1. You have been given the job of evaluating the following merger candidate. You have collected the following cash flow for the acquisition candidate for the proposed merger (in millions):

Year                                                                1                              2                               3                               4                               5__

Cash flows now for canidate 90                            85                               205                            165                            180

Additional cash flows with merger 60                            90                               100                            225                            250

Total cash flows with synergy 150                            175                            305                            390                            430

Risk free rate of return                                                                                                                 3.0%

Beta for this project (the company after merging)                                                         1.5           

Market risk premium                                                                                                                     5.5%      

Pre-tax cost of debt                                                                                                                         3.8%

Marginal tax rate                                                                                                                              25%

Number of shares outstanding for the target company (millions)                         85            

Current market price per share for the target company                                              $48         

Percentage of the acquisition financed with debt                                                           50%

Percentage of the acquisition financed with common equity                                                      50%       

What is the after tax cost of debt?

What is the after tax cost of common equity

What is the weighted average cost of capital for this acquisition candidate?

What is the maximum price per share you are willing to pay for this candidate?

Based on the numbers above, would you pursue this candidate?

Replacement Question 1

Green Acres is growing Green Beans in Green Land, Georgia. Assuming that Green Acres is buying and selling in both the input and output markets in perfect competition, answer the following questions:

1. Complete Table 2 (see attached Excel Sheet)
2. At what point will Green Acres will be at the most efficient point of production? Why?
3. What is the optimum point of production? How do you prove it? What are the net revenues at which profits are maximized?
4. If costs of production goes up, what choices does Green Acres have? Why?  
5. At what point will Green Acres will have to should shut down its business? Why (hint: use the shutdown rule for which you will have to derive the average fixed and average variable cost from the information provided)

Consider the following linear programming problem

if A and B are the two binding constraints.

(Round to ONLY two digits after decimal points)

a) What is the range of optimality of the objective function?

  Answer ≤ C1/C2  ≤  Answer

b) Suppose that the unit revenues for X1 and X2 are changed to $100 and $18, respectively. Will the current optimum remain the same?

AnswerYesNO that because the new C1/C2 is Answer which is Answerwithinnot within the range of optimality

c) Suppose that the unit revenue of X1 is fixed $4. What is the associated range for the unit revenue for X2 that will keep the optimum unchanged?

   Answer  ≤ C2 ≤  Answer

d) The Shadow Price for Constraint A is Answer.

e) The Shadow Price for Constraint B is Answer

f) If only the capacity of Constraint A is increased from the present 40 hours to 45 hours, The increase in revenue will be = $Answer

g) A suggestion is made to increase the capacities of Constraint A and B by an hour at the additional cost of $1/hr. Is this advisable?

This is advisable for AnswerConstraint AConstraint BBoth Constraints and the total additional net revenue per hour would be $Answer

On December 31, 2017, Berclair Inc. had 400 million shares of common stock and 5 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $550 million. The income tax rate is 40%. Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2013. The options are exercisable as of September 13, 2017, for 30 million common shares at an exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share. In 2014, $62.5 million of 8% bonds, convertible into 6 million common shares, were issued at face value. Required: Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2018. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

On December 31, 2017, Berclair Inc. had 320 million shares of common stock and 5 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $350 million. The income tax rate is 40%.

Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2013. The options are exercisable as of September 13, 2017, for 30 million common shares at an exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share.

In 2014, $62.5 million of 8% bonds, convertible into 6 million common shares, were issued at face value.

Required:

Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2018.

Bell Computers purchases integrated chips at ?$350 per chip. The holding cost is ?$35 per unit per? year, the ordering cost is ?$118 per? order, and sales are steady at 405

per month. The? company's supplier, Rich Blue Chip? Manufacturing, Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below.

1-99 units- $350

100-199- $325

200 or more units- $300

a. What is the optimal order quantity and the minimum annual cost for Bell Computers to? order, purchase, and hold these integrated? chips?

-The optimal order quantity after the change in pricing structure is (enter as whole number)

- The total annual cost for Bell computers to? order, purchase, and hold the integrated chips is.. {enter as whole number}

b. bell computers wishes to use a 10% holding cost rather than the fixed $36 holding cost in part a. what is the optimal order quantity, and what is the optimal annual cost?

-the optimal order quantity after the change in the holding cost calculation is (enter as whole number)

- the total annual cost for bell computers to order, purchase, and to hold integrated chips is (enter as whole number)

?

Write a modularized, menu-driven program to read a file with unknown number of records.

• Input file has unknown number of records of inventory items, but no more than 100; one record per line in the following order: item ID, item name (one word), quantity on hand , and a price
• All fields in the input file are separated by a tab (‘\t’) or a blank ( up to you)
• No error checking of the data required
• Create a menu which allows to
  • print inventory unsorted
  • search for an item by ID or name
  • sort by any field in ascending order (smallest to largest): item ID, item name (one word), quantity on hand , or price. Write one function, that can sort by any field. Do not copy and paste sort code five times into the same function. Tip: use bubble sort. It is easier to modify.
  • quit the program
• A user should be able to run many as many times as user wants
• NO goto, continue, break (except for switch)
• Clearly label the output
• Well document your code (comments)
• Include your test data
• All items are unique

Record sample:

997196478 Stroller 25 134.78

On December 31, 2017, Berclair Inc. had 520 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $850 million. The income tax rate is 40%.

Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2013. The options are exercisable as of September 13, 2017, for 30 million common shares at an exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share.

In 2014, $62.5 million of 8% bonds, convertible into 6 million common shares, were issued at face value.

Required:

Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2018. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Variance

Part A

The following standard costs per unit have been established by John, Inc.:

• Material (3 kilograms at $2 per kilogram)    $ 6.00
• Direct labor (2 hours at $12 per hour) $ 24.00

During the month, John produced 1,100 units, which was 100 more units than planned.

They used 3,400 kilograms and 2,050 hours to do so.

Total actual materials spending was $6,460, while total actual labor spending was $27,675.

Required

Choose EITHER materials OR labor, and compute the following variances:

• Spending
• Efficiency
• Activity

Be sure to denote which you chose (materials or labor) and label each variance as favorable or unfavorable.

Part B

Meghan Company sells two products – Deluxe and Ultra.

The following information was gathered about the two products:

Required

Calculate the three main revenue variances for the Meghan product.

Be sure to label the variances by name, as well as “favorable” or “unfavorable.”

If there is insufficient information to calculate any of the variances, please denote that clearly.

. How would a tax on bond held by individuals affect the demand for money, interest rate, investment, aggregate demand, price and real GDP?

2. Trace the impact of buying more bonds by government on bond prices, interest rates, investment, aggregate demand, real GDP, unemployment, and the price level.

3. True or false, explain you answers.

1. Lenders sell bonds, and borrowers buy them.
2. An increase in reserve requirements raises the reserve ratio and decreases the money supply.
3. When the government runs a budget deficit, interest rates rise, and investment falls.
4. Joan uses some of her income to buy mutual fund shares. A macroeconomist would refer to Joan’s purchase as investment.
   

4) Jeremiah deposits in a bank an amount of $1000 that he had been holding at home in a jar for a long time.
a. If the banking system is 100 percent reserve, how does the money supply change?
b. If the reserve requirement is 10 percent and the bank holds no excess reserves, how does the money supply change?
c. If the reserve requirement is 10 percent and the bank holds an excess reserve of 2 percent, how does the money supply change?