Business and Management
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Part One: External Funding Requirement
$5.00Part One: External Funding Requirement
Your company, Martin Industries, Inc., has experienced a higher than expected demand for its new product line. The company plans to expand its operation by 25% by spending $5,000,000 for an additional building.
The firm would like to maintain its 40% debt to total asset ratio in its capital structure and its dividend payout ratio of 50% of net income. Last year, net income was $2,500,000.
Required:
- What are retained earnings for last year?
- How much debt will be needed for the new project?
- How much external equity must Martin use at the beginning of this year in order to finance the new expansion?
- If Martin decides to retain all earnings for the coming year, how much external equity will be required?
Archer Daniels Midland Company is considering buying a new farm…
$2.00Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $11.80 million. This investment will consist of $2.90 million for land and $8.90 million for trucks and other equipment. The land, all trucks, and all other equipment is expected to be sold at the end of 10 years at a price of $5.02 million, $2.35 million above book value. The farm is expected to produce revenue of $2.02 million each year, and annual cash flow from operations equals $1.92 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 10 percent.
Calculate the NPV of this investment. (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.)
Using a 5% discount rate, calculate the Net Present Value
$5.00Part 1
Using a 5% discount rate, calculate the Net Present Value, Payback, Profitability Index, and IRR for each of the investment projects below (note, the inflows are for each year). Based on your calculations rank the projects and support you answer. Project 1 Initial Invest= $500,000, Cash inflows of $100,000 for years 1-5 and $50,000 for years 6-10. Project 2 Initial Invest= $1,000,000, Cash inflows of $400,000 for years 1-3, $0 for years 4-7 and $250,000 for years 8-10. Project 3 Initial Invest= $800,000, Cash inflows of $300,000 for years 1-5, $0 for years 6-9 and $100,000 for year 10.
Part 2
- Assuming a budget of $1,200,000 what are your recommendations for the three projects in the above problem. Explain.
- Assuming a budget of $2,000,000 what are your recommendations for the above problem? Explain.
Suppose we are thinking about replacing an old computer with a new one…
$10.00Suppose we are thinking about replacing an old computer with a new one. The old one cost us $450,000; the new one will cost $580,000. The new machine will be depreciated straight-line to zero over its five-year life. It will probably be worth about $130,000 after five years. The old computer is being depreciated at a rate of $90,000 per year. It will be completely written off in three years. If we don’t replace it now, we will have to replace it in two years. We can sell it now for $230,000; in two years it will probably be worth $60,000. The new machine will save us $85,000 per year in operating costs. The tax rate is 38 percent, and the discount rate is 14 percent.
- Calculate the EAC for old and new computer.
- What is the NPV of the decision to replace the computer now?
The managers of a firm are asked to consider two possible new product lines…
$1.00The managers of a firm are asked to consider two possible new product lines for the firm . Project 1 is quite risky and may result in a market value for the firm of $50 million in two Years ,or nothing .Project 2 is much more certain in outcome and may result in a firm market value as high as $25 million or as low as $15 million.
The face value of the company s debt ,payable in two years is $20 million
a- What are the possible payoffs to the bondholders under projects 1 and 2
b- What are the possible payoffs to the shareholders under project s 1&2
c- Which will the shareholders favor? The bondholders?
Justification Report Understanding the Report Process and Research Methods
$27.50You will be building up a formal, researched justification report that culminates in a recommendation to implement a particular product, service, or program in your place of employment. This recommended product, service, or program should resolve a problem that you identify in your workplace and should be directed to your employer (even if you do not actually plan to share it with your employer).
Use the basic outline below to draft your paper. Organize your responses to each question under the following section headings:- Problem Statement (for Question 1)
- Overview of Alternatives (for Question 2)
- Criteria (for Question 3)
- Methods (for Question 4)
Write a 7 page, double-spaced report in which you:
- Describe in detail a problem at work, persuading and convincing the reader that it needs fixing.
- Provide a detailed description of two (2) possible solutions (“alternatives”) that could be implemented to resolve the problem identified in Question 1.
- Describe five (5) criteria that you will use to measure the worth of each alternative in Criterion 2. Note: The alternative that satisfies the most criteria to the highest degree will be the one you recommend later to your employer. Criteria are standards that the audience values and are therefore used to measure the worth of each alternative (common examples include cost, desirability, durability, efficiency, time it will take to implement, and practicality).
- Describe in detail how you will conduct the research needed to determine the best recommended alternative to your employer
Business Plan – ECN
$42.00Define a business idea, preferably one that you create, that might work as a start-up firm in the United States. Your proposed firm should provide a particular product or service mainly to customers located outside the United States.
Then, using your knowledge from each of the previous modules, explain how your firm could succeed in foreign markets by applying any of the described global strategies. Select a country or countries (or a region) to focus on and explain why that market would be best for your firm. (Remember to discuss institutions.) Provide a detailed assessment of the product or service and of the country or region that will be your selected market.
Finally, describe the specific steps that your firm would take to enter that foreign market. Consider resources, logistics, and competition in this part of your discussion. This is the heart of your paper and should clearly explain the business strategy you plan to use.
Your paper should and include at last seven research articles from peer reviewed journals, in addition to books and other credible sources. You should use professional and academic references only. You may use electronic references, but they must be reputable and verifiable sources.Do not use unverifiable sources such as articles without any responsible author or institution.
Your paper should be 12-15 pages in length, well-written, and properly referenced.
The structure of your paper should be as follows:
- Introduction and Background on the business idea (1-2 pages)
- Description of the product or service that will be provided and why it would be in demand in the given market you’ve chosen (2-3 pages)
- Explanation of the target market—why did you select it, what is the legal, political, and economic environment in that market (2-3 pages)
- Strategic Analysis – walk the reader through your business strategy. What model will you use, why did you choose it, and what will make it successful in this market with this product or service (5-8 pages)
Use Saudi Electronic University academic writing standards and APA style guidelines, citing references as appropriate
P2-6A: Sievert Corporation P13-2A : Lucille Company
$15.00P2-6A: Sievert Corporation
Condensed balance sheet and income statement data for Sievert Corporation are presented here and on the next page.
SIEVERT CORPORATION
Balance Sheets
31-Dec 2012 2011
Assets
Cash 28,000 20,000
Receivables (net) 70,000 62,000
Other current assets 90,000 73,000
Long-term investments 62,000 60,000
Plant and equipment (net) 510,000 470,000
Total assets 760,000 685,000
Liabilities and Stockholders Equity
Current liabilities 75,000 70,000
Long-term debt 80,000 90,000
Common stock 330,000 300,000
Retained earnings 275,000 225,000
Total liabilities and stockholders equity 760,000 685,000
SIEVERT CORPORATION
Income Statements
For the Years Ended December 31
2012 2011
Sales 750,000 680,000
Cost of goods sold 440,000 400,000
Operating expenses (including income taxes) 240,000 220,000
Net income 70,000 60,000
Additional information:
Cash from operating activities 82,000 56,000
Cash used for capital expenditures 45,000 38,000
Dividends paid 20,000 15,000
Average number of shares outstanding 33,000 30,000
Instructions
Compute these values and ratios for 2011 and 2012.
(a) Earnings per share.
(b) Working capital.
(c) Current ratio.
(d) Debt to total assets ratio.
(e) Free cash flow.
(f ) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2011 to 2012 of Sievert Corporation
P13-2A : Lucille Company
The comparative statements of Lucille Company are presented here.
LUCILLE COMPANY
Income Statements
For the Years Ended December 31
2012 2011
Net sales 1,890,540 1,750,500
Cost of goods sold 1,058,540 1,006,000
Gross profit 832,000 744,500
Selling and administrative expenses 500,000 479,000
Income from operations 332,000 265,500
Other expenses and losses
Interest expense 22,000 20,000
Income before income taxes 310,000 245,500
Income tax expense 92,000 73,000
Net income 218,000 172,500
LUCILLE COMPANY
Balance Sheets
31-Dec
2012 2011
Assets
Current assets
Cash 60,100 64,200
Short-term investments 74,000 50,000
Accounts receivable 117,800 102,800
Inventory 126,000 115,500
Total current assets 377,900 332,500
Plant assets (net) 649,000 520,300
Total assets 1,026,900 852,800
Liabilities and Stockholders Equity
Current liabilities
Accounts payable 160,000 145,400
Income taxes payable 43,500 42,000
Total current liabilities 203,500 187,400
Bonds payable 220,000 200,000
Total liabilities 423,500 387,400
Stockholders equity
Common stock ($5 par) 290,000 300,000
Retained earnings 313,400 165,400
Total stockholders equity 603,400 465,400
Total liabilities and stockholders equity 1,026,900 852,800
All sales were on account. Net cash provided by operating activities for 2012 was $220,000.
Capital expenditures were $136,000, and cash dividends were $70,000.
Instruction:
Compute the following ratios for 2012.
(a) Earnings per share.
(b) Return on common stockholders equity.
(c) Return on assets.
(d) Current ratio.
(e) Receivables turnover.
(f ) Average collection period.
(g) Inventory turnover. (n) Free cash flow.
(h) Days in inventory.
(i) Times interest earned.
(j) Asset turnover.
(k) Debt to total assets.
(l) Current cash debt coverage.
(m) Cash debt coverage.
Macroeconomics Assignment Solutions
$30.00Macroeconomics
solve all the questions
Question 9:
An economy is currently in equilibrium and the following figures refer to elements in its national accounts:
Consumption (total) = 60billion
Investment = 5billion
Government expenditure= 8billion
Imports = 10billion
Exports = 7billion
(a) What is the current equilibrium level of GDP? (1 mark
(b) What is the level of injections? (1 mark)
(c) What is the level of withdrawals? (1 mark)
(d) Assuming that tax revenues are $7 billion, what is the value of savings? (1 mark)
(e) If GDP now rises to $80 billion and, as a result, the consumption of domestically produced goods rises to $58 billion, what is the MPCd? (i.e. marginal propensity to consume domestic goods) (2 marks)
(f) What is the value of the multiplier? (2 marks)
(g) Given an initial level of GDP of $80 billion, assume that spending on exports rises by $4 billion, spending on investment rises by $1 billion, while government expenditure falls by $2 billion. By how much will GDP change? (2 marks)
Question 10:
(a) Which of the following are final goods and services and which are intermediate goods and services? Please explain why in your answer. (4 marks – 1 mark each)
(i) A windscreen purchased by a motor vehicle spare parts supplier;
(ii) A new bulldozer to be used by a construction company;
(iii) A household cleaning service purchased by a family from a domestic cleaning service company;
(iv) Coking coal
(b) An economy produces final goods and services with a market value of $800 billion in a given year, but only $750 billion worth of goods and services is sold to domestic or foreign buyers.
Is this nation’s GDP $800 billion or $750 billion? Explain your answer. (2 marks)
(c) Explain why a new truck sold for use by a transport company is a final good, even though it is a fixed investment (capital) used to produce other goods. (2 marks)
Should the value of this truck then be added to GDP or should only the goods it transports be included in GDP? (2 marks)
Question 11:
(10 marks total – 2.5 marks each part)
(a) Illustrate and explain with diagrams the difference between demand-pull and cost-push inflation; (2.5 marks for the diagram and 2.5 marks for the explanation);
(b) Provide (describe) two (2) causes of each type of inflation
(2.5 marks for 2 demand-pull causes and 2.5 marks for 2 cost-push causes)
Question 12:
(a) Do you think that macroeconomic policy should be designed to achieve a measured unemployment rate of zero? Why or why not should this be the case? (5 marks)
(b) How did the classical economists interpret long-run unemployment? (2.5 marks)
(c) How does structural and cyclical unemployment differ and how concerned should policymakers be about these types of unemployment? (2.5 marks)
Question 13:
(2.5 marks each part)
Using the aggregate demand – aggregate supply (AD-AS) diagram, show how the four economic events would affect economic activity and the price level. (Note: use a separate AD-AS diagram for each event)
(a) An improvement in the marketing and selling skills of firm managers;
(b) An increase in personal income tax;
(c) An increase in exports;
(d) A significant destruction in an economy’s capital stock because of war;
Question 14:
(a) The consumer price index (i.e. CPI) is the most commonly used measure of changes in the general level of prices in Australia. Discuss some of the advantages and disadvantages of using this measure. (4 marks)
(b) Explain why some people ‘lose’ from inflation and why do some people ‘win’ from inflation? (6 marks)
Question 15:
Which of the following would cause a growth in the money supply? Answer yes, no, or possibly and explain your answer (i.e. please provide reasons). (2 marks each)
(a) The selling of government securities to banks;
(b) A fall in interest rates;
(c) An increase in government expenditure, financed by borrowing from the banking sector;
(d) The purchase of government securities by the Central Bank from the banking sector;
(e) It is agreed by the Treasurer and the Governor of the Central Bank to
reduce the target rate of inflation
Question 16:
The following are the various elements within a nation’s balance of payments account:
(i) Imports of goods (?)
(ii) Exports of goods (+)
(iii) Imports of services (?)
(iv) Exports of services (+)
(v) Other income outflows (?)
(vi) Other income inflows (+)
(vii) Capital transfers sent overseas from the nation (–)
(viii) Capital transfers to the nation from overseas (+)
(ix) The nation’s investments overseas (?)
(x) Investment in the nation from overseas (+)
(xi) Short-term financial outflows (?)
(xii) Short-term financial inflows (+)
(xiii) Adding to reserves (?)
(xiv) Drawing on reserves (+)
Into which of the above categories would you put the following? (total 10 marks – 1 mark each)
(a) DVD recorders imported into the nation from Japan;
(b) Insurance cover purchased in the nation by overseas residents;
(c) The nation gives overseas aid to a developing country;
(d) A US car company sets up a factory in the nation;
(e) Some of the nation’s residents take a holiday in Bali;
(f) Interest earned by the nation’s residents on overseas assets;
(g) Running down the stock of foreign exchange in the Central Bank of the nation;
(h) Migrants to the nation transferring property to the nation;
(i) New deposits made in banks in the nation by overseas residents;
(j) The nation’s palm oil is sold in the United Kingdom.
