Get college assignment help at uniessay writers MODEL 8: THE CONDOMINIUM PROJECT The Problem A condominium wants to start an annual program of collecting and saving money for a future capital project. A total of ten collections will be made, with the first collection made today. The parameters of the problem are: (1) the project’s cost, if done today, is $100 000, (2) the project will be undertaken and paid for 10 years from today, (3) the cost of the project will grow at an expected inflation rate of 5% per year, (4) interest rate that can be earned by investing the accumulated balance over the years is 8% per year, and (5) the annual collection will be increased once a year at a constant growth rate of 3%. Make all of the above parameters input variables in your model. Create a model that will use the Goal Seek function to calculate the necessary amount of the first annual collection. Create an additional model that will use Excel’s built-in PMT functions to calculate the necessary amount of the first annual collection. The model should use the FV argument of the PMT function. In other words, you will use the future value of an annuity
1. Testing of Key Concepts about Financial Assets Valwation (20s) (1) From the balance sheet model of the firm, what are the questions corporate Finance addresses? (2) What are agency problems, and why do they exist within a corporation? (3) Why are increased growth and size not necessarily equivalent to increased shareholder wealth?
2. Testing of Key Concepts and Skills about Financial Statements and Cash Flow(20S) (1) Klingon Cruisers, Inc., purchased new cloaking machinery three years ago for $18 million. The machinery shows net fixed assets of $15,000,000, current liabilities of $8,500,000, and net working capital of $4,000,000. If all the current assets were cash. What is the book value of Klingon’s assets today? What is the market value? (2) The following table presents the long-term liabilities and stockholders’ equity of Information Control Corp. can be sold to the Romulans today for $10 million. Klingon’s current balance sheet liquidated today, the company would receive $8.5 million one year ago: Long-term debt $80.000.000 Preferred stock20.000,000 Common stock ($1 par yalue) 30,000,000 Capital surplus 60.000,000 Accumulated retained earnings 90.000,000 During the past year, Information Control issued 15 million shares of new stock at a total price of $30 million, and issued $12 million in new long-term debt. The company generated $10 million in net income and paid $6 million in dividends. Construct the current balance sheet reflecting the changes that occurred at Information Control Corp. during the year hatements Analysis (40s)
3. Testing of Key Concepts and Skills about Financial Statements Analysis (40s) (1) Please compute MOOSE TOURS, INC. financial ratios including Current Ratio, Quick Ratio Cash Ratio, Total Debt Ratio, Debt/Equity, Equity Multiplier, Times Interest Earned, Inventory Turnover, Days’ Sales in Inventory, Receivables Turnover, Days’ Sales in Receivables,Total Asset Turnover,Profit Margin, Return on Assets (ROA), Return on Equity (ROE) MOOSE TOURS, INC.2018 Income Statement: $905,000 710,000 12,000 Sales Costs Other expenses $183,000 19,700 Earnings before interest and taxes Interest paid $163,300 57,155 Taxable income Taxes (35%) $106,145 Net income $42,458 63,687 Dividends Addition to retained earnings MOOSE TOURS, INC.Balance Sheet as of December 31, 2018: Liabilities and Owners’ Equity Assets Current assets Current liabilities Cash $25,000 43,000 Accounts payable Notes payable $65,000 9,000 $74,000 $156,000 Accounts receivable Total Inventory 76,000 Long-term debt $144,000 Total Owners’ equity Common stock and paid-in surplus Retained earnings Fixed assets $ 21,000 257,000 $278,000 Net plant and equipment $364,000 Total Total assets $508,000 Total liabilities and owners’ equity $508,000 (2) Thomsen Company has a debt-equity ratio of 1.50. Return on assets is 9.0 percent, and total equity is $550,000. What is the equity multiplier? Return on sales of $3,500, total assets of $1,500, and a debt-equity ratio of 0.8. If its return on equity is 15 equity? Net income? Y3K, Inc., has percent, what is its net income?
4. Testing of Key Concepts and Skills about Discounted Cash Flow Valuation (20s) (1) Compute the future value of $8,000 compounded annually for a.4 years at 6 percent b.8 years at 10 percent c.8 years at 6 percent d. Why is the interest earned in part (c) not twice the amount earned in part (a)? (2) Investment X offers to pay you $4,000 per year for nine years, whereas Investment Y offers to pay you $6,000 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 22 percent?
41. Assume and index model. The variance of returns for a risky asset is 0.25. The variance of the error term is 0.08. What portion of the total risk of the asset, as measured by variance, is systematic? 32% a. b, 8% 68% c. d. 25% 75% e.
Please type your answer And show your work 6. Chelsea, inc. expects to earn additional sales revenue of $200,000 next year from their new plant. The revenue is expected to grow by 10 % a year for the next 5 years. Their cost of operations is expected to be $80,000 next year and grow at 7% per year. They will depreciate the plant just bought costing $300,000 on a straight line basis over the 5 years. Chelsea pays 35% corporate tax rate. What is their operating cash flow in year 2 and 3 for the purpose of estimating free cash flow
(2) The following table presents the long-term liabilities and stockholders’ equity of Information Control Corp. one year ago: Long-term debt $80.000.000 Preferred stock 20,000,000 Common stock ($1 par value) 30,000,000 Capital surplus 60.000.000 Accumulated retained earnings 90,000,000 During the past year, Information Control issued 15 million shares of new stock at a total price of $30 million, and issued $12 million in new long-term debt. The company generated $10 million in net income and paid $6 million in dividends. Construct the current balance sheet reflecting the changes that occurred at Information Control Corp. during the year Analysis (40s)
(2) Investment X offers to pay you $4,000 per year for nine years, whereas Investment Y offers to pay you $6,000 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 22 percent?
Suppose that country B’s consumption function is given consumption expenditures per year and Y is the annual income. Assuming this is a linear consumption function. Consumers pay a 5% sales tax for all consumption as C $5000.00 0.8Y, where C is Use the information given on page 3 to complete the table given below Income(S) (7 Marks) (i) Tax (S) Average Tax Rate Marginal Tax Rate Consumption(S) 0 10,000 20,000 30,000 40,000 50,000 60,000 (ii) (iii What type of tax system is represented in the above table? Suppose that we table given (1 Mark) exempt the first $3,000 of consumption from taxation. Complete the (7 Marks) Tax (S) Average Tax Rate Income(S) Consumption (S) Marginal Tax Rate 0 10,000 20,000 30,000 40,000 50,000 60,000
Get college assignment help at uniessay writers (2) Thomsen Company has a debt-equity ratio of 1.50. Return on assets is 9.0 percent, and total equity is $550,000. What is the equity multiplier? Return on sales of $3,500, total assets of $1,500, and a debt-equity ratio of 0.8. If its return on equity? Net income? Y3K, Inc., has equity is 15 percent, what is its net income?
What is reinvestment rate risk? Which has more reinvestment rate H. risk, a 1-year bond or a 10-year bond? ment must be made. How does the equation for valuing a bond change if semiannual I. payments are made? Find the value of a 10-year, semiannual payment, 10% coupon bond if nominal ra = 13%. Suppose for $1,000 you could buy a 10%, 10-year, annual payment J. bond or a 10%, 10-year, semiannual payment bond. They are equally risky. Which would you prefer? If $1,000 is the proper price for the semiannual bond, what is the equilibrium price for the annual payment bond?
К. Suppose a 10-year, 10%, semiannual coupon bond with a par value of $1,000 is currently selling for $1,135.90, producing a nominal yield to maturity of 8%. However, it can be called after 4 years for $1,050. (1) What is the bond’s nominal yield to call (YTC)? К. (2) If you bought this bond, would you be more likely to earn the YTM or the YTC? Why?
26. The solution of the following constrained minimization problem [min x2 subject to x 2 0] is suboptimal (ie. larger) than the following unconstrained minimization problem [min x2 (TRUE/FALSE)
Einstein Games Inc. case Einstein Games, Inc. sells a variety of fun and educational family games. Management learned that the preholiday season is the best time to introduce a new game, because many families use this time to look for new ideas for December holiday gifts and activities. When Einstein discovers a new game with good market potential, it chooses an October market entry date In order to get games into its stores by October, Einstein places one-time orders with its manufacturers in June or July of each year. Demand for family games can be highly volatile. If a new game catches on, a sense of shortage in the marketplace often increases the demand to high levels and large profits can be realized. However, new games can also flop, leaving Einstein stuck with high levels of inventory that must be sold at reduced prices. The most important question the company faces is deciding how many units of a new game should be purchased to meet anticipated sales demand. If too few are purchased, sales will be lost; if too many are purchased, profits will be reduced because of low prices realized in clearance sales. For the coming season, Einstein plans to introduce a new product called GiggleBloxx. This is a stacking game made by a company in Texas. Children and parents alike will not be able to stop laughing. Consumer tests with the product show that families prefer GiggleBloxx to Jenga and SuspendO. Families often want to try out the new rave game during the holidays. As with other products, Einstein faces the decision of how many GiggleBloxx units to order for the coming holiday season. Members of the management team suggested order quantities of 25,000, 36,000, 48,000, or 65,000 units. The wide range of order quantities suggested indicates considerable disagreement concerning the market potential. The product management team asks you for an analysis of the stock-out probabilities for various order quantities, an estimate of the profit potential, and help with making an order quantity recommendation. Einstein expects to sell GiggleBloxx for $14 based on a cost of $5 per unit. If inventory remains after the holiday season, Einstein will sell all surplus inventory for $3 per unit. After reviewing the sales history of similar products, Einstein’s senior sales forecaster predicted an expected demand of 50,000 units with a .95 probability that demand would be between 30,000 units and 70,000 units. Managerial Report Prepare a managerial report that addresses the following issues and recommends an order quantity for the GiggleBloxx product. 1. Use the sales forecaster’s prediction to describe a normal probability distribution that can be used to approximate the demand distribution. Sketch the distribution and show its mean and standard deviation. 2. Compute the probability of a stock-out for the order quantities suggested by members of the management team. 3. Compute the projected profit for the order quantities suggested by the management team under three scenarios: worst case in which sales 30,000 units, most likely case in which sales = 50,000 units, and best case in which sales = 70,000 units. 4 One of Einstein’s managers felt that the profit potential was so great that the order quantity should have a 75% chance of meeting demand and only a 25% chance of any stock-outs. What quantity would be ordered under this policy, and what is the projected profit under the three sales scenarios? 5. Provide your own recommendation for an order quantity and note the associated profit projections. Provide a rationale for your recommendation
Consider the accompanying cash flow diagram. Compute the equivalent annual worth at i= 10% $5,000 $6,000 $4,000 $3,000 0 1 2 3 4 5 6 Years $3,000 Click the icon to view the interest factors for discrete compounding when i= 10% per year et
What will be displayed when the following lines are executed? Dim x As Double = 3, y As Double = 1 Dim z As Double z = x (y * x) x = y z = x z lstBox.Items.Add(x y z)
MODEL 2: CONSTANT ANNUITIES The Problem You are planning to save $1000 annually for the next 10 years and invest the money in a mutual fund earning 8 % per year interest income on it. Calculate the present value of this annuity and how much money you will have 10 years from now if you make the first investment today and make a total of 10 contributions. Also show how the present value and the future value will differ if you make the first investment a year from now. Make the annual saving amount, number of contributions, and the interest rates input variables. Build the model to do the calculations in three different ways: using year-by-year cash flows and no Excel function for discounting or compounding, using formulas we derived earlier, and using Excel’s built-in annuity functions. 22
MODEL 3: GROWING ANNUITIES The Problem You are planning to save for your retirement in annual instalments and you think that every year you will be able to save 4% more than the previous year because your income will grow as well. You will invest the money in a mutual fund earning 8% per year interest income. You plan to start by investing $1000 now and the future contributions will grow as mentioned. How much money will you accumulate at the end of 20 years? How would the money you accumulate change if, a year from now, you make your first contributions of $1000 plus the annual contribution growth rate (4%)? In both cases, you will make a total of 10 contributions and you want to calculate the future value of your savings 10 years from today. Make all the important variables of the problem input varíables. Use the model to determine how much the initial contributions will have to be in the two cases if you want to accumulate $100 000 in 20 years. 23
FINSAN Inc. 2012 2013 2014 2015 ASSETS Cash 21 17 31 8 Accounts receivable, net 248 375 460 1.158 273 388 19 475 795 15 Inventory 12 13 Other Current Assets 1.976 Current Assets 799 978 745 555 1.028 535 655 Fixed assets 267 305 213 168 Less: Accumulated depreciation 478 367 723 442 Net fixed assets 15 18 13 Intangible Fixed Asset 6 45 21 12 Prepaid Expenses 3 Other Assets 783 Non-Current Assets 471 517 395 950 2.759 1.270 1.495 Total Assets LIABILITIES 50 33 Long-Term Loan Installments 43 58 640 188 318 Short Term Bank Loans 298 258 Accounts Payable 98 258 138 243 Taxes Payable Accrued Expenses 315 155 23 43 45 90 31 Deferred Tax Other Current Liabilities 1.574 677 363 694 Total Current Liabilities 352 380 310 493 Long Term Liabilities 1,004 2.067 732 20 1.040 20 Total Liabilities 20 20 Paid-in Capital 672 198 210 471 Retained Earnings 491 692 218 230 Total Shareholders’ Equity Total Liabilities and Shs’ Equity 950 2.759 1.270 1.495 2014 2015 2012 2013 2011 2.855 5.373 6.655 2.188 2.128 Net Sales 5.487 2.560 4.369 1.689 1.682 Cost of Goods Sold 22 26 37 31 19 Depr. Cost of Goods Sold- 295 1.004 1.168 499 446 Gross Margin 271 462 646 395 374 Selling and adm. expenses De preclotion Operating Income 13 8 12 6 522 72 24 542 104 60 58 73 38 55 Interest 8 8 5 20 3 Other Income -28 489 457 69 37 Income before income taxes 228 213 244 40 23 8 Income taxes 12 261 46 29 Net profit 湖一 2035
MODEL 6:LOAN AMOTIZATION TABLE FOR CHANGING INTEREST RATE The Problem Create a model to produce an amortization table for a variable rate loan for which the interest rate can change in two steps over its life, that is, the loan life is broken down into three interest rate periods with different interest rates specified for the three periods. The loan is to be repaid in equal annual instalments over its life and the first payment is to be made at the end of the first year. The user will provide the lengths of the three interest rate periods (in years) and the interest rates for each of them. The model will have to calculate the appropriate equal annual payment.
The post Question: MODEL 8: THE CONDOMINIUM PROJECT The Problem A Condominium Wants To Start An Annual Program Of Collecting And Saving Money For A Future Capital Project. A Total Of Ten Collections Will Be Made, With The First Collection Made Today. The Parameters Of The Problem Are: (1) The Project’s Cost, If Done Today, Is $100 000, (2) The Project Will Be Undertaken … appeared first on uniessay writers.