ADMS 3330 Lecture : ADMS 3330 Assignment 2 Solution PART A

57 views6 pages

pearimpala756

29 Jun 2012

School

York University

Department

Administrative Studies

Course

ADMS 3330

Professor

Thabit Abdullah

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Part a (each model analysis is 20 pts) In this part we will analyze each forecasting model and then summarize the results: 5-period moving average: under this method we can only forecast from day 6 to day 30. : in this case we first need to set. Mad and mse are computed using periods 2-30, since the first period is used for initialization: multiplicative time series model. The first step involves the calculation of the seasonal indices. Day 1: (1. 0392 + 1. 0594 + 1. 0377 + 1. 0406 + 1. 0428)/5 = 1. 0439. Day 2: (0. 7982 + 0. 8111 + 0. 7985 + 0. 8172 + 0. 8000)/5 = 0. 8050. Day 3: (0. 9557 + 0. 9639 + 0. 9539 + 0. 9613 + 0. 9670 + 0. 9645)/6 = 0. 9611. Day 4: (1. 0647 + 1. 0405 + 1. 0519 + 1. 0568 + 1. 0157)/5 = 1. 0459. Day 5: (1. 1571 + 1. 1205 + 1. 1560 + 1. 1326 + 1. 1642)/5 = 1. 1461.

Related Questions

Finding Grant Element using the Jie Chen 2005 Method for Calculating NPV of the Loan (20 marks) To qualify as official development assistance (ODA), development loans must have a grant element of at least 25 percent, calculated using a stated annual interest rate of 10 percent. Your colleague and former ADMS 4540 student just started work as a policy analyst in Canadaâs Ministry of Foreign Affairs and is discussing some of the work she has been doing recently with you over lunch. She tells you about a recent meeting with representatives from Mongolia to discuss development assistance which Canada wishes to extend to the country. The assistance will have the following characteristics: a $75 million loan, to be amortized over 10 years by 20 semi-annual payments, after a grace period of 5 years during which only interest would be paid semi-annually. Canada would charge interest at a stated annual rate of 7%. Okay, if you are wondering, yes, you saw the above in Question 1 on Assignment 1. Now letâs calculate the grant element of this loan using the method another former ADMS 4540 student (and BAS graduate) Jie Chen discovered back in 2005. First find the payments for an unsubsidized loan using a stated annual interest rate of 10 percent, following the usual grace period of 5 years. That is, calculate the interest-only payments at 5% semi-annually for the first 5 years and then amortize the $75 million over 10 years by 20 semi-annual payments at 5% semi-annually. Next, calculate the payments at a subsidized annual rate of 7%. (Okay, you did this in assignment 1 already, so just copy it here.) Take the difference of each payment which is the subsidy each period over 15 years (or 30 semi-annual periods) and find the PV of these subsidies. Compare your result with the grant element you calculated in assignment 1. How do they compare? Unlike finding the NPV of a corporate loan, the Jie Chen 2005 method does not appear to involve less calculation in ODA problems. Why?

violetbee105

Assignment 2: You Are an InvestmentAnalyst
Due Week 10 and worth 250 points

As the CFO of your corporation, you are in charge of preparing andanalyzing financial statements that will be presented to potentialinvestors and creditors. However, before you can present thefinancial statements to investors and creditors, you need toprepare the financial statements with supporting analysis. Selectone (1) pair of the following companies to conduct your financialstatement analysis.

Pepsi versus Coca Cola, or

Amazon versus eBay

Target versus Walmart

Nike versus Reebok

Write a six to eight (6-8) page paper in which you:

1) Analyze each companyâs history, product / services, majorcustomers, major suppliers, and leadership, and provide a synopsisof each company.

2) Identify three (3) profitability ratios that creditors may beinterested in. Calculate the ratio for each company, and prepare areport to summarize your findings on the financial health of eachcompany. Also, recommend to management the manner in which they canimprove each of the three (3) ratios identified.

3) Summarize at least two (2) news events (this may includemergers, acquisitions, or political issues) that occurred from 2012to the present day, and analyze the impact that these events had oneach companyâs financial statements. Indicate the primary way inwhich the merger, acquisition or political issues influencepotential investorsâ and creditorsâ perception of bothcompanies.

4) Analyze each companyâs income statement over the past two (2)years, and determine which company outperformed the other. Suggesta way in which the lagging company can improve its income. Supportyour suggestion with a specific analysis.

5) Analyze each companyâs balance sheet. Prepare a verticalanalysis for each company, interpret the results, and write afinancial report. Also, suggest the manner in which the companythat is not performing well can improve its balance sheet in orderfor it to be attractive to potential investors.

6) Use at least four (4) quality academic resources in thisassignment. Note: Wikipedia and other Websites donot qualify as academic resources. PLEASE INCLUDE THE WEBSITES USEDFOR INFORMATION.

greymammoth322

I just need part E the rest has been answered

Mississippi Delta, Inc. has been selling switching equipment to computer companies on net-30 terms, in which payment is expected by 30 days from the invoice date. Concerned about deteriorating collection patterns, the credit manager has divided customers into two groups for examination purposes: Prompt payors and laggards. Prompt payors (80 percent of Mississippi Deltaâs customers) pay, on average, in 35 days, versus a 72-day average for the laggards. The manager wonders if the credit terms should be modified to include a 2 percent cash discount on invoices paid within 10 days. The average invoice is the same for both groups, roughly $4,000. The manager expects 50% of the prompt payors to pay in exactly 10 days and the average on the other half to slip to 40 days. He thinks that 20% of the laggards will pay in 10 days and the average on the others will slip to 80 days. Given these forecasts, he is not sure that the lost revenue from discount takes (who would then pay only 98% of the invoiced dollar amount) justifies the improved collection. The companyâs annual cost of capital is 11%. A.) Using NPV calculations, show the PV of the present collection experience. B.) Calculate the NPV of the proposed 2/10, net-30 terms. C.) Based on your NPV analysis, should Mississipi Delta Inc. adopt the cash discount? D.) What other factors should be taken into account before Mississippi Delta Inc. makes a switch, assuming such is justifiable on an NPV basis? E.) Sensivity analysis involves varying the key assumptions, one at a time, and observing the effect on the key decision criterion-such as profits or NPV. In the NPV analysis above, how could could one carry out sensitivity analysis? (If you have a financial spreadsheet available, conduct a sensitivity analysis that varies the number of prompt payors who will pay in exactly 10 days and report your findings.) *** Answer in an Excel document and give explanation as to how and why you got to your answer View comments (1) Expert Answer snarulatutor snarulatutor answered this 48 minutes later Was this answer helpful? 1 0 1,896 answers Since, there are multiple questions, the first four have been answered. ___________ Part A) To calculate the NPV, we need to determine the values of cash flows. Cash Flow on the 35th Day = Invoice Value*Customer Percentage Making the Payment on 35th Day = 4,000*80% = 3,200 Cash Flow on the 72th Day = Invoice Value*Customer Percentage Making the Payment on 72th Day = 4,000*20% = 800 The net present value of these 2 cash flows can be calculated as follows: Net Present Value = 3,200/(1+11%/365)^35 + 800/(1+11%/365)^72 = $3,949.26 ___________ Part B) To calculate the NPV, we need to determine the values of cash flows. Cash Flow on 10th Day = Invoice Value*Customer Percentage Taking Discount*(1-Discount Percentage) = 4,000*80%*50%*(1-2%) + 4,000*20%*20%*(1-2%) = $1,724.80 Cash Flow on 40th Day = Invoice Value*Customer Percentage Making Payment on 40th Day = 4,000*40% = $1,600 Cash Flow on 70th Day = Invoice Value*Customer Percentage Making Payment on 40th Day = 4,000*20%*80% = $640 The net present value of these 3 cash flows can be calculated as follows: Net Present Value = 1,724.80/(1+11%/365)^10 + 1,600/(1+11%/365)^40 + 640/(1+11%/365)^70 = $3,927.08 ___________ Part C) The net present value of cash flows with discount ($3,927.08) is less than the net present value of cash flows without discount ($3,949.26). Therefore, the company should not adopt the cash discount. ___________ Part D) Some of the other factors that should be taken into consideration include the possibility of default risk (as the credit period in case of laggards has increased to 80 resulting in higher probability of default). Another factor to be considered is the payment terms available from the suppliers. The company can adopt a cash discount policy, if it is also getting a discount on early payments to its suppliers. Credit policies used within the industry or by other companies of the same nature and size can be used as reference points while devising a credit policy.

I just need part E) and it explained

ADMS 3330 Lecture : ADMS 3330 Assignment 2 Solution PART A

Document Summary

Get access

Related Documents

ADMS 3330 Study Guide - Quiz Guide: Time Series, Exponential Smoothing

ADMS 3330 Study Guide - Final Guide: Toronto Star, Test Statistic, Simple Linear Regression

ADMS 3330 Study Guide - Final Guide: Linear Programming Relaxation, Simple Linear Regression, Integer Programming

Related Questions