A U.S.-based firm is considering a five- year project in Colombia. The following information is available about the project: Initial investment. The initial investment of USD 750,000 is used to purchase capital equipment. This equipment will be depreciated straight line to zero. At the end of five years, the remaining equipment will be sold for Colombian Peso (COP) 12,000,000. Working capital. The investment in working capital is COP 180,000,000. There are no changes in working capital until the end of the project when the full amount is recovered. Units, price, and costs. The firm will produce 1750 units of a product annually. The selling price is expected to be COP 599000 in the first year. This price is expected to increase at a rate of 3 percent annually. The direct expense per unit is expected to be COP 240000 in the first year. This is expected to increase at a rate of 7 percent annually. Indirect expenses are expected to be COP 75,000,000 annually. Taxes and miscellaneous. Colombian taxes on income and capital gains are 33 percent. There are no additional withholding taxes. All cash flows are repatriated when generated, and there are no additional U.S. taxes. The parity conditions are assumed to hold between Colombia and the United States. The
FINC 6367 – International finance Excel Homework Page 2
relevant inflation indexes indicate a rate of 2.5 percent for the United States and 6 percent for Colombia. Spot USDCOP equals 2900. Brady’s USD denominated WACC is 12.5 percent.

a. Calculate COP cash flows.

b. What is the appropriate COP discount rate? Calculate the project NPV.

c. Use parity conditions to generate future spot rates. Calculate the project NPV in USD.

d. Calculate break- even units.

e. Now assume that the COP rate of annual depreciation doesn’t follow parity conditions. What is the break- even rate of depreciation in COP? Assuming the USD inflation is unchanged, what is the COP inflation rate consistent with this break- even depreciation?

You have been hired as a consultant for Brilliant Paint Company, Inc. (BPC), manufacturers of fine industrial paint. The market for industrial paint is growing rapidly. The company bought some land three years ago for $1.35 million in anticipation of using it as a toxic paint waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $1.45 million on an after-tax basis, however, if it waits for 6 years, the land could be sold for $1.55 million after taxes. The company also hired a marketing firm to analyze the paint market, at a cost of $120,000. An excerpt of the marketing report is as follows: The paint industry will have a rapid expansion in the next five years. With the brand name recognition that BPC brings to bear, we feel that the company will be able to sell 3,000 units in the first year of operation and will increase by 25% in the second. The unite growth will decrease to 20% in the third year and will continue to decrease linearly to 5% every year until the end of the project. Capitalizing on the name recognition of BPC, we feel that a premium price of $600 can be charged in the first year but due to competition the company needs to keep the price for at least three years. However, the company could increase the price to $625 in year three and maintain it until the end of project life. BPC believes that fixed costs for the project will be $500,000 per year, and variable costs are 20 percent of sales. The equipment necessary for production will cost $3 million and will be depreciated according to a six-year MACRS schedule. At the end of the project, the equipment can be scrapped for $375,000. Net working capital of $150,000 will be required immediately but needs to increase it by %5 per year as the sales increases. BPC has a 35 percent tax rate, and the required return on the project is 13 percent. What is the NPV of the project?

You have been hired as a consultant for Brilliant Paint Company, Inc. (BPC), manufacturers of fine industrial paint. The market for industrial paint is growing rapidly. The company bought some land three years ago for $1.35 million in anticipation of using it as a toxic paint waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $1.45 million on an after-tax basis, however, if it waits for 6 years, the land could be sold for $1.55 million after taxes. The company also hired a marketing firm to analyze the paint market, at a cost of $120,000. An excerpt of the marketing report is as follows:

The paint industry will have a rapid expansion in the next five years. With the brand name recognition that BPC brings to bear, we feel that the company will be able to sell 3,000 units in the first year of operation and will increase by 25% in the second. The unite growth will decrease to 20% in the third year and will continue to decrease linearly to 5% every year until the end of the project.

Capitalizing on the name recognition of BPC, we feel that a premium price of $600 can be charged in the first year but due to competition the company needs to keep the price for at least three years. However, the company could increase the price to $625 in year three and maintain it until the end of project life.   

BPC believes that fixed costs for the project will be $500,000 per year, and variable costs are 20 percent of sales. The equipment necessary for production will cost $3 million and will be depreciated according to a six-year MACRS schedule. At the end of the project, the equipment can be scrapped for $375,000. Net working capital of $150,000 will be required immediately but needs to increase it by %5 per year as the sales increases. BPC has a 35 percent tax rate, and the required return on the project is 13 percent.

What is the NPV of the project?

You have been hired as a consultant for Brilliant Paint Company, Inc. (BPC), manufacturers of fine industrial paint. The market for industrial paint is growing rapidly. The company bought some land three years ago for $1.35 million in anticipation of using it as a toxic paint waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $1.45 million on an after-tax basis, however, if it waits for 6 years, the land could be sold for $1.55 million after taxes. The company also hired a marketing firm to analyze the paint market, at a cost of $120,000. An excerpt of the marketing report is as follows:

The paint industry will have a rapid expansion in the next five years. With the brand name recognition that BPC brings to bear, we feel that the company will be able to sell 3,000 units in the first year of operation and will increase by 25% in the second. The unite growth will decrease to 20% in the third year and will continue to decrease linearly to 5% every year until the end of the project.

Capitalizing on the name recognition of BPC, we feel that a premium price of $600 can be charged in the first year but due to competition the company needs to keep the price for at least three years. However, the company could increase the price to $625 in year three and maintain it until the end of project life.   

BPC believes that fixed costs for the project will be $500,000 per year, and variable costs are 20 percent of sales. The equipment necessary for production will cost $3 million and will be depreciated according to a six-year MACRS schedule. At the end of the project, the equipment can be scrapped for $375,000. Net working capital of $150,000 will be required immediately but needs to increase it by %5 per year as the sales increases. BPC has a 35 percent tax rate, and the required return on the project is 13 percent.

What is the NPV of the project?

Brilliant Paint Company

You have been hired as a consultant for Brilliant Paint Company, Inc. (BPC), manufacturers of fine industrial paint. The market for industrial paint is growing rapidly. The company bought some land three years ago for $1.35 million in anticipation of using it as a toxic paint waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $1.45 million on an after-tax basis, however, if it waits for 6 years, the land could be sold for $1.55 million after taxes. The company also hired a marketing firm to analyze the paint market, at a cost of $120,000. An excerpt of the marketing report is as follows:

The paint industry will have a rapid expansion in the next five years. With the brand name recognition that BPC brings to bear, we feel that the company will be able to sell 3,000 units in the first year of operation and will increase by 25% in the second. The unite growth will decrease to 20% in the third year and will continue to decrease linearly to 5% every year until the end of the project.

Capitalizing on the name recognition of BPC, we feel that a premium price of $600 can be charged in the first year but due to competition the company needs to keep the price for at least three years. However, the company could increase the price to $625 in year three and maintain it until the end of project life.   

BPC believes that fixed costs for the project will be $500,000 per year, and variable costs are 20 percent of sales. The equipment necessary for production will cost $3 million and will be depreciated according to a six-year MACRS schedule. At the end of the project, the equipment can be scrapped for $375,000. Net working capital of $150,000 will be required immediately but needs to increase it by %5 per year as the sales increases. BPC has a 35 percent tax rate, and the required return on the project is 13 percent.

What is the NPV of the project?

Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2021. The units have a list price of $600 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/10, n/30.
1.   Prepare the journal entries to record the sale on November 17 and collection on November 26, 2021 assuming the gross method is used.

2.   Prepare the journal entries to record the sale on November 17 and collection on November 26, 2021 assuming the net method is used.

3.   Prepare the journal entries to record the sale on November 17 and collection on December 15, 2021 assuming the gross method is used.

4.   Prepare the journal entries to record the sale on November 17 and collection on December 15, 2021 assuming the net method is used.

Edelman Engines has $18 billion in total assets — of which cash and equivalents total $100 million. Its balance sheet shows $2.7 billion in current liabilities — of which the notes payable balance totals $0.82 billion. The firm also has $8.1 billion in long-term debt and $7.2 billion in common equity. It has 600 million shares of common stock outstanding, and its stock price is $22 per share. The firm's EBITDA totals $1.848 billion. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. What are Edelman's market/book and its EV/EBITDA ratios? Do not round intermediate calculations. Round your answers to two decimal places.

M/B: ______ ×

EV/EBITDA: ___________

Basic Earnings per Share

Monona Company reported net income of $29,975 for 2019. During all of 2019, Monona had 1,000 shares of 10%, $100 par, nonconvertible preferred stock outstanding, on which the year's dividends had been paid. At the beginning of 2019, the company had 7,000 shares of common stock outstanding. On April 2, 2019, the company issued another 2,000 shares of common stock so that 9,000 common shares were outstanding at the end of 2019. Common dividends of $17,000 had been paid during 2019. At the end of 2019, the market price per share of common stock was $17.50.

Required:

1. Compute Monona's basic earnings per share for 2019. If required, round your answer to two decimal places.
$ per share

HASF Glassworks makes glass flanges for scientific use Material cost Rs.10 per flange and the glass blowers are paid a wage rate of 100 per hours a glass blower blows 20 flanges in two hours. Fixed manufacturing costs for flanges are 25000 per period. other non-manufacturing cost associated with flanges
are 10,000 per period and are fixed.
Required:
a. Find out variable cost per units and total fixed cost.
b. Assume Company manufactures and sells 10,000 flanges this period their competitor sells
flanges for 15 each. can company sell below competitor price and make a profit on the
flanges
c. How would be your answer to requirement 2 differ if company made and sold 20,000
flanges this period why

17. Using the following information, calculate the Break-Even in terms of dollars and number of units. (15 points)

BELT MANUFACTURER
Cost of leather per belt- $20 Cost of one belt buckle - $25
Cost to drill holes and attach buckle per belt - $5 Management payroll per month - $10,000 Operating expense per month - $20,000
Factory rent per month - $20,000
Price charged to retail store for 5 belts - $500

Cost per belt= $20, buckle /belt=$25, drill holes&buckle/belt=$5   
Fixed Expense= $10,000+$20,000+$20,000= $50,000
Avg Variable Exp Per Sale= $20+ $25+$5+$100= $150
CM= Avg $ Per Sale - Avg Variable Exp Per Sale