 2002.

m. Fifth third bank lends a manufacturer $1,000,000.

n. The City of Chicago purchases new police cars

o. Wildfires destroy homes in California (do not count the cost of fighting the fires).

1. What components of final expenditure (C, I, G, NX) if any, would the following transactions change? (provide numerical values for parts g and k)

a. A U.S. family buys a new refrigerator made in Illinois

b. A U.S. family buys a new refrigerator made in China

c. You buy a new house in Chicago

d. You buy a pizza from Dominos

e. California repaves U.S. highway one.

f. GM sells a car from its inventory of cars

g. You buy a house built in 2000. The house cost $120,000 in 2000, your purchase price is $200,000, of which $10,000 goes to a real estate agent as sales commission.

h. U.S. government spending for unemployment benefits increases because of increasing unemployment.

i. A parent pays $1,000 for daycare for their child.

j. Ben and Jerrys buy milk to make ice cream.

k. You buy $20 of yarn at a craft store. You use the yarn to make a sweater, which would cost $80 if sold at Target.

l. You pay rent for an apartment in a building that was built in 2002.

m. Fifth third bank lends a manufacturer $1,000,000.

n. The City of Chicago purchases new police cars

o. Wildfires destroy homes in California (do not count the cost of fighting the fires).

Section B:

Using the financial statements of XYZ Furnishings (below), comment on your interpretation of the financial health of the company.

There is a maximum of 10 marks available for this section, four marks for your knowledge and understanding of the financial statements, four marks for your analysis and evaluation and 2 marks for your communication.

The Donahoo Western Furnishings Company was formed on December 31, 2014 with $1,000,000 in equity plus $500,000 in long-term debt. On January 1, 2015, all of the firm's capital was held in cash. The following transactions occurred during January 2015:

January 2: Donahoo purchased $1,000,000 worth of furniture for resale. It paid $500,000 in cash and financed the balance using trade credit that required payment in 60 days.

January 3: Donahoo sold $250,000 worth of furniture that it had paid $200,000 to acquire. The entire sale was on credit terms of net 90 days.

January 15: Donahoo purchased more furniture for $200,000. This time, it used trade credit for the entire amount of the purchase, with credit terms of net 60 days.

January 31: Donahoo sold $500,000 worth of furniture, for which it had paid $400,000. The furniture was sold for 10% cash down, with the remainder payable in 90 days. In addition, the firm paid a cash dividend of $100,000 to its stockholders and paid off $250,000 of its long-term debt.

Submit answers to the 4 questions below.

1. Prepare Donahoo's balance sheet as of December 31, 2014.

2. What did the balance sheet look like after each of the transactions in January?

3. Ignoring taxes, calculate the income Donahoo earned during January. Prepare an income statement for the month. Recognize an interest expense of 1% for the month (12% annually) on the $500,000 long-term debt, which has not been paid, but is owed.

4. What was Donahoo's cash flow for the month of January.

Classique Household Furnishings & Appliances is a family-owned furniture store. You are the management accountant of the concern and have been given the task of preparing the cash budget for the business for the quarter ending September 30, 2018. Your data collection has yielded the following

Extracts from the sales and purchases budgets are as follows:

Cash Sales

$50,000 $65.000 $43,400 $52,800 $56,750

Sales Purchases On Account On Account

$480,000 $600,000 $720,000

$640,000

$800,000

$390.000 $360,000 $450,000 $400,000

$500,000

Month

May

June

July August September

An analysis of the records shows that trade receivables (accounts receivable) for sales on account are settled according to the following credit pattern, in accordance with the credit forms 5/30, n90:

50% in the month of sale 35% in the first month following the sale 15% in the second month following the sale

Accounts payable are settled as follows, in accordance with the credit forms - 4/30, n60 70% in the month in which the inventory is purchased 30% in the following month

Monthly rental is received from a tenant for storage space rental to him by Classique Household Furnishings & Appliances. The rental is $840,000 per annum and is received quarterly in advance

Rental relating to the quarter under review becomes due on July 1.

Computer equipment, which is estimated to cost $350,000, will be acquired for cash in August The manager has made arrangements with the seller to make a cash deposit of 50% of the amount upon signing of the agreement in August with the balance to be settled in four equal monthly instalments, starting in September 2018.

An investment instrument purchased by the company with a face value of $480,000 will mature on July 20, 2018 and will be liquidated on that date. At the same time, quarterly interest computed at a rate of 8% % per annum will also be collected.

Fixed operating expenses, which accrue evenly throughout the year are estimated to be $1,920.000 per annum including depreciation on non-current assets of $42,000 per month and are settled monthly

i)

iv)

vi)

vii)

viil)

Wages and salaries are expected to be $2,304,000 per annum and will be paid monthly

Other operating expenses are expected to be $144,000 per quarter and are settled monthly

In the month of August, furniture & fixtures, which cost $455,000, will be sold to an employee at a Inss of $20.000. Accumulated depreciation on the furniture & fixtures at that time is expected to be $305,000. The employee will be allowed to pay a deposit equal to 60% of the selling price in

2. Past Perfect Inc. is a small firm that sells antique furnishings. In the most recent year, the firm generated $ 4 million in after-tax operating income on revenues of $ 40 million; the firm reported book value of equity of $ 8 million and book value of debt of $ 4 million at the beginning of the year. During the year, the firm invested $2 million in a new warehouse for furniture (its only cap ex) and reported depreciation of $1 million in its income statement. The firm’s only working capital item is its inventory, which increased by $ 200,000 during the course of the year. The cost of capital for the firm is expected to be 12% for the next 3 years and 10% thereafter. You have been asked to appraise the value of the company. Assuming that the firm maintains its existing return on capital and reinvestment rate for the next 3 years, estimate the expected free cash flow to the firm each year for the next 3 years. b. Estimate the value of the firm at the end of year 3, assuming that the return on capital stays at the current level but the growth rate drops to 3%. c. Assuming that Past Perfect Inc. has 5 million shares outstanding, estimate the value of equity per share. (You can assume that the book value of debt = market value of debt, and that the debt remained unchanged over the most recent year). You can also assume no cash holdings.

A suburban hotel derives its revenue from its hotel and restaurant operations. The owners are interested in the relationship between the number of rooms occupied on a nightly basis and the revenue per day in the restaurant. Below is a sample of 25 days (Monday through Thursday) from last year showing the restaurant income and number of rooms occupied.

1. Choose the scatter diagram that best fits the data.

• Scatter diagram 1

• Scatter diagram 2

• Scatter diagram 3

2. Determine the coefficient of correlation between the two variables. (Round your answer to 3 decimal places.)

1. c-1. State the decision rule for 0.01 significance level: H₀: ρ ≤ 0; H₁: ρ > 0. (Round your answer to 3 decimal places.)

1. c-2. Compute the value of the test statistic. (Round your answer to 2 decimal places.)

1. c-3. Is it reasonable to conclude that there is a positive relationship between revenue and occupied rooms? Use the 0.01 significance level.

4. What percent of the variation in revenue in the restaurant is accounted for by the number of rooms occupied? (Round your answer to 1 decimal place.)

A suburban hotel derives its revenue from its hotel and restaurant operations. The owners are interested in the relationship between the number of rooms occupied on a nightly basis and the revenue per day in the restaurant. Below is a sample of 25 days (Monday through Thursday) from last year showing the restaurant income and number of rooms occupied.

Determine the coefficient of correlation between the two variables. (Round your answer to 3 decimal places.)

c-1. State the decision rule for 0.025 significance level: H0: ρ ≤ 0; H1: ρ > 0. (Round your answer to 3 decimal places.)

c-2Compute the value of the test statistic. (Round your answer to 2 decimal places.)

c-3. Is it reasonable to conclude that there is a positive relationship between revenue and occupied rooms? Use the 0.025 significance level.

What percent of the variation in revenue in the restaurant is accounted for by the number of rooms occupied? (Round your answer to 1 decimal place.)

A suburban hotel derives its revenue from its hotel and restaurant operations. The owners are interested in the relationship between the number of rooms occupied on a nightly basis and the revenue per day in the restaurant. Below is a sample of 25 days (Monday through Thursday) from last year showing the restaurant income and number of rooms occupied.

1. Choose the scatter diagram that best fits the data.

• Scatter diagram 1

• Scatter diagram 2

• Scatter diagram 3

2. Determine the coefficient of correlation between the two variables. (Round your answer to 3 decimal places.)

Pearson correlation _______

1. c-1. State the decision rule for 0.01 significance level: H₀: ρ ≤ 0; H₁: ρ > 0. (Round your answer to 3 decimal places.)

Reject H0 if t > ________

1. c-2. Compute the value of the test statistic. (Round your answer to 2 decimal places.)

Value of the test statistic ______

4. What percent of the variation in revenue in the restaurant is accounted for by the number of rooms occupied? (Round your answer to 1 decimal place.)

_____ % of the variation in revenue is explained by variation in occupied rooms.