Question: Kolman Kampers has a production cycle of

> Astro Investment Bank has the following bond deals under way: Determine the net proceeds of each bond and the cost of the bonds for each company in terms of yield. The bond yield in the table is the market yield before the commission is charged. Assume t

> In Problem 7, Loan A and Loan D borrow the same amount each year. However, Loan A borrows every month, and Loan D borrows every other month (note that the borrowing for Loan D for January equals the borrowing for Loan A for January and February). If As W

> As We Go Bank offers its customers a line of credit loan in which each month’s outstanding balance requires a 12% (APR). What are the monthly interest payments required on the following loans and total interest paid for the year on thes

> Right Bank offers EAR loans of 9.38% and requires a monthly payment on all loans. What is the APR for these monthly loans? What is the monthly payment for (a) a loan of $200,000 for six years, (b) a loan of $450,000 for twelve years, or (c) a loan of

> Left Bank has a standing rate of 8% (APR) for all bank loans, and requires monthly payments. What is a monthly payment if a loan is for (a) $100,000 for five years, (b) $250,000 for ten years, or (c) $1,000,000 for 25 years? What is the effective annu

> Criss-Cross has decided that it will need to raise more than $3,000,000 in commercial paper (see Problem 17). Criss-Cross must now raise $5,000,000, and the paper will have a maturity of 182 days. If this paper has a maturity value of $50,000 and is sell

> Criss-Cross Manufacturers will issue commercial paper for a short-term cash inflow. The paper is for 91 days, has a face value of $50,000, and is anticipated to sell at 96% of par value. Criss-Cross wants to raise $3,000,000, so what is the cost of this

> 1. The following is a partial list of comments made by staffers at the meeting. To help Frank make a decision, identify the dividend policy or theory they reflect and comment on the usefulness of each. a. “What difference does it make if we pay dividends

> Use the same information from Problem 15. What if the auction bids total only 2,640,000 shares, as follows: Bidder Quantity Bid  XYZ Pension Fund 1,200,000  Clark Kent Investors 500,000  Central City Insurance 400,000  Arthur Curry 300,000

> Bruce Wayne is going public with his new business. Berkman Investment Bank will be his banker and is doing a best-efforts sale with a 4% commission fee. Wayne has been authorized 5,000,000 shares for this issue. He plans on keeping 1,000,000 shares for h

> Using the information in Problem 13, what is the break-even sales percentage for Lunar Vacations? What are the proceeds to Lunar Vacations and Astro Investment Bankers at the break-even sales percentage?

> Astro Investment Bankers offers Lunar Vacations the following options on its initial public sale of equity: (a) a best-efforts arrangement whereby Astro will keep 2.5% of the retail sales or (b) a firm-commitment arrangement of $10,000,000. Lunar plans

> Rawlings needs to raise $40,000,000 for its new manufacturing plant in Jamaica. Berkman Investment Bank will sell the bond for a commission of 2.5%. The market is currently yielding 7.5% on twenty-year zero-coupon bonds. If Rawlings wants to issue a zero

> Berkman Investment Bank has the following bond deals under way: Determine the net proceeds of each bond and the cost of the bonds for each company in terms of yield. The bond yield in the table is the market yield before the commission is charged. Assume

> Lunar Vacations needs to raise $6,000,000 for its new project (a golf course on the moon). Astro Investment Bank will sell the bond for a commission of 2.5%. The market is currently yielding 7.5% on twenty-year semiannual bonds. If Lunar wants to issue a

> Blue Angel Investors has a success ratio of 10% with its venture funding. Blue Angel requires a rate of return of 20% for its portfolio of lending, and the average length on its loan is five years. If you were to apply to Blue Angel for a $100,000 loan,

> Calculate the current ratio, quick ratio, and cash ratio for Tyler Toys for 2013 and 2014. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the shareholders? Tyler Toys, Inc. Income Statement for Y

> Prepare common-size income statements for Wal-Mart and Starbucks using the January 2014 information for Walmart and your new pro forma September 2013 information for Starbucks provided in Problems 5 and 6. Which company is doing a better job of getting s

> 1. Why should GESS expect to pay a higher rate of interest if it borrows $4,000,000 rather than $2,000,000? 2. Estimate earnings per share for Plan A and Plan B at EBIT levels of $800,000, $1,000,000 and $1,200,000. 3. How do taxes impact your findings i

> Below are abbreviated income statements for Starbucks. The year ending September 30, 2013, included a large nonrecurring loss of $2,784 (million). Redo the 2013 income statement removing this nonrecurring loss from the SG&A + Other category and recal

> Below is an abbreviated income statement for Wal-Mart. Predict the net income for the period ending January 31, 2015, by determining the growth rates of sales, COGS, SG&A, and interest expense. Use a tax rate of 37%. Walmart Inc. Abbreviated Inco

> Construct the Barron Pizza Inc. balance sheet statement for December 31, 2015, with the following information: Retained earnings: …………………………………………………........ $43,743 Accounts payable: ………...………...………...………...………......... $74,633 Accounts receivable: ………

> Fill in the missing information on the annual Balance Sheets Statements for Barron Pizza Inc.

> Construct the Barron Pizza Inc. income statement for the year ending 2015 with the following information: Shares outstanding: ………...………...………...……...………...………... 16,740,000 Tax rate: ………...………...………...………...………...………...………...………...37.5% Interest expense:

> Go to a Web site such as Yahoo.com and find the financial statements of General Motors (GM) and Ford Motor Company (F). Compare these two companies using the following financial ratios: times interest earned, current ratio, asset turnover, financial leve

> Go to a Web site such as Yahoo.com and find the financial statements of Disney (DIS) and McDonald’s (MCD). Compare these two companies using the following financial ratios: times interest earned, current ratio, asset turnover, financial leverage, profit

> Go to a Web site such as Yahoo.com and find the sales, net income, total assets, and total equity of the following five actively traded companies: Microsoft (MSFT), Boeing (BA),Wal-Mart (WMT), Procter and Gamble (PG), and Waste Management (WMI). Use the

> For the following firms, find the return on equity using the three components of the DuPont identity: operating efficiency, as measured by the profit margin (net income/sales); asset management efficiency, as measured by asset turnover (sales/total asset

> Calculate the profit margin, return on assets, and return on equity for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the shareholders? Tyler Toys, Inc. Income Sta

> 1.The 1-year Treasury bill rates for 2002 through 2006 are given below: Year   2002 2.00%  2003 1.24%  2004 1.89%  2005 3.62%  2006 4.94%   How much interest did MR Venture Capital receive each year? What was the average interest rate

> Calculate the inventory turnover, days’ sales in inventory, receivables turnover, days’ sales in receivables, and total asset turnover ratios for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change i

> Calculate the debt ratio, times interest earned ratio, and cash coverage ratio for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the shareholders? Tyler Toys, Inc.

> Fill in the missing numbers on the following annual income statements for Barron Pizza Inc.

> Myers and Associates, a famous law office in California, bills it clients on the first of each month. Clients pay in the following fashion: 40% pay at the end of the first month, 30% pay at the end of the second month, 20% pay at the end of the third mon

> Rian Company had a target of fifteen days for its payment (accounts payable) cycle. What would the ending balance in the accounts payable account need to be to reach this target (holding all other accounts the same)? 2014 Selected Income Statement I

> Calculate Rian Company’s average accounts payable cycle. 2014 Selected Income Statement Items for Rian Company Cash Sales ………... $298,000 Credit Sales ………... $672,000 Total Sales ……&hell

> Rian Company had a target of twenty days for the collection cycle for the year 2014. If total sales had remained at $970,000, how much of the sales revenue would have needed to be cash sales for the company to meet the collection goal? 2014 Selected I

> What is the average collection cycle for Rian Company? 2014 Selected Income Statement Items for Rian Company Cash Sales ………... $298,000 Credit Sales ……… $672,000 Total Sales ………... $970

> Find the average production cycle for Rian Company. 2014 Selected Income Statement Items for Rian Company Cash Sales ………... $298,000 Credit Sales ……… $672,000 Total Sales ………... $970,00

> Stewart and Company currently has a production cycle of forty days, a collection cycle of twenty days, and a payment cycle of fifteen days. What are Stewart’s current business operating cycle and cash conversion cycle? If Stewart and Company wants to red

> 1. Cranston’s Common Size Income Statements and Balance Sheets for 2013 and 2012 are given below. Prepare common size statements for 2014. 2. Complete the 2014 table of financial ratios for Cranston. 3. Use the common size statements and the ratio analys

> Working capital investment is 25% of the anticipated first year sales for Wally’s Waffle House. The first-year sales are currently projected at $4,300,000. The incremental cash flow (not including working capital investment) is Initial cash flow = $13,7

> Farbuck’s Tea Shops is thinking about opening another tea shop. The incremental cash flow for the first five years is as follows: Initial capital cost = $3,500,000 Operating cash flow for each year = $1,000,000 Recovery of capital assets after five year

> It turns out that the marketing manager in Problem 15 has underestimated the zen-zen market. The zen-zens are a smash, and current estimates are that the company will sell 8 million of them per year. Should the inventory manager simply double the EOQ ord

> Tinnendo Inc. believes it will sell 4 million zen-zens, an electronic game, this coming year (note that this figure is for annual sales). The inventory manager plans to order zen-zens forty times over the next year. The carrying cost is $0.03 per zen-zen

> As manager of Fly-by-Night Airlines, you decide to allow customers 90 days to pay their bills. To encourage early payment, though, you allow them to reduce their bills by 1.5% if paid within the first 30 days. At what implied effective annual interest ra

> Screendoor Inc. is a credit-screening consulting firm. Screendoor advises Tennindo Inc. (from Problem 11) that it can offer a credit-screening device that is 90% accurate and costs $5.00 per customer to apply. Using the data in Problem 11, determine whet

> Tennindo Inc. is starting up its new, cost-efficient gaming system console, the yuu. Tennindo currently has 4,000 cash-paying customers and makes a profit of $60 per unit. Tennindo wants to expand its customer base by allowing customers to buy on credit.

> Myers and Associates (from Problem 9) has hired a new accountant, who promises to increase the speed of payment by clients. The new collection times will be 60% at the end of the first month, 25% at the end of the second month, and 10% at the end of the

> Given the income statement below for National Beverage Company for 2013, and the sales forecast from Problem 1, prepare a pro forma income statement for 2014. National Beverage Company Income Statement for 2013

> 1. Determine Cranston’s average production cycles for 2013 and 2014. 2. Determine Cranston’s average collection cycles for 2013 and 2014. Assume that all sales are credit sales. 3. Determine Cranston’s average payment cycles for 2013 and 2014. 4. Using y

> California Cement Company anticipates the following fourth-quarter sales for 2014: $1,800,000 (October), $1,600,000 (November), and $2,100,000 (December). It posted the following sales figures for the third quarter of 2014: $1,900,000 (July), $2,050,000

> National Beverage Company anticipates the following first-quarter sales for 2015: $1,800,000 (January), $1,600,000 (February), and $2,100,000 (March). It posted the following sales figures for the last quarter of 2014: $1,900,000 (October), $2,050,000 (N

> What is an economic order quantity? What cost does it attempt to minimize?

> For the prior three years, sales for California Cement Company have been $20,011,000 (2011), $21,167,000 (2012), and $22,923,000 (2013). CCC uses the prior two year’s average growth rate (i.e. the geometric mean) to predict the coming year’s sales. What

> In a pro forma income statement, why would a finance manager make changes in the prior year’s percentages for different line items? Give an example of a line item that you would expect to vary in percentage every year as sales forecasts grow.

> How can a company “encourage” its slow-paying customers to pay their outstanding bills?

> Why can excess cash be an opportunity cost for a company?

> What is the difference between a secured and an unsecured loan?

> Why should a company attempt to speed up its receivables and slow down its payables?

> Why should a company be concerned about a change in future exchange rates if it has already delivered and sold product in a foreign country?

> Why are currency exchange rates constantly changing over time?

> What are some of the production costs that are tied to the sales forecast?

> Is it better to calculate the net present value of a foreign project in the foreign currency or in the domestic currency?

> Does a stock split provide an increase in wealth for a shareholder? If yes how? If no why not?

> California Cement Company Balance Sheet for the Year Ending 2013 Current Assets Cash ………………………………… $1,447,000 Marketable Securities …………... 1,129,00

> Explain why we use the term ex-date when pricing a stock that has a declared dividend.

> When you agree to buy a stock on the NYSE or NASDAQ how much time after the agreed-upon sale do you have to provide the necessary funds for the purchase? What is the name given to the actual delivery of funds and stocks for exchange?

> In what way is the decision on capital structure related to the company’s expected earnings?

> How do we measure the advantage of financial leverage to the company’s owners?

> In the static theory of capital structure, what is static?

> What is the difference between the return to an investor or lender and the cost to the borrower?

> What is the role of an investment bank in selling bonds?

> What is a letter of credit or line of credit? How does it work?

> What are two key timing issues with respect to predicting cash inflow for a sales forecast?

> According to the U.S. Census Bureau’s Business Information Tracking System, what is the failure rate of companies over the first six years?

> National Beverage Company Balance Sheet for the Year Ending 2013 Current Assets Cash …………………….……………………... $2,440,000 Marketable Securities ……………………...1,656,000 Accounts Receivable ……………………... 2,704,000 Inventories ……………………...…………… 1,641,000 Total Cu

> What are the five stages of a business life cycle? Do all companies go through all five stages?

> What are the three components of the DuPont identity? What do they analyze?

> What are asset management ratios? For retail firms, what is one of the key management ratios? Why?

> What does restating financial statements into common-size financial statements allow a finance manager or financial analyst to do?

> What does analyzing companies over time tell a finance manager?

> When might it be detrimental to a company to have too many items in inventory? When might it be detrimental to have too few?

> Why is it often a good practice to simply write off a bad debt rather than pursue payment from a credit customer?

> Why is it necessary to consider changes to working capital accounts as part of the capital budgeting decision?

> Why are cash management and cash budgeting important to a company’s survival?

> What is the accounting identity?

> Runway Fashions Inc. is considering the following potential projects for the company but has only $1,000,000 in the capital budget. Which projects should it choose? Project Cost NPV IRR Winter coats $750,000 $95,000 13% Spring dresses $500,000 $45,00

> Get Real Inc. has announced that it will buy back 3,000,000 of its 27,000,000 shares over the next year. If the stock is selling for $15.30, what is the equivalent cash dividend that the company could pay? If you owned 500 shares of stock, how many would

> Sea Crest Corporation, which is an all-equity firm has an annual EBIT of $2,540,000, and a WACC of 15%. The current tax rate is 35%. Sea Crest Corp. will have the same EBIT forever. If the company sells debt worth $3,250,000 with a cost of debt of 10%, w

> The Always- Stocked Party Store wants to stay true to its name, especially since the “Out-to-Get-You” Party store is opening up very close by. One of their main sellers, the Mega-Keg, costs $2 to stock and accounts for sales of 3600 kegs per year. Each o

> You plan on traveling to South Korea and China on a business trip. You will first stop in Korea, where the current direct exchange rate is $1: 1243.78SK Won. You will next stop in China, where the current direct exchange rate is $1: Yuan 6.83013. As you

> R.K. Boats Inc. is in the process of making some major investments for growth and is interested in calculating their cost of equity so as to be able to correctly estimate their adjusted WACC. The firm’s common stock is currently trading for $43.25 and th

> You have been assigned the task of estimating the after-tax cost of debt for a firm as part of the process in determining the firm’s cost of capital. After doing some checking, you find out that the firm’s original 20-year 9.5% coupon bonds (paid semi-an

> Your company has posted you on an eighteen-month overseas assignment in Budapest, Hungary. You will be living on the Buda side of the river, but will be spending much of your time on the Pest side. The current indirect rate for the Hungarian forint is 18

> You plan on traveling to Japan and China on a business trip. You will first stop in Japan, where the current direct exchange rate is 0.0092. You will next stop in China, where the current direct exchange rate is 0.1285. As you leave Japan, you have ¥980,

> You are taking a trip to six European countries. It is a ten-day trip, and you are taking $3,500. The current direct conversion rate is 1.2150 for euros. While in Europe, you spend € 2638.30. You convert your remaining euros back to U.S. dollars upon you

> While traveling in various countries, you occasionally resort to U.S. food. You pay the following prices for a Big Mac: India – 210 rupee Kuwait – 1.39 dinar Sweden – 34.90 krona Ukraine – 133 rubles If the price of a Big Mac is $4.59 in the United State

> Country Farmlands, Incorporated is considering the following potential projects for this coming year, but has only $200,000 for these projects: Project A: Cost $60,000, NPV $4,000, and IRR 11% Project B: Cost $78,000, NPV $6,000, and IRR 12% Project C: C

> International Products has contracted for 5,000 winter hats from Russia. The contract price is 1,375 rubles per hat. The current direct exchange rate is 0.03562. The expected inflation rate for the next nine months is 5% in the United States and 2% in Ru