Homework Help for Finance

Assume that you went to Las Vegas and hit the jackpot for 5 million. Further assume that you were offered a choice to receive the $5 million today or receive it in two years. According to one of the principles of finance, which would you take?
a. You would be indifferent to when you would receive the $5 million.
b. $5 million in two years because you would be afraid of spending it all right away.
c. $5 million today because it would be worth more than if you would receive
e it in two years.
d. $5 million in two years because it would be worth more than if you would receive it today.

Business Law -

Several students from a high school in Fairfax County, Virginia, and another in Tucson, Arizona, filed suit against iParadigms for copyright infringement. iParadigms is the company that owns and operates Turnitin, a software program that allows educational institutions to check student term papers against previous students’ papers to detect plagiarism. The students wanted their papers removed from Turnitin because no contract was ever formed to allow their papers to be posted to Turnitin, that there was duress involved when they clicked to submit their papers because they had no choice but to post them in order to turn in their papers, and that they were minors and could not make valid contracts.

Are the students correct? Or was there a valid contract?

• Managing Credit •

Life Situation •

Single •

Age 24 •

No dependents •

Graduate and engaged • Financial Data Monthly Income $1,750 Living Expenses $1,210 Personal property $7,300 Savings $5,000 Student loan $4,200 Credit card debt $4,600 • Shelby and Mark are making plans to get married, open her pet salon, and possibly buy a condo, but they realize that they must manage their credit situation better. They have made a budget so that they can reduce their individual credit card balances. However, they are looking for other ways to help them achieve their goals more quickly. •

Questions •

1.Given their current situation, list some suggestions on how Shelby and Mark can reduce the cost of using credit. What are some alternative sources of credit they might consider? •

2.What is the best way for Shelby and Mark to compare the cost of credit from different sources?

Total asset turnover deals with the marketing function. If turnovers are low what might a firm wish to consider to improve its performance?

16. A pawn shop will lend $500 for 10 days at a cost of $25 interest. What is the effective rate of interest? (use 360 day year)

When the net present value is negative, the internal rate of return is __________ the cost of capital. Answer greater than greater than or equal to less than equal to

To prepare a risk management plan for the following.

Family : Mother age 37, Father age 39, 3 children ages 14,11 8 and dog age 3.

Income: Mother $35,000, Father $115,000 ( both employed outside of home)

Assets: Home 350,000, in ground pool, perimeter trees and shrubs, storage shed, 2 Autos ( 2014 SUV,2011 sedan) $22,000 savings, $4,500 in antiques,

Both have IRA’s current total = 25,000.

Other data: living in Allentown, PA, Father commutes 37 miles round trip 5 days a week, Mother commutes 5 mile a day round trip. Mothers parents both living (61 and 59).

1. What are the Techniques to treat loss Exposure that is suitable for this family?

Which of the following is one gauge of the company's ability to meet its short term obligations?

a. gross margin

b. asset turnover

c. profit margin

d. working capital

e. none of the above

2. Ellen Fetter invested 5k in a saving account that paid 5% interest compounded annually. she kept the account for 3 years. At the end of the 3 years, Ellen will have approximately?

a. 6,103

b.5,444

c.5,414

d.5,799

E.none of the above

3. Grayson is saving for a used car. He needs 14,000. How much must he invest at 3% annual interest rate to have 14,000 in two years? Round to the nearest dollar.

a. 12,983

b.12,417

c.13,720

d.13,196

e.none of the above

4.Which of the following is added to net income to calculate flow?

a. depreciation

b. increase in accounts recievable

c.increase in inventory

d.decrease in accounts payable

e.none of the above

5. if a company pays out more than the income tax incrrued as shown in the income tax liablity decrease, the effect on cash is a

a. decrease

b. increase

c. no effect

d. none of the above

6. Elsei Jackson is saving for a down payment on a condo. She needs 20,000. How much must she invest in a savings account that pays 5% annually to have the 20,000 in eight years? Round to the nearest dollar.

a. 13,206

b.12,983

c.13,616

d.13,537

e. none of the above

7. The quality that allows quantitative assessment of the similarities and differences among enterprises is known as

a. comparability

b. consistency

c. reliability

d. relevance

e. none of the above

8.Which of the following increases cash?

a. increase in inventory

b. increase in accounts recieveable

c. increase in accounts payable

d. none of the above

9.Which of the following ratios is not useful for comparison purposes?

a. return on assets

b. price earning ratio

c. return on equity

d. earnings per share

e. none of the above

10. Which of the following is a snapshot of the financial position of a company?

a. balance sheet

b. income statement

c. statement of retained earnings

d. cash flow statement

e. none of the above

11. The concept that an item is not large enough to influence the users of a financial statement is

a. cost effectiveness

b. materiality

c. reliability

d. relevance

e. none of the above

12. Which of the following increases cash?

a. issuance of long term debt

b. acquistion of property plant and equipment

c. payment of dividends

d. decrease in short term debt

e. none of the above

13. profit margin and asset turnover can be combined to create

a. return on assets

b. return on equity

c. earnings per share

d. price earnings ratio

e. none of the above

14. which ratio is Wall streets favorite?

a. inventory turnover

b. recieveable turnover

c. current

d. price earnings

e. none of the above

15. information that can make a different to the decision at hand is considered to be

a. reliable

b. comparable

c. relevant

d. understandable

e. none of the above

16. Blackson inc signed a three year lease for the building that Blackson occupies and paid the first six months in advance. The account that should be debited is

a. prepaid expenses

b. cash

c. building

d. accounts payable

e. none of the above

17. Ginger Ellison invested 10,000 in a bank account at Offshot Bank. The account pays 3% interest compounded annually. How much will Ginger have in 5 years? Round to the nearest dollar

a. 11,593

b.11,108

c.10,123

d.12,619

e. none of the above

18. Right hand entries increase

a. asset accounts

b. owners equity accounts

c. liabilities

d. both b and c

e. none of the above

19. Ellis industries is a large, multinational company located in the US. Ellis financial statements are in US dollars. This GAAP is known as

a. monetary concept

b. economic entity

c. conservatism

d. matching

e. none of the above

20. Which of the following ratios is the coverage ratio?

a. return on assets

b. return on equity

c. earnings per share

d. times interest earned

e. none of the above

Eisenhower Communications is trying to estimate the first-year net operating cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project:

The company has a 40% tax rate, and its WACC is 12%.

Write out your answers completely. For example, 13 million should be entered as 13,000,000.

a. What is the project's operating cash flow for the first year (t = 1)? Round your answer to the nearest cent?

b. If this project would cannibalize other projects by $2.5 million of cash flow before taxes per year, how would this change your answer to part a? Round your answer to the nearest cent.
The firm's OCF would now be

c. Ignore Part b. If the tax rate dropped to 30%, how would that change your answer to part a? Round your answer to the nearest cent.
The firm's operating cash flow would (increase/decrease) by $_____?

A)Suppose you buy a December call option for 10,000 pounds with a strike price for 1.050/pound and a premium for $.04/pound. What is the excercise price?

B)Suppose you buy a December Put option for 10,000 pounds with a strike price for 1.040/pound and a premium for $.03/pound. What is the excercise price?

For any two – but no more – of the bond features below, explain whether their presence in a bond contract would make the bonds more attractive or less attractive as an investment relative to bonds that lack the feature but are otherwise identical. Explain each answer.

(i) The bond is callable.

(ii) The bond is putable.

(iii) The bond is convertible.

(iv) The bond is a ‘mortgage bond’ rather than a ‘debenture.’

(v) The bond contract contains no covenants.

1 - Why is cost-based price risky? Cite your work.

2 - How can marketing research and database marketing help companies improve their marketing efforts? Cite your work.

Which has greater interest rate risk, a 30 year treasury bond or a 30-year BB corporate bond?

Problem 12-7
Forecasted Statements and Ratios

Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. Upton's balance sheet as of December 31, 2013, is shown here (millions of dollars):

Sales for 2013 were $375 million and net income for the year was $11.25 million, so the firm's profit margin was 3.0%. Upton paid dividends of $4.5 million to common stockholders, so its payout ratio was 40%. Its tax rate is 40%, and it operated at full capacity. Assume that all assets/sales ratios, spontaneous liabilities/sales ratios, the profit margin, and the payout ratio remain constant in 2014. Do not round intermediate calculations.

If sales are projected to increase by $70 million, or 18.67%, during 2014, use the AFN equation to determine Upton's projected external capital requirements. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
$ million

Using the AFN equation, determine Upton's self-supporting growth rate. That is, what is the maximum growth rate the firm can achieve without having to employ nonspontaneous external funds? Round your answer to two decimal places.
%

Use the forecasted financial statement method to forecast Upton's balance sheet for December 31, 2014. Assume that all additional external capital is raised as a line of credit at the end of the year and is reflected (because the debt is added at the end of the year, there will be no additional interest expense due to the new debt).
Assume Upton's profit margin and dividend payout ratio will be the same in 2014 as they were in 2013. What is the amount of the line of credit reported on the 2014 forecasted balance sheets? (Hint: You don't need to forecast the income statements because you are given the projected sales, profit margin, and dividend payout ratio; these figures allow you to calculate the 2014 addition to retained earnings for the balance sheet.) Round your answers to the nearest cent.