FIN 571 Assignment Calculate Project Cash Flow, NPV, IRR, payback methods FOR MORE CLASSES VISIT
The purpose of this assignment is to allow the student to calculate the project cash flow using net present value (NPV), internal rate of return (IRR), and the payback methods. Assignment Steps Resources: Corporate Finance Create a 350-word memo to management including the following: • Describe the use of internal rate of return (IRR), net present value (NPV), and the payback method in evaluating project cash flows. • Describe the advantages and disadvantages of each method. Calculate the following time value of money problems: 1. If you want to accumulate $500,000 in 20 years, how much do you need to deposit today that pays an interest rate of 15%? 2. What is the future value if you plan to invest $200,000 for 5 years and the interest rate is 5%? 3. What is the interest rate for an initial investment of $100,000 to grow to $300,000 in 10 years? 4. If your company purchases an annuity that will pay $50,000/year for 10 years at a 11% discount rate, what is the value of the annuity on the purchase date if the first annuity payment is made on the date of purchase? 5. What is the rate of return required to accumulate $400,000 if you invest $10,000 per year for 20 years. Assume all payments are made at the end of the period. Calculate the project cash flow generated for Project A and Project B using the NPV method. • Which project would you select, and why? • Which project would you select under the payback method? The discount rate is 10% for both projects. • Use Microsoft®Excel®to prepare your answer. • Note that a similar problem is in the textbook in Section 5.1. Sample Template for Project A and Project B: Show all work. Submit the memo and all calculations =============================================
FIN 571 Assignment Capital Market Efficiency Paper
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Purpose of Assignment The purpose of this assignment is to allow the student an opportunity to explain what it means to have an efficient capital market. Students will gain an understanding of the different levels of market efficiency and how behavioral finance can inhibit reaching market transparency. Assignment Steps Resources: Microsoft® Word Explain in 525 words what it means to have efficient capital market, including: • Describe the behavioral challenges in achieving efficiency. • Discuss the three forms of market efficiency. • What are the implications to corporate finance? • Would you consider the real estate market an efficient capital market? Please explain why or why not.
========================================== FIN 571 Assignment Effect of Debt Issuance on Stock Valuation FOR MORE CLASSES VISIT
Purpose of Assignment The purpose of this assignment is to demonstrate to students how the issuance of debt to purchase outstanding common stock could affect the value of the company's equity and redefine the capital structure. The problem will also allow students to explore the effect of corporate taxes through debt financing. Assignment Steps Resources:Corporate Finance Scenario: Hightower, Inc. plans to announce it will issue $2.0 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a coupon rate of 5%. Hightower, Inc. is
currently an all-equity company worth $7.5 million with 400,000 shares of common stock outstanding. After the sale of the bonds, the company will maintain the new capital structure indefinitely. The company currently generates annual pretax earnings of $1.5 million. This level of earnings is expected to remain constant in perpetuity. The tax rate is 35%. Prepare a 1,050-word memo advising the management of Hightower, Inc. on the financial impact, including the following: • What is the expected return on the company's equity before the announcement of the debt issue? • Construct the company's market value balance sheet before the announcement of the debt issue. What is the price per share of the firm's equity? • Construct the company's market value balance sheet immediately after the announcement of the debt issue. • What is the company's stock price per share immediately after the repurchase announcement? • How many shares will the company repurchase as a result of the debt issue? How many shares of common stock will remain after the repurchase? • What is the required return on the company's equity after the restructuring? • Discuss the advantages and disadvantages of debt financing over equity financing.
========================================== FIN 571 Assignment Rate of Return for Stocks and Bonds FOR MORE CLASSES VISIT
The purpose of this assignment is to allow the student an opportunity to calculate the rate of return of equity and debt instruments. It allows the student to understand the effects of dividends; capital gains; inflation rates; and how the nominal rate of return affects valuation and pricing. The assignment also allows the student to apply concepts related to CAPM, WACC, and Flotation Costs to understand the influence of debt and equity on the company's capital structure. Assignment Steps Resources: Corporate Finance Calculate the following problems and provide an overall summary of how
companies make financial decisions in no more than 700 words, based on your answers: 1. 1) Stock Valuation: A stock has an initial price of $100 per share, paid a dividend of $2.00 per share during the year, and had an ending share price of $125. Compute the percentage total return, capital gains yield, and dividend yield. 2. 3. 2) Total Return: You bought a share of 4% preferred stock for $100 last year. The market price for your stock is now $120. What was your total return for last year? 4. 5. 3) CAPM: A stock has a beta of 1.20, the expected market rate of return is 12%, and a risk-free rate of 5 percent. What is the expected rate of return of the stock? 6. 7. 4) WACC: The Corporation has a targeted capital structure of 80% common stock and 20% debt. The cost of equity is 12% and the cost of debt is 7%. The tax rate is 30%. What is the company's weighted average cost of capital (WACC)? 8. 9. 5) Flotation Costs: Medina Corp. has a debt-equity ratio of .75. The company is considering a new plant that will cost $125 million to build. When the company issues new equity, it incurs a flotation cost of 10%. The flotation cost on new debt is 4%. What is the initial cost of the plant if the company raises all equity externally? 10. Secondly: he purpose of this assignment is to allow the student an opportunity to explain what it means to have an efficient capital market. Students will gain an understanding of the different levels of market efficiency and how behavioral finance can inhibit reaching market transparency. Assignment Steps Resources: Microsoft® Word Explain in 525 words what it means to have efficient capital market, including: • Describe the behavioral challenges in achieving efficiency. • Discuss the three forms of market efficiency. • What are the implications to corporate finance? • Would you consider the real estate market an efficient capital market? Please explain why or why not.
========================================== FIN 571 Assignment Select Fortune 500 Company FOR MORE CLASSES VISIT
Assignment Steps Resources: Yahoo Finance Select a Fortune 500 Company from one of the following industries: • Pharmaceutical • Energy • Retail • Automotive • Computer Hardware • Manufacturing • Mining Access Yahoo Finance and enter the company name. Review the financial information and statistics provided for the stock you selected and answer the following: • What is the ticker symbol of the company you chose? • What is the Current Stock Price? • What is the Market Cap for the stock you chose? • What is the Price to Earnings Ratio? • What is the Dividend and Yield? • What is the Enterprise Value? • What is the Beta? • Was there a Stock Split, and if so, when? • What was the closing stock price for the last 5 days? • What was the 52 Week High for this stock? • What is the Book Value per Share? • What type of rating are analysts recommending (i.e. buy, hold, etc.)? • What is the target price analysts are predicting for this stock? • What is the analyst's average revenue estimate for next year? • What are some of the significant news items and press releases made by the company over the last year? Explain in 700 words why you would or would not recommend investing in this stock. • Describe the relationship between the value of the stock and the price to earnings ratio. • What information does the Market Capitalization (Market Cap) and Beta provide to the investor?
========================================== FIN 571 Assignment start-up company Signature Assignment (score 80%) FOR MORE CLASSES VISIT
About Your Signature Assignment: This signature assignment is designed to align with specific program student learning outcome(s)
in your program. Program Student Learning Outcomes are broad statements that describe what students should know and be able to do upon completion of their degree. The signature assignments may be graded with an automated rubric that allows the University to collect data that can be aggregated across a location or college/school and used for program improvements. Purpose of Assignment: The purpose of this assignment is to allow the student an opportunity to apply their understanding of cash flow management, break-even analysis, and short-term and long-term financing in starting and growing a business. The assignment will be presented to the class giving the real world scenario of presenting a proposal to investors. Resources: OECD Database, Corporate Finance Prepare a 15-slide PowerPointÂŽ content presentation with speaker notes requesting initial funding of $500,000 to start and run a start-up company. The proposed start-up company could be an existing business model (coffee shop, pet store, etc.) or could be something entirely new and exciting. Create the presentation in the following format, with at least one slide to cover each of the following areas: 1. Title Page 2. Table of Contents 3. Executive Summary 4. Information about the Industry 5. Marketing Plan 6. Competitor Analysis 7. 3 Year Income Statement (Profit & Loss) Projections 8. Include your assumptions for why and how you will achieve your sales growth and what significant expenses and investments you expect to incur to achieve your revenue goals. Assumptions: Sales Growth, Significant Expenses and Investments 9. 3 Year Proposed Funding Schedule (Sources and uses of the funds received.) 10. Break-Even Analysis Review the following scenarios and assumption, and explain how it impacts your decision to expand: Each should have its own slide just as above; 11. After Year 3, the investors are interested in your company expanding internationally to possibly outsource labor or to reduce manufacturing costs. What countries would you expand to first, and why? What factors would you need to consider in making this decision? Global Expansion: Labor/Mfg. Costs. Country? 12. What is the corporate tax rate in the countries you are considering expanding your business to, and how will that affect your decision to expand globally? (Use OECD Database or another resource to determine the corporate tax rate). 13. The investors want to see a decision tree detailing the decisions you
would make if you received $300K now and $200K at the end of three years instead of $500K up front. 14. The investors would like your team to provide advantages and disadvantages of using debt financing versus selling company stock to raise capital for growth. 15. Briefly explain the venture capital process. Does it make sense for your company to raise funds through venture capital? 16. Academic and Business References 17. Feedback Format your presentation consistent with APA guidelines. You must present this assignment in class to earn full credit. Students who do not present will have a 50% reduction in grade. Click the Assignment Files tab to submit your assignment.
========================================== FIN 571 Final Exam Guide (3 Set with Excel File)
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This Tutorial also contains 2 other sets This tutorial contains 3 set of final along with excel file which can be used to solve question in case value changes 1.Which one of the following parties is considered a stakeholder of a firm? 2.The process of planning and managing a firm's long-term assets is called: 3. Which one of the following actions by a financial manager creates an agency problem? 4. Which one of these is a cash outflow from a corporation? 5. For each of the following, compute the present value (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.): 6. Gerold invested $115 in an account that pays 5 percent simple interest. How much money will he have at the end of 5 years?
that the discount rate is 16 percent and the tax rate is 34 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 44. Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.64 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which it will be worthless. The project is estimated to generate $2,060,000 in annual sales, with costs of $755,000. The tax rate is 35 percent and the required return is 13 percent. What is the project’s NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 45. What is the net present value of a project with an initial cost of $36,900 and cash inflows of $13,400, $21,600, and $10,000 for Years 1 to 3, respectively? The discount rate is 13 percent.
========================================== FIN 571 Final Exam Guide (New)
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Related Tutorials
========================================== FIN 571 Final Exam Guide Set 2 (NEW)
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1. Financial managers should primarily strive to: 2. The process of planning and managing a firm's long-term assets is called: 3. Which one of the following actions by a financial manager creates an agency
========================================== FIN 571 Week 1 Connect Problems (Math and Accounting Review)
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FIN 571 Week 1 Connect Problems (Math & Accounting Review) 1. Functions Excel will make your life as a finance student much easier. This section will show how to use various functions in Excel. Once you understand the how and why of a particular financial equation, you can make 1. Which Excel cell entry will calculate the square root
of 165? 2. Which statements about Excel’s FV function are correct? 3. Which fields are required to calculate net present value (NPV) in Excel? 4. Which Excel function is used to calculate the amount of each annuity payment? 5. Which fields are required to calculate the rate of return (RATE) for a present value calculation in Excel? 2. The Balance Sheet This lesson will help you refresh your knowledge on the basics of the balance sheet. Brushing up on these concepts now s. Under ________ accounting, revenues are recorded when cash is received and expenses are recorded when cash is paid out. Financial statements are prepared using ________ accounting. 3. The ________ retains the power and authority to set accounting standards. Currently, this responsibility has been delegated to the________. 4. In what order are the four primary financial statements prepared? 5. The difference between net income and dividends paid is known as what?
========================================== FIN 571 Week 1 Connect Problems (Week 1 Problem Set)
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FIN 571 Week 1 Connect Problems (Math & Accounting Review) 1. Functions Excel will make your life as a finance student much easier. This section will show how to use various functions in Excel. Once you understand the how and why of a particular financial equation,
you can make 1. Which Excel cell entry will calculate the square root of 165? 2. Which statements about Excel’s FV function are correct? 3. Which fields are required to calculate net present value (NPV) in lesson will help you refresh the basic accounting concepts. 1. ________ are items owed to a creditor. ________ are items owned by a company. ________ represents owners' claims to company resources. 2. Under ________ accounting, revenues are recorded when earned and expenses are recorded with related revenues. Under ________ accounting, revenues are recorded when cash is received and expenses are recorded when cash is paid out. Financial statements are prepared using ________ accounting. 3. The ________ retains the power and authority to set accounting standards. Currently, this responsibility has been delegated to the________. 4. In what order are the four primary financial statements prepared? 5. The difference between net income and dividends paid is known as what?
========================================== FIN 571 Week 1 DQ 1
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What is ethics? If you follow all applicable rules and regulations, are you an ethical person?
========================================== FIN 571 Week 1 DQ 2
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Assume that interest rates have increased substantially. Would this tend to increase or decrease the market value (meaning the price an investor in the firm's paper is willing to pay) of a firm’s liabilities (relative to the book value of liabilities)?
This question is referring to a firm's liability such as a bond or debenture that has been issued in the markets. What happens to the price an investor who is looking to purchase that bond or debenture is willing to pay if the market interest rate increases above the rate that the bond or debenture pays.
========================================== FIN 571 Week 1 Individual Assignment Business Structures
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Watch the "Your Business Structure" and "Corporate Business Structures" videos on the Electronics Reserve Readings page. Identify the different business structures. Write a 350 to 700 word explanation of how each business structure might and might not be advantageous. Click the Assignment Files tab to submit your assignment.
========================================== FIN 571 Week 2 Connect Problems
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FIN 571 Week 2 Connect Problems 1. Sankey, Inc., has current assets of $4,230, net fixed assets of $25,700, current liabilities of $3,500, and long-term debt of $14,400. (Do not round intermediate calculations.) What is the value of the shareholders' equity account for this firm? How much is net working capital? 2. Which one of the following assets is generally the most liquid? 3. Which one of the following accounts is included in stockholders' equity? Operating
cash flow is defined as: 4. It is easier to evaluate a firm using its financial statements when the firm: If a firm is currently profitable, then: 5. Which one of these accounts is classified as a current asset on the balance sheet? During 2015, Rainbow Umbrella Corp. had sales of $720,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $500,000, $90,000, and $85,000, respectively. In addition, the company had an interest expense of $90,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) a. What is the company's net income for 2015? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) Net income $ b. What is its operating cash flow? (Do not round intermediate calculations.) Operating cash flow $ 6. Please use excel sheet in case the values changes Sankey, Inc., has current assets of $4,500, net fixed assets of $23,500, current liabilities of $2,750, and long-term debt of $12,900. (Do not round intermediate calculations.) What is the value of the shareholders' equity account for this firm? Shareholders' equity $ How much is net working capital? Net working capital $ 7. Please use excel sheet in case the values changes Shelton, Inc., has sales of $396,000, costs of $184,000, depreciation expense of $49,000, interest expense of $30,000, and a tax rate of 35 percent. (Do not round intermediate calculations.) What is the net income for the firm? Suppose the company paid out $39,000 in cash dividends. What is the addition to statement summarizing a firm's accounting performance over a period of time is the:
========================================== FIN 571 Week 2 DQ 1
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In order to receive proper credit, please reply to this message when posting your answers to WK2 DQ1.
Suppose you own $1 million worth of 30-year Treasury bonds. Is this asset riskless? You own $1 million worth of 90-day Treasury bills. You “roll over” this investment every 90 days by reinvesting the proceeds in another issue of 90-day Treasury bills. Is this investment riskless? Can you think of an asset that is truly riskless?
FIN 571 Week 2 DQ 2
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Suppose rf is 5% and rM is 10%. According to the SML and the CAPM, an asset with a beta of −2.0
has a required return of negative 5% *= 5 − 2(10 − 5)+. Can this be possible? Does this mean that the asset has negative risk? Why would anyone ever invest in an asset that has an expected and required return that is negative? Explain
========================================== FIN 571 Week 2 Individual Assignment Business Structure Advice
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Write a 350 to 700 word response to the following e-mail: Dear Consultant, I am currently starting a business and developing my business plan. I'm in need of some advice on how to start forming my business. I am not sure exactly how it will be financed and whether or not I want to take on partners. I am interested and willing to learn the intricacies of my options to determine how to best proceed with my plan. Please advise on what my options are, the advantages and disadvantages of each, and possible tax consequences for each scenario?
Respectfully, John Owner
Click the Assignment Files tab to submit your assignment.
========================================== FIN 571 Week 2 Individual Assignment Ethics and Finance
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The Sarbanes-Oxley Act of 2002 (SOX) was passed as the result of the Enron scandal and other instances of accounting fraud. This act was passed to strengthen the role of the Securities and Exchange Commission (SEC). Research a case of corporate financial abuse related to the Sarbanes-Oxley Act of 2002 and apply this to your current work or desired place of employment. Create a 1,400-word analysis of the application of SOX in which you include the following: Discuss the mistakes made by the company and their leadership. Discuss the steps leadership could have taken to prevent or mitigate the repercussions. Explain the role of market pressures on unethical behavior. Examine the influence of the basics of finance and how the Sarbanes-Oxley Act of 2002 changed things. Evaluate the influence of
Sarbanes-Oxley Act on ethical behavior. Are businesses more ethical since the enactment? Explain the changes companies needed to make in how they use and present financial statements. Discuss how SOX has affected your current place of employment if at all, and if not, how it has affected others in the same industry. Cite a minimum of 2 scholarly sources. Format your paper consistent with APA guidelines. Click the Assignment Files tab to submit your assignment.
========================================== FIN 571 Week 2 Individual Assignment Ratio Analysis Problems
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Ratio Analysis Problems
Ratio Analysis (Individual Assignment) You may use excel or word.doc format for this assignment. Please post your homework as a word.doc or excel file in the class discussion section below by the due date. 1. Analysis of cost of goods sold problem.
1992 Gross Profit Margin 51%
1993 1994 60%
55%
What is happening to cost of goods sold? As was done in the week 2 online lecture on ratio analysis, please assume sales of 1 dollar each 4. Using the data provided below, which is the better managed company? Why? Please support your answers by calculating appropriate ratios. (5 points) Company A Sales
10 million dollars
Company B 20 million dollars
Net Income
1 million dollars
2 million dollars
Total Assets
10 million dollars
15 million dollars
Click the Assignment Files tab to submit your assignment.
========================================== FIN 571 Week 2 Learning Team Reflection
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Read the Ethics case, "A Sad Tale: The Demise of Arthur Anderson" located in the WileyPLUS Week Fundamentals of Corporate Finance Chapter readings. Discuss the mistakes made by Arthur Anderson and potential actions that leadership could have taken to prevent the organizational failure. Write a 350- to 700-word summary of your discussion. Click the Assignment Files tab to submit your assignment.
========================================== FIN 571 Week 3 Connect Problems
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FIN 571 Week 3 Connect Problems If the Garnett Corp. has a 15 percent ROE and a 25 percent payout ratio, what is its sustainable growth rate? 1.If the Hunter Corp. has an ROE of 15 and a payout ratio of 18 percent, what is its sustainable growth rate 2.The most recent financial statements for Williamson, Inc., are shown here Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be $8,418. What is the external financing needed? 3.The maximum rate at which a firm can grow while maintaining a constant debt-equity ratio
is best defined by its: 4.Financial planning, when properly executed: 5.Projected future financial statements are called: 6.Which account planning some operational changes that are expected to decrease the accounts receivable period by 2.8 days and decrease the inventory period by 3.1 days. The accounts payable turnover rate is expected to increase from 9 to 11.5 times per year. If all of these changes are adopted, what will be the firm's new operating cycle? 25.On average, D & M sells its inventory in 37 days, collects on its receivables in 3.4 days, and takes 35 days to pay for its purchases. What is the length of the firm’s operating cycle? 26.A firm has an inventory turnover rate of 15.7, a receivables turnover rate of 20.2, and a payables turnover rate of 14.6. How long is the cash cycle?
========================================== FIN 571 Week 3 DQ 1
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Why are interest rates on short-term loans not necessarily comparable to each other? Give three possible reasons.
========================================== FIN 571 Week 3 DQ 2
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Optical Supply Company offers credit terms of 2/10, net 60. If Optical Supply is considering a change in its credit terms to one of those indicated, explain whether the change should increase or decrease sales. (a) 2/10, net 30, (b) net 60, (c) 3/15, net 60, (d) 2/10, net 30, 30 extra
========================================== FIN 571 Week 3 Individual Assignment Interpreting Financial Results
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Resource: Financial Statements for the company assigned by your instructor in Week 2. Review the assigned company's financial statements from the past three years. Calculate the financial ratios for the assigned company's financial statements, and then interpret those results against company historical data as well as industry benchmarks:
Compare the financial ratios with each of the preceding three (3) years (e.g. 2014 with 2013; 2013 with 2012; and 2012 with 2011). Compare the calculated financial ratios against the industry benchmarks for the industry of your assigned company.
Write a 500 to 750 word summary of your analysis. Show financial calculations where appropriate. Click the Assignment Files tab to submit your assignment.
========================================== FIN 571 Week 3 Learning Team Reflection
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Watch the "Concept Review Video: Working Capital Management" video located in theWileyPLUS Assignment: Week 3 Videos Activity.
Discuss strategies these business owners used to manage their working capital. Write a 350-700 word summary of your discussion. Click the Assignment Files tab to submit your assignment
========================================== FIN 571 Week 3 Team Assignment Financial Statement Interpretation
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Select three publicly traded companies. Choose one each from the following sectors: manufacturing, service, and retail. At least one of the three companies should be foreign. If possible, choose from among the team members' places of business or similar industries. Calculate the following: • Current ratio • Quick ratio • Net profit margin • Asset utilization • Financial leverage Analyze the Return on Equity (ROE) for the last 2 years using the DuPont method. Develop a 2,100-word comparison of your three companies in which you include the following: •Discuss the differences in the industries • Discuss the different measurement conventions and how this affects presentations. • Contrast IASB basis for accounting (IFRS) and FASB/GAAP accounting. • Compare the three companies and their strategies for managing their working capital. • Discuss the financial ratios and analyses and what they indicate about the companies and their financial forecast. Incorporate the calculated ratios and analysis into the paper. Include the financial statements for the 3 companies as an appendix to the paper. Cite at least 3
scholarly sources. Format the paper consistent with APA guidelines. Click the Assignment Files tab to submit your assignment.
========================================== FIN 571 Week 4 Connect Problems
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.55. Its cost of equity is 14 percent, and its cost of debt is 9 percent. If the tax rate is 40 percent, what is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, 12.Filer Manufacturing has 4 million shares of common stock outstanding. The current share price is $76, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value $90 million, a coupon of 5 percent, and sells for 94 percent of par. The second issue has a face value of $70 million, a coupon of 6 percent, and sells for 104 percent of par. The first issue matures in 20 years, the second in 3 years. a. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) b. What are the company's capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) c. Which are more relevant? 13. Titan Mining
Corporation has 8.9 million shares of common stock outstanding and 330,000 5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $37 per share and has a beta of 1.45, and the bonds have 15 years to maturity and sell for 118 percent of par. The market risk premium is 7.7 percent, T-bills are yielding 4 percent, and the company’s tax rate is 40 percent.
========================================== FIN 571 Week 4 DQ 1
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A firm uses a single discount rate to compute the NPV of all its potential capital budgeting projects, even though the projects have a wide range of nondiversifiable risk. The firm then undertakes all those projects that appear to have positive NPVs. Briefly explain why such a firm would tend to become riskier over time
========================================== FIN 571 Week 4 DQ 2
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Phyllis believes that the firm should use straight-line depreciation for a capital project because it results in higher net income during the early years of the project’s life. Joanna believes that the firm should use the modified accelerated cost recovery system depreciation because it reduces the tax liability during the early years of the project’s life. Assuming you have a choice between depreciation methods, whose advice should you follow? Why?
========================================== FIN 571 Week 4 Individual Assignment Analyzing Pro Forma Statements
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Decide upon an initiative you want to implement that would increase sales over the next five years, (for example, market another product, corporate expansion, and so on). Using the sample financial statements, create pro forma statements of five year projections that are clear, concise, and easy to read. Be
sure to double check the calculations in your pro forma statements. Make assumptions that support each line item increase or decrease for your forecasted statements. Discuss and interpret the financials in relation to the initiative. Make recommendations on potential discretionary financing needs. Write a 350 - 700 word analysis of the company's short term and long term financing needs and determine strategies for the company to manage working capital.
Click the Assignment Files tab to submit your assignment.
========================================== FIN 571 Week 4 Learning Team Reflection
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Watch the "Concept Review Video: Stock Valuation" video located in the WileyPLUS Assignment: Week 4 Videos Activity. Discuss how markets and investors value a stock. Write a 350-700 word summary of your discussion. Click the Assignment Files tab to submit your assignment.
========================================== FIN 571 Week 4 Team Assignment Operating Leverage and Forecasting
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Operating Leverage and Forecasting Problems Team Assignment Please complete the following problems. When calculating earnings per share and PE ratios, please show your work. This problem is similar to the examples shown in the lecture. You manufacture hunting pack systems in China for 80 dollars each, including shipping. The manufacturing costs only include variable costs. Variable costs are not calculated as a percentage of sales in this case. Sales are a function of the number of packs sold and the price per pack. Likewise, variable costs are a function of the number of packs sold and the cost to produce each pack. You sell these packs to retailers for 200 dollars each. In the current year you will sell 100,000 packs. Your fixed costs including such items as insurance, marketing, travel, shows, office supplies, warehouse rentals etc. totals 5 million dollars this year and are not part of the 80 dollars per pack manufacturing cost. The federal income tax rate for your company is 40 percent.
Your company is publicly traded on the NASDAQ with 1,000,000 shares outstanding. Please create a current income statement using the same format as found in the lecture. (5 points) Please calculate earnings per share. (2 points) Please calculate the price/earnings multiple assuming that the current stock price is 10 dollars per share. (2 points) Create a two-year forecast of the income statement from the information provided in problem number one. Please create three columns of data: current year, year 2, and year 3. Assume that sales increase ten percent per year for year's two and three. Please show the earnings per share for each of the three years. (10 points) 2. Please estimate the stock price for year's two and three, assuming that the current PE multiple remains constant for each of the two forecasted years. (6 points)
========================================== FIN 571 Week 5 Connect Problems
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1.The difference between the present value of an investment’s future cash flows and its initial cost is the: payback period. internal
rate of return. profitability index. discounted payback period. net present value. 2.Which statement concerning the net present value (NPV) of an investment or a financing project is correct? An investment project that has positive cash flows for every time period after the initial investment should be accepted. Any type of project should be accepted if the NPV is positive and rejected if it is negative. A financing project should be accepted if, and only if, the NPV is exactly equal to zero. Any type of project with greater total cash inflows than total cash outflows, should always be accepted. An investment project should be accepted only if the NPV is equal to the
========================================== FIN 571 Week 5 DQ 1
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Because the weighted average is always a correct measure of a required return, why do firms not create securities to finance each project and offer them in the capital market in order to accurately determine the required return for the project?
========================================== FIN 571 Week 5 DQ 2
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The development of the new issue junk bond market had important implications for capital structure choice. The existence of a viable junk bond market means that firms can comfortably maintain higher degrees of leverage than they could prior to the development of this market. Do you agree or disagree? Justify your answer.
========================================== FIN 571 Week 5 Individual Assignment DCF and WACC Problems
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Please post the answers (and show your work) in the assignments section by midnight the last day of the week assigned.
Calculate the future value of 1,535 invested today for 8 years at 6 percent.
(5 points)
What is the total present value of the following cash stream, discounted at 8 percent? (5 points)
Year
Amount
1
400
2
750
3
945
4
145
5
78
3. If you invested $2,000 per year into an IRA for 30 years and received 6 percent return each year, what would the account balance be in 30 years? (5 points)
4. A friend gives you a proposition. If you give him 1,500 dollars today, he will guarantee your receive 12 percent a year for the next 5 years. How much money will you receive from him at the end of 5 years? (5 points)
5. You want to buy a new Computer Aided Design (CAD) system for your business. The cost of the system is $150,000 and you expect to save over $40,000 per year in reduced labor costs. Please calculate
the net present value of the CAD if your required return is 10 percent and the life of the system is expected to be 5 years. (10 points)
6. Your company is considering converting its heating system in the main office from coal to heating oil. The initial cost of removing the coal fired furnace and installing an new oil fired unit is $60,000. The life of the analysis is 7 years. In the past you spent $25,000 per year on coal. The new company says you will spend no more than $15,000 per year on heating oil. If your required return is 12 percent, should you make this investment? Please calculate the net present value of this project. (10 points)
7. You have collected the following information:
a. the yield on your company’s preferred stock 8% b. the yield on your company’s debt 10% c. the required return on your company’s common stock and internal equity 12% d. debt total $5,000,000 e. preferred stock current market value $10,000,000 f. common stock and retained earnings total value $20,000,000
Please calculate the pre-tax weighted average cost of capital (WACC) for your company.
(10 points)
8. Your company’s marginal income tax rate is 40%. Please calculate the post tax WACC from the information provided in problem 7. (10 points)
========================================== FIN 571 Week 5 Learning Team Reflection
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Watch the "Concept Review Video: Cost of Capital" video located in the WileyPLUS Assignment: Week 5 Videos Activity. Discuss some of the corporate finance challenges faced by this company. Write a 350-700 word summary of your discussion. Click the Assignment Files tab to submit your assignment.
========================================== FIN 571 Week 5 Team Assignment Capital Budgeting Assignment, Part 1 (New Heritage Doll)
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Acting as the executive team for a small company, your team will apply the principles of capital budgeting to invest in growth and cash flow improvement opportunities in three phases over 10 simulated years. Each opportunity has a unique financial profile and you must analyze the effects on working capital. Examples of opportunities include taking on new customers, capitalizing on supplier discounts, and reducing inventory. The team must understand how the income statement, balance sheet, and statement of cash flows are interconnected and be able to analyze forecasted financial information to consider possible effects of each opportunity on the firm's financial position. The company operates on thin margins with a constrained cash position and limited available credit. You must optimize use of internal and external credit as you balance the desire for growth with the need for maintaining liquidity. Create a 1,050word analysis of the team members' decisions during each phase (13) and how they influenced each member's final results. • Analyze the influence of member's decisions on sales outcomes or metrics of SNC. • Analyze the influence of member's decisions on EBIT outcomes or metrics of SNC. • Assess the influence of member's decisions on Net Income outcomes or metrics of SNC. • Analyze the influence of member's decisions on Free Cash Flow outcomes or metrics of SNC. • Assess the influence of member's decisions on Total Firm Value outcomes or
metrics of SNC. Cite a minimum of two scholarly references. Format your assignment consistent with APA guidelines.
========================================== FIN 571 Week 5 Working Capital Simulation Managing Growth, Part 1 (SNC)
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Acting as the executive team for a small company, your team will apply the principles of capital budgeting to invest in growth and cash flow improvement opportunities in three phases over 10 simulated years. Each opportunity has a unique financial profile and you must analyze the effects on working capital. Examples of opportunities include taking on new customers, capitalizing on supplier discounts, and reducing inventory. The team must understand how the income statement, balance sheet, and statement of cash flows are interconnected and be able to analyze forecasted financial information to consider possible effects of each opportunity on the firm's financial position. The company operates on thin margins with a constrained cash position and limited available credit. You must optimize use of internal and external credit as you balance the desire for growth with the need for maintaining liquidity. Sign-in to the Harvard Business Simulation and review each of the following: •
Welcome Statement • How to Play • Terminology Primer • More Details (this includes information to help you understand how to play the simulation) Complete the Harvard Business Simulation individually and track and save your results. Create a 1,050-word analysis of the team members' decisions during each phase (1-3) and how they influenced each member's final results. • Analyze the influence of member's decisions on sales outcomes or metrics of SNC. • Analyze the influence of member's decisions on EBIT outcomes or metrics of SNC. • Assess the influence of member's decisions on Net Income outcomes or metrics of SNC. • Analyze the influence of member's decisions on Free Cash Flow outcomes or metrics of SNC. • Assess the influence of member's decisions on Total Firm Value outcomes or metrics of SNC. Cite a minimum of two scholarly references. Format your assignment consistent with APA guidelines. ==========================================