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Perpetual preferred stock from Franklin Inc. sells for $97.50 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?

A company is considering launching a new product. It has ordered a feasibility study at a cost of $300,000 to investigate the consequences of the investment. The study yielded the following information. Expected sales for the next four years are the following:

The sales price of the new product is estimated at $200 per unit. The logistics department forecasts that net working capital requirements (NWC) will represent 20% of current year sales, and that NWC will be recovered in full in year 5. Variable costs per unit are estimated at $140, and there are annual fixed costs of $600,000 every year. Because of marketing synergies, the new product is expected to increase sales of existing products by $150,000 per year for the next 4 years.

This project requires an initial investment (machine) of $8 million that can be depreciated linearly over 8 years to zero book value. At the end of the project in year 4, the machine can be sold for 40% of the purchase price. Taxable income and capital gains are taxed at a fixed rate of 35%, and the required rate of return by investors is 16%. Compute the NPV of the project.

PCW Co is a listed company that operates in the automobile industry. Due to an increase in local demand for the company's products, PCW Co decides to invest in a new machinery. Such an investment project requires some initial investment in working capital of $300,000. And the investment in working capital is subject to general inflation, which is forecasted to be 5% per annum. The cost of the new machine is $3 million. Each year, the new investment is estimated to generate 7,000 products and all of them are expected to be sold. For simplicity's reason, there is no scrap value of the machine. The usual lifetime of the machinery would be 3 years, after which it is supposed to be replaced. The costs and selling price in current price terms are summarised as follows:

Annual sector-specific inflation

Variable costs $100 / unit 6.0 %

Incremental fixed costs $200,000 / year 4.5 %

Selling price $400 / unit 4.0 %

Capital allowance on plant and machinery is on a 25% reducing-balance basis, with the remaining allowance to be claimed in full during the final year of the investment project.

The current corporate tax rate is 35%. The company has a nominal (money-terms) after-tax cost of capital of 10%.

Required:

(a)  Calculate the net present value of the planned purchase of the machine using a nominal (money term) approach and comments on its financial acceptability.                            (11 marks)

(b)  Discuss the following methods involved in investment appraisal:

1)    Real terms approach                                                   (2 marks) 

2)    Written down allowance                                             (2 marks)

Information:

Bergen Bysykkel ha now figured out that they want further improvements

to their database design. Until now the design has not included handling

of subscription. This must be implemented to keep track of who has

currently got a membership and who have had it before. A user can have

more than one membership (the 1 active and older inactive ones). A

fellow junior developer proposes that we add the following attributes to

the User entity:

• SubscriptionID

• Status

• Start

• End

• Type

1. What is the problem with the proposed solution? Are there unwanted

dependencies if we add the attributes that the junior developer proposes?

Identify the problem.

2. Create table / tables to solve the problem. Mark primary keys, and

foreign keys.

3. Based on the tables created, produce the extended ER diagram. Include

appropriate primary, foreign keys and relations.

1.

a. In a market system with no interferences, equilibrium price is $

2.

Need Explanation andDetail in Excel Format:

1 The corporate treasurer of Ajax Company expects the company togrow at 4% in the future, and debt securities
at 6% interest (tax rate = 30%) to be a cheaper option to financethe growth. The current market price per share
of its common stock is $39, and the expected dividend in one yearis $1.50 per share. Calculate the cost of the company's
retained earnings and check if the treasurer's assumption iscorrect.

2 The risk-free rate on 10-year U.S. Treasury bills is 3% and theexpected rate of return on the overall stock market is 11%.
The company has a beta of 1.6. What is the cost of equity?

3 A company has a capital structure as follows:
Total Assets $600,000
Debt $300,000
Preferred Stock $100,000
Common Equity $200,000
What would be the minimum expected return from a new capitalinvestment project to satisfy the suppliers of the capital?
Assume the applicable tax rate is 40%, interest on debt is 11%,flotation cost per share of preferred stock is $0.75, and
flotation cost per share of common stock is $4. The preferred andcommon stocks are selling in the market for $26 and $143
a share respectively, and they are expected to pay a dividend of $2and $7, repectively, in one year. The company's dividends
are expected to grow at 13% per year. The firm would like tomaintain the existing capital structure to finance the new
project.

4 Required rate of return is 10%.
Net Cash Flow
Year Project A Project B
0 -$2,000 -$2,500
1 $900 $1,500
2 $1,100 $1,300
3 $1,300 $800
a) Calculate the payback period for each project.
b) Calculate the net present value for each project.

c) Which project do you think will be approved, if only one projectcan be approved? Why?
d) What if the required rate of return was 20%?




5 A corporate bond has a face value of $1,000 and an annual couponinterest rate of 7%. Interest is paid annually.
10 years of the life of the bond remain. The current market priceof the bond is $872. To the nearest whole percent,
what is the yield to maturity (YTM) of the bond today?



6 Ajax Manufacturing dividend is $8 per share of common stock inone year. The dividend growth rate is 3%.
Required rate of return is 14%.

a) What is the current market price per share?
b) What is the annual rate of return if you purchase the stock at$65?


7. A common stock sells for $82 per share, has a growth rate of 7%and a dividend that was just paid of $3.82. What is the
annual percent yield per share?

8 A corporate bond has a face value of $1,000 and an annual couponinterest rate of 6%. Interest is paid annually.
12 years of the life of the bond remain. The current market priceof the bond is $1,027, and it will mature at $1,100.
To the nearest whole percent, what is the yield to maturity (YTM)of the bond today?

Please this is the only information i currently have

Margaret Lykaios is the president and major shareholder of MeasureUp Ltd., a Canadian-controlled private corporation that operates a construction business in Campbellford, Ontario. MeasureUp earns only business income, which is all subject to the small business deduction.

In 2020, she had a number of financial transactions. She has asked you to help her prepare her 2020 tax return. The following additional financial information is provided for 2020:

1. Margaret’s gross salary was $90,000, from which MeasureUp deducted the following amounts:

2. Margaret is a 30% partner in a computer software business but is not active in its management. The partnership financial statement shows a profit of $90,000 for the year ended December 31, 2020. The profit consists of $12,000 from software sales and $78,000 from interest earned.

3. On July 1, 2019, Margaret purchased a three-year guaranteed investment certificate for $20,000 with interest at 10%. The interest compounds annually but is not payable until July 1, 2022.

4. Margaret received (made) the following additional receipts (disbursements):

5. In the past few years, Ms. Lykaios has invested her excess funds in various residential rental properties in Campbellford.  Given the economic situation in the community at the time, she was able to purchase several foreclosed properties at very low prices.  At the beginning of 2020, she owned four properties, as well as some furnishings used in one of the older buildings.  The relevant information on these rental properties for 2020 is as follows:

• Furniture The furniture was used in the building at 18 Peter Street.  It had a capital cost of $15,000, a UCC of $8,000 at the beginning of the year, and was sold during the year for $5,000.

• 18 Peter Street The building had a capital cost of $42,000. It was sold on August 1.  For CCA purposes, it was included in the same Class 1 pool as 4 Marmora Road.  Of the sale proceeds, $60,000 was allocated to the building.  From January 1 to July 31, the building generated rents of $6,000 and incurred property taxes of $1,200, interest charges of $1,750, and other allowable expenses (excluding CCA) of $1,000.

• 4 Marmora Road The building has a capital cost of $45,000.  At the beginning of the year, the UCC of the Class 1 pool, which included both 4 Marmora Rd and 18 Peter Street, was $50,000.  During the year, it generated rents of $5,000 and incurred property taxes of $1,550, interest charges of $650, and other allowable expenses (excluding CCA) of $2,500.

• 94 Gregory Street The building has a capital cost of $650,000.  Its UCC at the beginning of the year was $550,000.  During the year, it generated rents of $42,000 and incurred property taxes of $5,200, interest charges of $7,800, and other allowable expenses (excluding CCA) of $8,500.

• 125 Hanover Drive The building has a capital cost of $102,000.  Its UCC at the beginning of the year was $98,000.  During the year, the unit generated rents of $10,000 and incurred property taxes of $1,750, interest charges of $5,000, and other allowable expenses (excluding CCA) of $4,000.

• During the year, Ms. Lykaios purchased a used pick-up truck that she intends to use only when working with her rental properties. The cost of the truck, including HST was $14,230.

Required:

Using the formatted spreadsheet provided, calculate the minimum net income for tax purposes for Ms. Lykaios for 2020.   Indicate your rationale for the treatment of all information given.  Include page references to your text for support of your analyses.

When calculating CCA, please show both the maximum CCA that is available and also the actual amount that will be deducted in calculating net income.

When calculating Ms. Lykaios’s net rental income:

• You should provide a separate calculation for each property as well as a total (see formatted spreadsheet).  
• On the CCA chart, please show the maximum CCA that is available and the corresponding UCC balances.
• Note the amount (if any) of taxable capital gains or allowable capital losses in relation to these buildings.

Stock X has an expected return of 12% and risk of (8 = 1. Stock Y has expected return of 13 % and (3 =1.5. The market's expected return is 11% and the T-bill rate is 5%. 
a) According to the capital asset pricing model (CAPM), which stock is a better buy? [6 marks] b) What is the alpha of each stock?  [4 marks] c) Plot the security market line (SML) and each stock's risk-return point on one graph. Show the alphas graphically.  

Margaret Lykaios is the president and major shareholder of MeasureUp Ltd., a Canadian-controlled private corporation that operates a construction business in Campbellford, Ontario. MeasureUp earns only business income, which is all subject to the small business deduction.

In 2020, she had a number of financial transactions. She has asked you to help her prepare her 2020 tax return. The following additional financial information is provided for 2020:

1. Margaret’s gross salary was $90,000, from which MeasureUp deducted the following amounts:

2. Margaret is a 30% partner in a computer software business but is not active in its management. The partnership financial statement shows a profit of $90,000 for the year ended December 31, 2020. The profit consists of $12,000 from software sales and $78,000 from interest earned.

3. On July 1, 2019, Margaret purchased a three-year guaranteed investment certificate for $20,000 with interest at 10%. The interest compounds annually but is not payable until July 1, 2022.

4. Margaret received (made) the following additional receipts (disbursements):

5. In the past few years, Ms. Lykaios has invested her excess funds in various residential rental properties in Campbellford.  Given the economic situation in the community at the time, she was able to purchase several foreclosed properties at very low prices.  At the beginning of 2020, she owned four properties, as well as some furnishings used in one of the older buildings.  The relevant information on these rental properties for 2020 is as follows:

• Furniture The furniture was used in the building at 18 Peter Street.  It had a capital cost of $15,000, a UCC of $8,000 at the beginning of the year, and was sold during the year for $5,000.

• 18 Peter Street The building had a capital cost of $42,000. It was sold on August 1.  For CCA purposes, it was included in the same Class 1 pool as 4 Marmora Road.  Of the sale proceeds, $60,000 was allocated to the building.  From January 1 to July 31, the building generated rents of $6,000 and incurred property taxes of $1,200, interest charges of $1,750, and other allowable expenses (excluding CCA) of $1,000.

• 4 Marmora Road The building has a capital cost of $45,000.  At the beginning of the year, the UCC of the Class 1 pool, which included both 4 Marmora Rd and 18 Peter Street, was $50,000.  During the year, it generated rents of $5,000 and incurred property taxes of $1,550, interest charges of $650, and other allowable expenses (excluding CCA) of $2,500.

• 94 Gregory Street The building has a capital cost of $650,000.  Its UCC at the beginning of the year was $550,000.  During the year, it generated rents of $42,000 and incurred property taxes of $5,200, interest charges of $7,800, and other allowable expenses (excluding CCA) of $8,500.

• 125 Hanover Drive The building has a capital cost of $102,000.  Its UCC at the beginning of the year was $98,000.  During the year, the unit generated rents of $10,000 and incurred property taxes of $1,750, interest charges of $5,000, and other allowable expenses (excluding CCA) of $4,000.

• During the year, Ms. Lykaios purchased a used pick-up truck that she intends to use only when working with her rental properties. The cost of the truck, including HST was $14,230.

Required:

Using the formatted spreadsheet provided, calculate the minimum net income for tax purposes for Ms. Lykaios for 2020.   Indicate your rationale for the treatment of all information given.  Include page references to your text for support of your analyses.

When calculating CCA, please show both the maximum CCA that is available and also the actual amount that will be deducted in calculating net income.

When calculating Ms. Lykaios’s net rental income:

• You should provide a separate calculation for each property as well as a total (see formatted spreadsheet).  
• On the CCA chart, please show the maximum CCA that is available and the corresponding UCC balances.
• Note the amount (if any) of taxable capital gains or allowable capital losses in relation to these buildings.

The question is in the image attached.