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FIN 486 Entire Course

FOR MORE CLASSES VISIT www.fin486cart.com FIN 486 Week 1 Assignment Part 3 JJ’s Jammers Summary FIN 486 Week 1 Assignment Part 1 Financial Statement Construction and Part 2 Cash Flow Reconciliation FIN 486 Week 1 Video Summary (350 Words) FIN 486 Week 2 Individual Assignment (Chapter 5, Chapter 8) FIN 486 Week 2 Team Assignment (P4-6, P4-19) FIN 486 Week 3 Individual Assignment (P10–2,P10–7, P10–10, P10–14, P10–21, P11–1, P11–4, P11–7, P11–8, P11–9) FIN 486 Week 3 Video Summary Short Term Finance FIN 486 Week 3 Team Assignment FIN 486 Week 4 Individual Assignment P12-1, P12-3, P12-6, P12-17, P12-19) FIN 486 Week 4 Team Assignment Case Study O’Grady Apparel Company FIN 486 Week 4 Risk and Return Summary FIN 486 Week 5 Individual Assignment Eboy Corporation FIN 486 Week 5 Team Assignment Case Study Casa de Diseno FIN 486 Week 5 Summary Long Term Financing FIN 486 Week 5 Team Assignment Asor Products, Inc FIN 486 Week 1 DQ 1 FIN 486 Week 1 DQ 2 FIN 486 Week 1 Individual Assignment Business Ethics (2 Papers) FIN 486 Week 2 DQ 1 FIN 486 Week 2 DQ 2 FIN 486 Week 2 Learning Team Assignment Department Budgets (2 Papers) FIN 486 Week 3 DQ 1 FIN 486 Week 3 DQ 2 FIN 486 Week 3 Individual Assignment Long-Term Financial Needs (2 Papers) FIN 486 Week 4 DQ 1 FIN 486 Week 4 DQ 2 FIN 486 Week 4 Individual Assignment Capital Budgeting Scenarios FIN 486 Week 5 Learning Team Assignment Strategic Financial Plan (2 Papers) ==============================================

FIN 486 Week 1 Assignment Part 1 Financial Statement Construction and Part 2 Cash Flow Reconciliation


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Part 1: Financial Statement Construction Exercise Take the following results for JJ’s Jammers and create a Balance Sheet and Income Statement in the 2012 columns of the template showing JJ’s Jammers 2011 results (In alphabetical order). Make sure you make the embedded calculations for the caption accounts (like total Current Assets or Gross Profit) Accounts Receivable 77251: Cash and Securities 315954: Goodwill and Other Assets 448484: Inventories 40712: less: Accumulated Depreciation -594200: Other Current Assets 21349: Plant & Equipment 1023458: Accounts payables and accruals 373807: Accrued Taxes 19: Additional Paid in Capital 842967: Common Stock 179798: Long Term Debt 563748: Notes payable 10578: Retained Earnings 166634: Treasury stock (571,320) shares -25303. Cost of Goods sold 1158228: Depreciation and Amortization 83729: Dividends 5310: Interest (5.5%) 56000: Net Sales 1701013: Selling and Admin Expenses 247637: Taxes (33%) 51287. Part 2: Cash Flow Reconciliation Now that you have completed the Balance Sheet and Income Statement portion of the assignment, conduct a Cash Flow Reconciliation. You will need to use net figures as indicated by the line items. ==============================================

FIN 486 Week 1 Assignment Part 3 JJ’s Jammers Summary

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Write a 525- to 700-word summary that includes the following: Explain how the three different parts of the Financial Statement work together to provide a picture of how the business is operating. Explain the role of the Financial Manager in stewarding the company’s resources. Formulate and write your opinion as to whether the market for JJ’s Jammers is good based on the financial results depicted in the 2011 and 2012 results. ==============================================

FIN 486 Week 1 DQ 1

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FIN 486 Week 1 DQ 1 What are a chief financial officer’s (CFO) two roles? Use real-world examples to explain why these roles are important to a company’s success. ==============================================

FIN 486 Week 1 DQ 2

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FIN 486 Week 1 DQ 2 Explain business ethics in your own words. Why are business ethics important in strategic planning? Howdobusinessethicsaffecttheworkplace?


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FIN 486 Week 1 Individual Assignment Business Ethics (2 Papers)

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This Tutorial contains 2 Different Papers Write a 700- to 1,050-word paper describing the demise of Enron Corporation® and WorldCom®. Identify major factors that led to the dissolution of Enron Corporation® and WorldCom®. Explain specific ethical violations in accounting practices at Enron Corporation® and WorldCom®. Describe the role of business ethics in strategic financial planning. Cite readings and at least one other source, including the Internet. Format your paper consistent with APA guidelines. Click the Assignment Files tab to submit your assignment. ==============================================

FIN 486 Week 1 JJ’s Jammer Assignment

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Read the attached documents for assignment instructions. Click the Assignment Files tab to submit your assignment. a. Compute the 13 ratios for both companies. (Use a 360-day year. Do not round intermediate calculations. Input your profit margin, return on assets, return on equity, and debt to total assets answers as a percent rounded to 2 decimal places. Round all other answers to 2 decimal places.) b.


Provide what each ratio represents to each of the two companies. a. Compute the following 13 ratios for both companies. (Use a 360-day year. Do not round intermediate calculations. Input your profit margin, return on assets, return on equity, and debt to total assets answers as a percent rounded to 2 decimal places. Round all other answers to 2 decimal places.) b. Compute the following 13 ratios for both companies. (Use a 360-day year. Do not round intermediate calculations. Input your profit margin return on assets return on equity and debt to total assets answers as a percent rounded to 2 decimal places. Round all other answers to 2 decimal places.) c. Provide what each ratio represents to each of the two companies. ==============================================

FIN 486 Week 1 Video Summary (350 Words)

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FIN 486 Week 1 Video Summary ==============================================

FIN 486 Week 2 Apply Gale Force Surfing Case Study

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FIN 486 Week 2 Apply: Gale Force Surfing Case Study Purpose This assignment allows students to view the impact of level versus seasonal production on inventory levels, bank loan requirements, and


profitability. In addition, it allows students the opportunity to demonstrate the ability to apply profitability analysis activities used in financial decision making. Assignment Instructions Review the Week 2 Case Study. Complete the required activities using the Student Worksheet. Click the Assignment Files tab to submit your completed worksheet. ==============================================

FIN 486 Week 2 DQ 1

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FIN 486 Week 2 DQ 1 Why are financial ratios used to assess a company’s financial performance? Why are sales reports, profits, debts, or current liability reports insufficient? How have financial ratios been used in your company? Do you think they are an effective assessment of financial performance? If so, why? If not, why? ==============================================

FIN 486 Week 2 DQ 2

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FIN 486 Week 2 DQ 2


If you had to pick three commonly calculated ratios to analyze the financial health of a company, which would you analyze? Why would you choose those ratios? ==============================================

FIN 486 Week 2 Individual Assignment (Chapter 5, Chapter 8)

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FIN 486 Week 2 Individual Assignment (5-1,5-4,5-5,5-8,5-10,5-17,521,P8-3,P8-4,P8-9,P8-10,P8-13,P8-24,P8-25,P8-26) P8–3 Risk preferences Sharon Smith, the financial manager for Barnett Corporation, wishes to evaluate three prospective investments: X, Y, and Z. Sharon will evaluate each of these investments to decide whether they are superior to investments that her company already has in place, which have an expected return of 12% and a standard deviation of 6%. The expected returns and standard deviations of the investments are as follows: a. If Sharon were risk neutral, which investments would she select? Explain why. b. If she were risk averse, which investments would she select? Why? c. If she were risk seeking, which investments would she select? Why? d. Given the traditional risk preference behavior exhibited by financial managers, which investment would be preferred? Why? Investment Expected return Standard deviation X 14% 7% Y 12 8 Z 10 9 P8–4 Risk analysis Solar Designs is considering an investment in an expanded product line. Two possible types of expansion are being considered. After investigating the possible outcomes, the company made the estimates shown in the following table. Expansion A Expansion B Initial investment $12,000 $12,000 Annual rate of return Pessimistic


16% 10% Most likely 20% 20% Optimistic 24% 30% a. Determine the range of the rates of return for each of the two projects. b. Which project is less risky? Why? c. If you were making the investment decision, which one would you choose? Why? What does this decision imply about your feelings toward risk? d. Assume that expansion B’s most likely outcome is 21% per year and that all other facts remain the same. Does your answer to part c now change? Why? P8–9 Rate of return, standard deviation, and coefficient of variation Mike is searching for a stock to include in his current stock portfolio. He is interested in Hi-Tech, Inc.; he has been impressed with the company’s computer products and believes that Hi-Tech is an innovative market player. However, Mike realizes that any time you consider a technology stock, risk is a major concern. The rule he follows is to include only securities with a coefficient of variation of returns below 0.90. Mike has obtained the following price information for the period 2012 through 2015. Hi-Tech stock, being growthoriented, did not pay any dividends during these 4 years. Stock price Year Beginning End 2012 $14.36 $21.55 2013 21.55 64.78 2014 64.78 72.38 2015 72.38 91.80 a. Calculate the rate of return for each year, 2012 through 2015, for Hi-Tech stock. b. Assume that each year’s return is equally probable, and calculate the average return over this time period. c. Calculate the standard deviation of returns over the past 4 years. (Hint: Treat these data as a sample.) d. Based on b and c, determine the coefficient of variation of returns for the security. e. Given the calculation in d, what should be Mike’s decision regarding the inclusion of Hi-Tech stock in his portfolio? P8–10 Assessing return and risk Swift Manufacturing must choose between two asset purchases. The annual rate of return and the related probabilities given in the following table summarize the firm’s analysis to this point. Project 257 Project 432 Rate of return Probability Rate of return Probability −10% 0.01 10% 0.05 10 0.04 15 0.10 20 0.05 20 0.10 30 0.10 25 0.15 40 0.15 30 0.20 45 0.30 35 0.15 50 0.15 40 0.10 60 0.10 45 0.10 70 0.05 50 0.05 80 0.04 100 0.01 a. For each project, compute: (1) The range of possible rates of return. (2) The expected return. (3) The standard deviation of the returns. (4) The coefficient of variation of the returns. b. Construct a bar chart of each distribution of rates of return. c. Which project would you consider less risky? Why?


P8–13 Portfolio return and standard deviation Jamie Wong is considering building an investment portfolio containing two stocks, L and M. Stock L will represent 40% of the dollar value of the portfolio, and stock M will account for the other 60%. The expected returns over the next 6 years, 2015–2020, for each of these stocks are shown in the following table. Expected return Year Stock L Stock M 2015 14% 20% 2016 14 18 2017 16 16 2018 17 14 2019 17 12 2020 19 10 a. Calculate the expected portfolio return, rp, for each of the 6 years. b. Calculate the expected value of portfolio returns, , over the 6-year period. c. Calculate the standard deviation of expected portfolio returns, , over the 6-year period. d. How would you characterize the correlation of returns of the two stocks L and M? e. Discuss any benefits of diversification achieved by Jamie through creation of the portfolio. P8–24 Capital asset pricing model (CAPM) For each of the cases shown in the following table, use the capital asset pricing model to find the required return. Case Risk-free rate, RF Market return, rm Beta,β A 5% 8% 1.30 B 8 13 0.90 C 9 12 −0.20 D 10 15 1.00 E 6 10 0.60 P8–25 Beta coefficients and the capital asset pricing model Katherine Wilson is wondering how much risk she must undertake to generate an acceptable return on her portfolio. The risk-free return currently is 5%. The return on the overall stock market is 16%. Use the CAPM to calculate how high the beta coefficient of Katherine’s portfolio would have to be to achieve each of the following expected portfolio returns. a. 10% b. 15% c. 18% d. 20% e. Katherine is risk averse. What is the highest return she can expect if she is unwilling to take more than an average risk? P8–26 Manipulating CAPM Use the basic equation for the capital asset pricing model (CAPM) to work each of the following problems. a. Find the required return for an asset with a beta of 0.90 when the risk-free rate and market return are 8% and 12%, respectively. b. Find the risk-free rate for a firm with a required return of 15% and a beta of 1.25 when the market return is 14%. c. Find the market return for an asset with a required return of 16% and a beta of 1.10 when the risk-free rate is 9%. d. Find the beta for an asset with a required return of 15% when the risk-free rate and market return are 10% and 12.5%, respectively. P5–1 Using a time line The financial manager at Starbuck Industries is considering an investment that requires an initial outlay of $25,000 and is expected to


result in cash inflows of $3,000 at the end of year 1, $6,000 at the end of years 2 and 3, $10,000 at the end of year 4, $8,000 at the end of year 5, and $7,000 at the end of year 6. a. Draw and label a time line depicting the cash flows associated with Starbuck Industries’ proposed investment. b. Use arrows to demonstrate, on the time line in part a, how compounding to find future value can be used to measure all cash flows at the end of year 6. c. Use arrows to demonstrate, on the time line in part b, how discounting to find present value can be used to measure all cash flows at time zero. d. Which of the approaches—future value or present value—do financial managers rely on most often for decision making? Why? P5–4 Future values For each of the cases shown in the following table, calculate the future value of the single cash flow deposited today at the end of the deposit period if the interest is compounded annually at the rate specified. Case Single cash flow Interest rate Deposit period (years) A $ 200 5% 20 B 4,500 8 7 C 10,000 9 10 D 25,000 10 12 E 37,000 11 5 F 40,000 12 9 P5–5 Time value You have $1,500 to invest today at 7% interest compounded annually. a. Find how much you will have accumulated in the account at the end of (1) 3 years, (2) 6 years, and (3) 9 years. b. Use your findings in part a to calculate the amount of interest earned in (1) the first 3 years (years 1 to 3), (2) the second 3 years (years 4 to 6), and (3) the third 3 years (years 7 to 9). c. Compare and contrast your findings in part b. Explain why the amount of interest earned increases in each succeeding 3-year period. P5–8 Time value Misty needs to have $15,000 at the end of 5 years to fulfill her goal of purchasing a small sailboat. She is willing to invest a lump sum today and leave the money untouched for 5 years until it grows to $15,000, but she wonders what sort of investment return she will need to earn to reach her goal. Use your calculator or spreadsheet to figure out the approximate annually compounded rate of return needed in each of these cases: a. Misty can invest $10,200 today. b. Misty can invest $8,150 today. c. Misty can invest $7,150 today. P5– 10 Present value calculation Without referring to the preprogrammed function on your financial calculator, use the basic formula for present value, along with the given opportunity cost, r, and the number of periods, n, to calculate the present value of $1 in each of the cases shown in the following table. Case Opportunity cost, r Number of


periods, n A 2% 4 B 10 2 C 5 3 D 13 2 P5–17 Cash flow investment decision Tom Alexander has an opportunity to purchase any of the investments shown in the following table. The purchase price, the amount of the single cash inflow, and its year of receipt are given for each investment. Which purchase recommendations would you make, assuming that Tom can earn 10% on his investments? Investment Price Single cash inflow Year of receipt A $18,000 $30,000 5 B 600 3,000 20 C 3,500 10,000 10 D 1,000 15,000 40 P5–21 Time value: Annuities Marian Kirk wishes to select the better of two 10-year annuities, C and D. Annuity C is an ordinary annuity of $2,500 per year for 10 years. Annuity D is an annuity due of $2,200 per year for 10 years. a. Find the future value of both annuities at the end of year 10 assuming that Marian can earn (1) 10% annual interest and (2) 20% annual interest. b. Use your findings in part a to indicate which annuity has the greater future value at the end of year 10 for both the (1) 10% and (2) 20% interest rates. c. Find the present value of both annuities, assuming that Marian can earn (1) 10% annual interest and (2) 20% annual interest. d. Use your findings in part c to indicate which annuity has the greater present value for both (1) 10% and (2) 20% interest rates. e. Briefly compare, contrast, and explain any differences between your findings using the 10% and 20% interest rates in parts b and d. ==============================================

FIN 486 Week 2 Learning Team Assignment Department Budgets (2 Papers)

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This Tutorial contains 2 Different Papers Your Learning Team is the financial management team for Huffman Trucking, responsible for creating the financial portion of a strategic plan. You must obtain


information from the marketing, sales, operations, and human resources departments to complete it. Resource: Virtual Organizations Review Huffman Trucking's financial information within the Virtual Organizations web link located on the course materials page. Create a spreadsheet for each department manager to complete his or her budget. Refer to the finance and accounting information for budget examples. Include an area in each spreadsheet for managers to list major assumptions. Draft a memo directed to department managers, containing the following information: · A summary of team players and their role in creating a strategic plan · Instructions explaining how managers should complete their budgets in the spreadsheets, including information needed to prepare a cash flow budget, and to time cash coming in and going out Create a sales forecast predicting sales over the next 2 years. Use financial information available on the Huffman Trucking Web site to create the forecast. Format the memo consistent with APA guidelines. Click the Assignment Files tab to submit your assignment. ==============================================

FIN 486 Week 2 Team Assignment (P4-6, P4-19)

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P4–6 Finding operating and free cash flows Consider the following balance sheets and selected data from the income statement of Keith Corporation. Keith Corporation Balance Sheets December 31 Assets 2015 2014 Cash $ 1,500 $ 1,000 Marketable securities 1,800 1,200 Accounts receivable 2,000 1,800 Inventories 2,900 2,800 $ 8,200 $ 6,800 Gross fixed assets $29,500 $28,100 Less: Accumulated depreciation 14,700 13,100 Net fixed assets $14,800 $15,000 Total assets $23,000 $21,800 Total current assets Liabilities and stockholders’ equity Keith Corporation Balance Sheets December 31


Assets 2015 2014 Cash $ 1,500 $ 1,000 Accounts payable $ 1,600 $ 1,500 Notes payable 2,800 2,200 200 300 $ 4,600 $ 4,000 5,000 5,000 $ 9,600 $ 9,000 $10,000 $10,000 3,400 2,800 Total stockholders’ equity $13,400 $12,800 Total liabilities and stockholders’ equity $23,000 $21,800 Accruals Total current liabilities Long-term debt Total liabilities Common stock Retained earnings Keith Corporation Income Statement Data (2015) Keith Corporation Balance Sheets December 31 Assets Cash 2015 2014 $ 1,500 $ 1,000 Depreciation expense $1,600 Earnings before interest and taxes (EBIT) 2,700 Interest expense 367 Net profits after taxes 1,400 Tax rate 40% a. Calculate the firm’s net operating profit after taxes (NOPAT) for the year ended December 31, 2015, using Equation 4.1. b. Calculate the firm’s operating cash flow (OCF) for the year ended December 31, 2015, using Equation 4.3. c. Calculate the firm’s free cash flow (FCF) for the year ended December 31, 2015, using Equation 4.4. d. Interpret, compare, and contrast your cash flow estimates in parts b and c. P4–19 Integrative: Pro forma statements Red Queen Restaurants wishes to prepare financial plans. Use the financial statements and the other information provided below to prepare the financial plans. The following financial data are also available: (1) The firm has estimated that its sales for 2016 will be $900,000. (2) The firm expects to pay $35,000 in cash dividends in 2016. (3) The firm wishes to maintain a minimum cash balance of $30,000. (4) Accounts receivable represent approximately 18% of annual sales. (5) The firm’s ending inventory will change directly with changes in sales in 2016. (6) A new machine costing $42,000 will be purchased in 2016. Total depreciation for 2016 will be $17,000. (7) Accounts payable will change directly in response to changes in sales in 2016. (8) Taxes payable will equal one-fourth of the tax liability on the pro forma income statement. (9) Marketable securities, other current liabilities, long-term debt, and common stock will remain unchanged. a. Prepare a pro forma income statement for the year ended December 31, 2016, using the percent-of-sales method. b. Prepare a pro forma balance sheet dated December 31, 2016, using the judgmental approach. c. Analyze these statements, and discuss the resulting external financing required. Red Queen Restaurants Income Statement for the Year Ended December 31, 2015


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FIN 486 Week 2 Video Summary

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FIN 486 Week 2 Video Summary ==============================================

FIN 486 Week 3 Apply Berkshire Instruments Case Study

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FIN 486 Week 3 Apply: Berkshire Instruments Case Study Purpose This assignment allows students to work with issues related to the cost of capital. In addition, students will practice calculations related to capital structure and use them in making financial decisions. Assignment Instructions Review the Week 3 Case Study. Complete the required activities 1 to 3 in Microsoft® Excel® or Microsoft® Word. Click the Assignment Files tab to submit your assignment. ==============================================

FIN 486 Week 3 DQ 1

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FIN 486 Week 3 DQ 1 In your own words, explain capital budgeting. Why is it important to a company’s long-term success? Provide an example of poorly performed capital budgeting. How does this affect a company’s longterm success? ==============================================

FIN 486 Week 3 DQ 2

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FIN 486 Week 3 DQ 2 Why is capital budgeting part of a company’s long-term strategic planning process? What are the pros and cons of these methods:

o NPV o Simple payback o IRR ==============================================

FIN 486 Week 3 Individual Assignment (P10–2,P10–7, P10–10, P10–14, P10–21, P11–1, P11–4, P11–7, P11–8, P11–9)


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P10–2 Payback comparisons Nova Products has a 5-year maximum acceptable payback period. The firm is considering the purchase of a new machine and must choose between two alternative ones. The first machine requires an initial investment of $14,000 and generates annual after-tax cash inflows of $3,000 for each of the next 7 years. The second machine requires an initial investment of $21,000 and provides an annual cash inflow after taxes of $4,000 for 20 years. a. Determine the payback period for each machine. b. Comment on the acceptability of the machines, assuming that they are independent projects. c. Which machine should the firm accept? Why? d. Do the machines in this problem illustrate any of the weaknesses of using payback? Discuss. P10–7 Net present value: Independent projects Using a 14% cost of capital, calculate the net present value for each of the independent projects shown in the following table, and indicate whether each is acceptable. P10–10 NPV: Mutually exclusive projects Hook Industries is considering the replacement of one of its old drill presses. Three alternative replacement presses are under consideration. The relevant cash flows associated with each are shown in the following table. The firm’s cost of capital is 15%. • a. Calculate the net present value (NPV) of each press. • b. Using NPV, evaluate the acceptability of each press. • c. Rank the presses from best to worst using NPV. • d. Calculate the profitability index (PI) for each press. • e. Rank the presses from best to worst using PI. P10–14 Internal rate of return For each of the projects shown in the following table, calculate the internal rate of return (IRR). Then indicate, for each project, the maximum cost of capital that the firm could have and still find the IRR acceptable. Project A Project B Project C Project D Initial investment (CF0) $90,000 $490,000 $20,000 $240,000 Year (t) Cash inflows (CFt) 1 $20,000 $150,000 $7,500 $120,000 2 25,000 150,000 7,500 100,000 3 30,000 150,000 7,500 80,000 4 35,000 150,000 7,500 60,000 5 40,000 — 7,500 —


P10–21 All techniques, conflicting rankings Nicholson Roofing Materials, Inc., is considering two mutually exclusive projects, each with an initial investment of $150,000. The company’s board of directors has set a maximum 4-year payback requirement and has set its cost of capital at 9%. The cash inflows associated with the two projects are shown in the following table. Cash inflows (CFt) Year Project A Project B 1 $45,000 $75,000 2 45,000 60,000 3 45,000 30,000 4 45,000 30,000 5 45,000 30,000 6 45,000 30,000 a. Calculate the payback period for each project. b. Calculate the NPV of each project at 0%. c. Calculate the NPV of each project at 9%. d. Derive the IRR of each project. e. Rank the projects by each of the techniques used. Make and justify a recommendation. f. Go back one more time and calculate the NPV of each project using a cost of capital of 12%. Does the ranking of the two projects change compared to your answer in part e? Why? P11–1 Classification of expenditures Given the following list of outlays, indicate whether each is normally considered a capital expenditure or an operating expenditure. Explain your answers. LG 2 a. An initial lease payment of $5,000 for electronic point-of-sale cash register systems b. An outlay of $20,000 to purchase patent rights from an inventor c. An outlay of $80,000 for a major research and development program d. An $80,000 investment in a portfolio of marketable securities e. A $300 outlay for an office machine f. An outlay of $2,000 for a new machine tool g. An outlay of $240,000 for a new building h. An outlay of $1,000 for a marketing research report P11–4 Sunk costs and opportunity costs Masters Golf Products, Inc., spent 3 years and $1,000,000 to develop its new line of club heads to replace a line that is becoming obsolete. To begin manufacturing them, the company will have to invest $1,800,000 in new equipment. The new clubs are expected to generate an increase in operating cash inflows of $750,000 per year for the next 10 years. The company has determined that the existing line could be sold to a competitor for $250,000. a. How should the $1,000,000 in development costs be classified? b. How should the $250,000 sale price for the existing line be classified? c. Depict all the known relevant cash flows on a time line. P11–7 Book value Find the book value for each of the assets shown in the accompanying table, assuming that MACRS depreciation is being used. See Table 4.2 on


page 120 for the applicable depreciation percentages. Asset Installed cost Recovery period (years) Elapsed time since purchase (years) A $ 950,000 5 3 B 40,000 3 1 C 96,000 5 4 D 350,000 5 1 E 1,500,000 7 5 P11–8 Book value and taxes on sale of assets Troy Industries purchased a new machine 3 years ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the percentages given in Table 4.2 on page 000. Assume a 40% tax rate. a. What is the book value of the machine? b. Calculate the firm’s tax liability if it sold the machine for each of the following amounts: $100,000; $56,000; $23,200; and $15,000. P11–9 Tax calculations For each of the following cases, determine the total taxes resulting from the transaction. Assume a 40% tax rate. The asset was purchased 2 years ago for $200,000 and is being depreciated under MACRS using a 5-year recovery period. (See Table 4.2 on page 120 for the applicable depreciation percentages.) a. The asset is sold for $220,000. b. The asset is sold for $150,000. c. The asset is sold for $96,000. d. The asset is sold for $80,000. ==============================================

FIN 486 Week 3 Individual Assignment Long-Term Financial Needs (2 Papers)

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This Tutorial contains 2 Different Papers You are the head of the Huffman Trucking accounting department. The chief executive officer (CEO) has asked you to prepare a financial report addressing long-term financial needs. Resource: Virtual Organizations Examine financial information for Huffman Trucking, within the Virtual Organization web link located on the course materials page. Read the New Strategic Directions Memo. Calculate external funds needed (EFN) to create the pro forma balance sheet. Calculate the following


year-end ratios for the pro forma statements: · Profit as a percentage of sales · Current ratio · Asset ratio Prepare a 500- to 850-word financial report for the CEO containing the EFN calculation, the ratio calculations, and an explanation of how you reached the calculations. Explain which income statement and balance sheet items you assumed were variable instead of fixed. Format your paper consistent with APA guidelines. Click the Assignment Files tab to submit your assignment. ==============================================

FIN 486 Week 3 Team Assignment

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a) Calculate the after-tax cost of debt b) Calculate the cost of preferred stock c) Calculate the cost of retained earnings d) calculate the cost of common stock e) calculate the firms weighted average cost of capital using retained earnings and the capital structure weights f) calculate the firms weighted average cost of capital using new common stock and the capital structure weights a. Cost of debt: Proceeds from sale of $1,000 par value bond: b. Cost of preferred stock: rp = Dp ÷ Np c. Cost of common stock: rj = RF + [bj × (rm − RF)] d. Weighted average cost of capital: ra = (wi × ri) + (wp × rp) + (ws × rn) e. 1. Change in risk Premium: Change in beta × market risk premium Note: 17.5% − 15.7% = 1.8% 2. Revised weighted average cost of capital: ra = (wi x ri) + (ws x rn) ==============================================

FIN 486 Week 3 Video Summary Short Term Finance

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FIN 486 Week 3 Video Summary Short Term Finance ==============================================

FIN 486 Week 4 DQ 1

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FIN 486 Week 4 DQ 1 What are major areas of risk in financial management? What are major areas of financial risk in your company? Which risk management techniques are important to your company? Why? ==============================================

FIN 486 Week 4 DQ 2

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FIN 486 Week 4 DQ 2 What is capital structure? Why does it matter in terms of a company’s financial performance? How does a company’s capital structure affect overall risk?


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FIN 486 Week 4 Individual Assignment (P12-1, P12-3, P12-6, P12-17, P12-19)

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P12–1 Recognizing risk Caradine Corp., a media services firm with net earnings of $3,200,000 in the last year, is considering the following projects. LG 1 The media services business is cyclical and highly competitive. The board of directors has asked you, as chief financial officer, to do the following: a.Evaluate the risk of each proposed project and rank it ―low,‖ ―medium,‖ or ―high.‖ b.Comment on why you chose each ranking. P12–3 Breakeven cash inflows and risk Blair Gasses and Chemicals is a supplier of highly purified gases to semiconductor manufacturers. A large chip producer has asked Blair to build a new gas production facility close to an existing semiconductor plant. Once the new gas plant is in place, Blair will be the exclusive supplier for that semiconductor fabrication plant for the subsequent 5 years. Blair is considering one of two plant designs. The first is Blair’s ―standard‖ plant, which will cost $30 million to build. The second is for a ―custom‖ plant, which will cost $40 million to build. The custom plant will allow Blair to produce the highly specialized gases that are required for an emerging semiconductor manufacturing process. Blair estimates that its client will order $10 million of product per year if the traditional plant is constructed, but if the customized design is put in place, Blair expects to sell $15 million worth of product annually to its client. Blair has enough money to build either type of plant, and, in the absence of risk differences, accepts the project with the highest NPV. The cost of capital is 12%. LG 2 a.Find the NPV for each project. Are the projects acceptable? b.Find the breakeven cash inflow for each project. c.The firm has estimated the probabilities of achieving various ranges of cash inflows


for the two projects as shown in the following table. What is the probability that each project will achieve at least the breakeven cash inflow found in part b? d.Which project is more risky? Which project has the potentially higher NPV? Discuss the risk–return trade-offs of the two projects. e.If the firm wished to minimize losses (that is, NPV < $0), which project would you recommend? Which would you recommend if the goal were to achieve a higher NPV? P12–6 Impact of inflation on investments You are interested in an investment project that costs $40,000 initially. The investment has a 5-year horizon and promises future end-of-year cash inflows of $12,000, $12,500, $11,500, $9,000, and $8,500, respectively. Your current opportunity cost is 6.5% per year. However, the Fed has stated that inflation may rise by 1.5% or may fall by the same amount over the next 5 years. LG 2 Assume a direct positive impact of inflation on the prevailing rates (Fisher effect) and answer the following questions. (Assume that inflation has an impact on the opportunity cost, but that the cash flows are contractually fixed and are not affected by inflation). a.What is the net present value (NPV) of the investment under the current required rate of return? b.What is the net present value (NPV) of the investment under a period of rising inflation? c.What is the net present value (NPV) of the investment under a period of falling inflation? d.From your answers in a, b, and c, what relationship do you see emerge between changes in inflation and asset valuation? P12–17 Real options and the strategic NPV Jenny Rene, the CFO of Asor Products, Inc., has just completed an evaluation of a proposed capital expenditure for equipment that would expand the firm’s manufacturing capacity. Using the traditional NPV methodology, she found the project unacceptable because LG 6 NPVtraditional = −$1,700 < $0 Before recommending rejection of the proposed project, she has decided to assess whether there might be real options embedded in the firm’s cash flows. Her evaluation uncovered three options: Option 1: Abandonment. The project could be abandoned at the end of 3 years, resulting in an addition to NPV of $1,200. Option 2: Growth. If the projected outcomes occurred, an opportunity to expand the firm’s product offerings further would become available at the end of 4 years. Exercise of this option is estimated to add $3,000 to the project’s NPV. Option 3: Timing.


Certain phases of the proposed project could be delayed if market and competitive conditions caused the firm’s forecast revenues to develop more slowly than planned. Such a delay in implementation at that point has an NPV of $10,000. Jenny estimated that there was a 25% chance that the abandonment option would need to be exercised, a 30% chance that the growth option would be exercised, and only a 10% chance that the implementation of certain phases of the project would affect timing. a.Use the information provided to calculate the strategic NPV, NPVstrategic, for Asor Products’ proposed equipment expenditure. b.Judging on the basis of your findings in part a, what action should Jenny recommend to management with regard to the proposed equipment expenditure? c.In general, how does this problem demonstrate the importance of considering real options when making capital budgeting decisions? P12–19 Capital rationing: NPV approach A firm with a 13% cost of capital must select the optimal group of projects from those shown in the following table, given its capital budget of $1 million. LG 6 a.Calculate the present value of cash inflows associated with each project. b.Select the optimal group of projects, keeping in mind that unused funds are costly. ==============================================

FIN 486 Week 4 Individual Assignment Capital Budgeting Scenarios

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FIN 486 Week 4 Individual Assignment Capital Budgeting Scenarios Choose a scenario from the Capital Budgeting Worksheet to review and analyze. Using net present value, determine the proposal’s appropriateness and economic viability.


Prepare a 500-word report explaining your calculations and conclusions. Answer the following in your report: Explain the effect of a higher or lower cost of capital on a firm’s longterm financial decisions. Analyze the use of capital budgeting techniques in strategic financial management. Format your report consistent with APA guidelines. ==============================================

FIN 486 Week 4 KFC and the Colonel Case Study

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FIN 486 Week 4 Apply: KFC and the Colonel Case Study Purpose This assignment allows students to provide practical business strategies. Assignment Instructions Review the Week 4 Case Study. Summarize the following in 2 to 3 pages:  Discuss issues raised concerning Sanders’ approach in connection with the sale to Brown and Massey.  Include some of the other options that Sanders may have considered other than the $2,000,000 cash price.  Explain the reasons for regulatory control over financial markets. Let’s assume Colonel Sanders obtained a six-month loan of $150,000 Canadian dollars from an American bank to finance the acquisition of a building for another Canadian franchise in Quebec province. The loan will be repaid in Canadian dollars. At the time of the loan, the spot exchange rate was U.S. $0.8995/Canadian dollar and the Canadian currency was selling at a discount in the forward market. The contract after six months (face value = C$150,000 per contract) was quoted at U.S. $0.8930/Canadian dollar. Explain how the American bank could lose on this transaction assuming no hedging.  Assume the bank


does hedge with the forward contract, what is the maximum amount it can lose? Format your paper to current APA standards. Click the Assignment Files tab to submit your MicrosoftÂŽ Word assignment. ==============================================

FIN 486 Week 4 Risk and Return Summary

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FIN 486 Week 4 Risk and Return Summary ==============================================

FIN 486 Week 4 Signature Assignment Capital Budgeting Scenarios (New Factory)

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FIN 486 Week 4 Signature Assignment Capital Budgeting Scenarios About Your Signature Assignment Signature/Benchmark Assignments are 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. Signature/Benchmark Assignments are graded with a grading guide or an automated rubric that allows the University to collect data that can be aggregated across a location or college/school and used for


course/program improvements. Resource: Capital Budgeting Worksheet Choose a scenario from the Capital Budgeting Worksheet to review and analyze. Using Net Present Value (NPV), determine the proposal’s appropriateness and economic viability. Prepare a 700- to 1,050-word report explaining your calculations and findings. Answer the following in your report:  Apply calculations to determine the proposal’s appropriateness and economic viability.  Explain the effect of a higher or lower cost of capital on a firm’s long-term financial decisions.  Analyze the use of capital budgeting techniques in strategic financial management. Format your report consistent with APA guidelines. Click the Assignment Files tab to submit your assignment. ==============================================

FIN 486 Week 4 Team Assignment Case Study O’Grady Apparel Company

FOR MORE CLASSES VISIT www.fin486cart.com O’Grady Apparel Company was founded nearly 160 years ago when an Irish merchant named Garrett O’Grady landed in Los Angeles with an inventory of heavy canvas, which he hoped to sell for tents and wagon covers to miners headed for the California goldfields. Instead, he turned to the sale of harder-wearing clothing. Today, O’Grady Apparel Company is a small manufacturer of fabrics and clothing whose stock is traded in the OTC market. In 2015, the Los Angeles– based company experienced sharp increases in both domestic and European markets resulting in record earnings. Sales rose from $15.9 million in 2014 to $18.3 million in 2015 with earnings per share of $3.28 and $3.84, respectively. European sales represented 29% of total sales in 2015, up from 24% the year before and only 3% in 2010, 1 year after foreign operations were launched. Although foreign sales


represent nearly one-third of total sales, the growth in the domestic market is expected to affect the company most markedly. Management expects sales to surpass $21 million in 2016, and earnings per share are expected to rise to $4.40. (Selected income statement items are presented in Table 1.) Because of the recent growth, Margaret Jennings, the corporate treasurer, is concerned that available funds are not being used to their fullest potential. The projected $1,300,000 of internally generated 2016 funds is expected to be insufficient to meet the company’s expansion needs. Management has set a policy of maintaining the current capital structure proportions of 25% long-term debt, 10% preferred stock, and 65% common stock equity for at least the next 3 years. In addition, it plans to continue paying out 40% of its earnings as dividends. Total capital expenditures are yet to be determined. Jennings has been presented with several competing investment opportunities by division and product managers. However, because funds are limited, choices of which projects to accept must be made. A list of investment opportunities is shown in Table 2. To analyze the effect of the increased financing requirements on the weighted average cost of capital (WACC), Jennings contacted a leading investment banking firm that provided the financing cost data given in Table 3. O’Grady is in the 40% tax bracket. TABLE 1 Selected Income Statement Items TABLE 2 TABLE 3 Financing Cost Data Long-term debt: The firm can raise $700,000 of additional debt by selling 10-year, $1,000, 12% annual interest rate bonds to net $970 after flotation costs. Any debt in excess of $700,000 will have a before-tax cost, rd, of 18%. Preferred stock: Preferred stock, regardless of the amount sold, can be issued with a $60 par value and a 17% annual dividend rate. It will net $57 per share after flotation costs. Common stock equity: The firm expects its dividends and earnings to continue to grow at a constant rate of 15% per year. The firm’s stock is currently selling for $20 per share. The firm expects to have $1,300,000 of available retained earnings. Once the retained earnings have been exhausted, the firm can raise additional funds by selling new common stock, netting $16 per share after underpricing and flotation costs. TO DO: a. Over the relevant ranges noted in the following table, calculate the after-tax cost of each source of


financing needed to complete the table. Source of capital Range of new financing After-tax cost (%) Long-term debt $0–$700,000 _________ $700,000 and above _________ Preferred stock $0 and above _________ Common stock equity $0–$1,300,000 _________ $1,300,000 and above _________ ==============================================

FIN 486 Week 5 Individual Assignment Eboy Corporation

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The current balance in accounts receivable for Eboy Corporation is $443,000. This level was achieved with annual (365 days) credit sales of $3,544,000. The firm offers its customers credit terms of net 30. However, in an effort to help its cash flow position and to follow the actions of its rivals, the firm is considering changing its credit terms from net 30 to 2/10 net 30. The objective is to speed up the receivable collections and thereby improve the firm’s cash flows. Eboy would like to increase its accounts receivable turnover to 12.0. The firm works with a raw material whose current annual usage is 1,450 units. Each finished product requires one unit of this raw material at a variable cost of $2,600 per unit and sells for $4,200 on terms of net 30. It is estimated that 70% of the firm’s customers will take the 2% cash discount and that, with the discount, sales of the finished product will increase by 50 units per year. The firm’s opportunity cost of funds invested in accounts receivable is 12.5%. In analyzing the investment in accounts receivable, use the variable cost of the product sold instead of the sale price because the variable cost is a better indicator of the firm’s investment. TO DO Create a spreadsheet similar to Table 15.3 to analyze whether the firm should initiate the proposed cash discount. What is your advice? Make sure that you calculate the following: • a. Additional profit contribution from sales. • b. Average investment in accounts receivable at present


(without cash discount). • c. Average investment in accounts receivable with the proposed cash discount. • d. Reduction in investment in accounts receivable. • e. Cost savings from reduced investment in accounts receivable. • f. Cost of the cash discount. • g. Net profit (loss) from initiation of proposed cash discount. ==============================================

FIN 486 Week 5 Individual Assignment Final

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FIN 486 Week 5 Individual Assignment Final ==============================================

FIN 486 Week 5 Learning Team Assignment Strategic Financial Plan (2 Papers)

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This Tutorial contains 2 Different Papers Resource: The previously completed budgeting spreadsheets Create the financial portion of the strategic plan. The plan must include 3 years of income statements, balance sheets, and cash flow statements. Write a 700- to 1,050-word memo that explains the plan’s major assumptions and identifies areas of risk. The memo must include the following: · A review of cash flow statements and a recommendation of implementing new shortterm working capital strategies on long-term cash flow · An explanation of corporate risk mitigation techniques used in capital


budgeting · An analysis of the effect of a company’s capital structure on strategic financial planning and how it affects risk Refer to the Mergent Online database available in the University Library for financial plan examples. Format your memo consistent with APA guidelines. Click the Assignment Files tab to submit your assignment. ==============================================

FIN 486 Week 5 Signature Assignment Harrod’s Sporting Goods Case Study

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FIN 486 Week 5 Apply: Signature Assignment: Harrod’s Sporting Goods Case Study About Your Signature Assignment Harrod’s Sporting Goods Case Study 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. Signature/Benchmark Assignments are graded with a grading guide or an automated rubric that allows the University to collect data that can be aggregated across a location or college/school and used for course/program improvements. Review the Week 5 Case Study. Complete the required activities 1 to 8 in Microsoft® Word or Microsoft® Excel®. Click the Assignment Files tab to submit your assignment. ==============================================

FIN 486 Week 5 Summary Long Term Financing

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FIN 486 Week 5 Summary Long Term Financing ==============================================

FIN 486 Week 5 Team Assignment Asor Products, Inc

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Jenny Rene, the CFP of Asor Products, Inc. has just completed an evaluation of a proposed capital expenditure for equipment that would expand the firm's manufacturing capacity. Using the traditional NPV methodology, she found the project unacceptable because NPV traditional = -$1,700 < $0 Before recommending rejection of the proposed project, she has decided to assess whether there might be real options embedded in the firm's cash flows. Her evaluation uncovered three options: Option 1; Abandonment; The project could be abandoned at the end of 3 years, resulting in an addition to NPV of $1,200. Option 2; Expansion; If the project outcomes occurred, an opportunity to expand the firm's product offerings further would become available at the end of 4 years. Exercise of this option is estimated to add $ 3,000 to the projects NPV. Option 3: Delay; Certain phases of the proposed project could be delayed if market and competitive conditions caused the firm's forecast revenues to develop more slowly than planned. Such a delay in implementation at that point has a NPV of $10,000. Jenny estimated that there was a 25% chance that the abandonment option would need to be exercised, a 30% chance that the expansion option would be exercises, and only a 10% chance that the implementation of certain phases of the project would have to be delayed. a) use the information provided to calculate the strategic NPV, NPV strategic , for Asor Products' proposed


equipment expenditure. b) judging on the basis of the findings in part a, what action should jenny recommend to management with regard to the proposed equipment expenditure? c) In general, how does this problem demonstrate the importance of considering real options when making capital budgeting decisions? ==============================================

FIN 486 Week 5 Team Assignment Case Study Casa de Diseno

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Chapter 16 Case Study: Casa de Diseno In January 2012, Teresa Leal was named treasurer of Casa de Diseno. She decided that she could best orient herself by systematically examining each area of the company’s financial operations. She began by studying the firm’s short-term financial activities. Casa de Diseno is located in Southern California and specializes in a furniture line called ―Ligne Moderna.‖ Of high quality and contemporary design, the furniture appeals to the customer who wants something unique for his or her home or apartment. Most Ligne Miderna furniture is built by special order because a wide variety of upholstery, accent trimming, and colors is available. The product line is distributed through exclusive dealership arrangements with well-established retail stores. Casa de Diseno’s manufacturing process virtually eliminates the use of wood. Plastic and metal provide the basic framework, and wood is used only for decorative purposes. Casa de Diseno entered the plastic-furniture market in late 2004. The company markets its plastic-furniture products as indoor-outdoor items under the brand name ―Futuro.‖ Futuro plastic furniture emphasizes comfort, durability, and practicality and is distributed through wholesalers. The Futuro line has been very successful, accounting for nearly 40 percent of the firm’s sales and profits in 2011. Casa de Diseno anticipates some


additions to the Futuro line and also some limited change of direction in its promotion in an effort to expand the applications of the plastic furniture. Leal has decided to study the firm’s cash management practices. To determine the effects of these practices, she must first determine the current operating and cash conversion cycles. In her investigations, she found that Casa de Diseno purchases all of its raw materials and production supplies on open account. The company is operating at production levels that preclude volume discounts. Most suppliers do not offer cash discounts, and Casa de Diseno usually receives credit terms of net 30. An analysis of Casa de Diseno’s accounts payable showed that its average payment period is 30 days. Leal consulted industry data and found that the industry average payment period was 39 days. Investigation of six California furniture manufacturers revealed that their average payment period was also 39- days. Next, Leal studied the production cycle and inventory policies. Casa de Diseno tries not to hold any more inventory than necessary in either raw materials or finished goods. The average inventory age was 110 days. Leal determined that the industry standard, as reported in a survey done by Furniture Age, the trade association journal, was 83 days. Casa de Diseno sells to all of its customers on a net-60 basis, in line with the industry trend to grant such credit terms on specialty furniture. Leal discovered, by aging the accounts receivable, that the average collection period for the firm was 75 days. Investigation of the trade association’s and California manufacturers’ averages showed that the same collection period existed where net-60 credit terms were given. Where cash discounts were offered, the collection period was significantly shortened. Leal believed that if Casa de Diseno were to offer credit terms of 3/10 net 60, the average collection period could be reduced by 40 percent. Casa de Diseno was spending an estimated $26,500,000 per year on operating-cycle investments. Leal considered this expenditure level to be the minimum she could expect the firm to disburse during 2012. Her concern was whether the firm’s cash management was as efficient as it could be. She knew that the company paid 15 percent annual interest for its resource investment. For this reason, she was concerned about the financing cost resulting from any inefficiencies in the management of Casa de Diseno’s cash conversion cycle. (Note:


Assume a 365-day year and that the operating –cycle investment per dollar of payables, inventory, and receivables is the same.) To Do A. Assuming a constant rate for purchases, production, and sale throughout the year, what are Casa de Diseno’s existing operating cycle (OC), cash conversion cycle(CCC), and resource investment need? B. If Leal can optimize Casa de Diseno’s operating cycle (OC), cash conversion cycle (CCC), and resource investment need to be under these more efficient condition? C. In terms of resource investment requirements, what is the cost of Casa de Diseno’s Operational inefficiency? D. (1) If in addition to achieving industry standards for payables and inventory, the firm can reduce the average collection period by offering credit terms of 3/10 net 60, what additional savings in resource investment costs will result from the shortened cash conversion cycle, assuming that the level of sales remains constant? (2) If the firm’s sales (all on credit) are $40,000,000 and 45% of the customers are expected to take the cash discount, by how much will the firm’s annual revenues be reduced as a result of the discount? (3) If the firm’s variables cost of the $40,000,000 in sales is 80%, determine the reduction in the average investment in accounts receivable and the annual savings that will result from this reduced investment, assuming that sales remain constant. (4) If the firm’s bad-debts expenses decline from 2% to 1.5% of sales, what annual savings will result, assuming that sales remain constant? (5) Use your findings in parts (2) through (4) to assess whether offering the cash discount can be justified financially. Explain why or why not. E. On the basis of your analysis in parts a through d, what recommendations would you offer Teresa Leal? F. Review for Teresa Leal the key sources of short-term financing, an account payable, that she may consider for financing Casa de Diseno’s resource investment need calculated in part b. Be sure to mention both unsecured and secured sources. ==============================================

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FOR MORE CLASSES VISIT www.fin486cart.com FIN 486 Week 1 Assignment Part 3 JJ’s Jammers Summary FIN 486 Week 1 Assignment Part 1 Financia...

FIN 486 CART Education for Service--fin486cart.com  

FOR MORE CLASSES VISIT www.fin486cart.com FIN 486 Week 1 Assignment Part 3 JJ’s Jammers Summary FIN 486 Week 1 Assignment Part 1 Financia...

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