Angelo Diaz has decided to go into business selling computer accessories that are popular among university students

Question 1


Angelo Diaz has decided to go into business selling computer accessories that are popular among university students. He will operate the business in a shopping centre, mostly on weekends. He is trying to organise himself for the start of the first quarter, so he needs to prepare a few budgets. Use the following information in order to help him achieve this goal.

Angelo estimates expected sales for January to be £800, February to be £1,200, March to be £2,000 and April to be £3,000. He expects a gross profit ratio of 0.4. He will keep sixty per cent of the next month’s sales in the ending finished goods inventory.

Angelo will pay himself a monthly salary of £150. He will pay his best friend £60 to help him with miscellaneous errands. He estimates that general operating costs will be £130 monthly. In addition, since his cousin is the owner of the shopping centre where he will locate his store, he will only pay £100 per month in rent. However, he plans to upgrade his space at the shopping centre, which will cost £500, of which £200 will be paid in January and £300 in February. All other costs must be paid for as incurred. He will begin January with £400 in the bank.

He expects that forty per cent of sales will be paid for in cash. He expects customers will put the rest on credit and pay in instalments in subsequent months.
For the purposes of this assignment, assume the following:

· 30% will be paid in the month of sale and 10% of people who pay in the month of sale will qualify for a 20% discount.

· Another 20% will be received the month following the sale and 5% the second month following the sale.

· 5% of credit sales will never be received.

For the purposes of this Assignment, you can also assume the following:

· Payments for merchandise are made 30% in the month of purchase and 70% the following month.
· Interest is charged at a rate of 24% per year, and payments of interest only are due at end of each         quarter.

· All loans are borrowed at the very beginning of the month, and payments are made at the very end of the month.

· Angelo must maintain a minimum cash balance of £1,000.

Required:


Help Angelo by doing the following:

· Prepare a schedule of cash receipts for the first quarter.

· Prepare a schedule of inventory purchases for the first quarter.

· Prepare a schedule of cash disbursements for the first quarter.

· Prepare a cash budget for January and February.

· Calculate how much interest is owed on February 28.




Question 2


ABC is a company that manufactures a type of docking station for a laptop. You will analyse its income statement for the 2014 fiscal year (shown below).

Sales	£2,400,000
Variable cost of goods sold	1,680,000
Variable sales commissions	120,000
Contribution margin	600,000
Selling expense	105,000
Sales commissions expense	48,000
Administrative expense	212,000
Net income	235,000

Variable costs per unit are £6.


Required: (Round all answers to 2 decimal places.)


· Calculate break even in pounds.


· Calculate break even in units.


· Calculate break even in pounds if the sales price increases by 10% and fixed costs increase by £12,000.


· Calculate break even in pounds if total sales increase by 10% and fixed costs increase by 10%.


· Calculate sales (in pounds) to achieve £600,000 after tax (tax rate is 40%).

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IT CKIT-552-1

MedCo is a large manufacturing company, currently using a large printing press in its operations

Question 1

MedCo is a large manufacturing company, currently using a large printing press in its operations, and is considering two replacements: the PDX341 and PDW581. The PDX341 costs £500,000 and has annual maintenance costs of £10,000 for the first 5 years and £15,000 for the following 5 years. After 10 years, MedCo would scrap the PDX341 (salvage value is zero). In contrast, PDW581 costs £50,000 and requires maintenance of £30,000 a year for its 10-year life. The salvage value of the PDW581 would be zero in 10 years. MedCo must replace its current printing press because it has stopped functioning. Assume that MedCo has a 10% cost of capital and that all cash flows are after tax.


Required: Use the NPV approach to calculate which replacement press is the more appropriate.


Question 2

Read the Peavler (2014) article and answer the required questions.

Peavler, R. (2014) Pros and cons of the discounted payback period [Online]. Available from:http://bizfinance.about.com/od/Capital-Budgeting/a/discounted-payback-period.htm

(Accessed 26 March 2015).

ABC Computer, a computer manufacturing company, is considering opening three retail stores in Manchester, UK. To do this, ABC requires a £600,000 initial investment and expects to make £120,000 per year in the first 4 years and £240,000 every year for the next 3 years.

Required:
· What is the payback period?
· One of the disadvantages of the payback method is that the time value of money is not considered when you calculate payback period. If the discount rate is 8%, what is the discounted payback period?

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Decision Trees Problems

Problem 1 Decision Trees

In an earlier example you constructed a decision tree showing event in order to calculate the probabilities of  three siblings by gender
You were asked to calculate the probabilities of siblings with different numbers if siblings and genders
This time you will have to construct a tree calculating the probabilities of a mother giving birth to two consequtive sets of twins after two different pregnancies.

Construct the decision tree and answer the following questions

1 - What is the probability of having two boy and two girls?
2 - What is the probability of having twin boys followed by twin girls?
3 - What is the probability of a girl having two or more brothers
4 - What is the probability of having both boys and girls amongst your two sets of twins?
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Problem 2

Decision Trees
In an earlier example , you explored a decision tree for a business trying to do a product rollout by December
For this example you are going to examine another situation

In this case a company needs to make a decision about their manufacturing facility
They can
A) not expand their business at all
B) expand their operations here in the US, or
C) expand their operations by outsourcing to China

For each scenario, there are three possible events that can occur
1) Business conditions can remain unchanged, with salkes and revenue remaining unchanged
2) Business conditions can improve, allowing more growth
3) or Business conditions can worsen reducing sales and revenues

The business currently makes about $200 million dollars a year.
If business conditions improve, revenues would increase by 50%
If business conditions worsen revenues would drop by 50%

Outsourcing would cost the company about $100 million the first year to set up a manufacturing facility overseas, but would  save about 20%/year (i.e., savings equal to 20% of revenue), thus increasing net earnings
Expanding locally would increase costs by $50million the first year
If neither expansion nor outsourcing occurs, potential increases in sales would not be achieved

If the probabilities of changes in business conditions are as noted below,
Calculate the expected payoff for each choice, A, B, or C and each of the events based on two years of  earnings/costs/savings

economy unchanged 50.00% savings from outsourcing 20.00%
economy improves 20.00% cost to outsource -100
economy worsens 30.00% cost to expand -50

Represent in a decision tree
Identify the optimum choice
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Problem 3

In your readings you had an example of a project PERT chart that had durations of different steps characterized in terms of Best case duration, worse case duration, and most likely duration

For the table below,
draw a PERT network diagram
calculate the estimated duration for each activity (TE - estimated time) cumulative single tail probability table
identify the critical path based on the expected time
what is the probability of completing the project in 30 days


a m b predecessors TE variance Expected Time Critical path
A 2 5 6 - -9.00 -0.69 4.67
B 4 8 10 - -14.00 1.00 7.67 1.00
C 2 3 5 A -6.00 11.98 3.17
D 1.5 3 6 C -7.50 3.84 3.25
E 4 5 8 B -9.00 2.60 5.33
F 5 10 15 B -20.00 37.86 10.00 6.15
G 3 7 10 D -14.00 22.74 6.83
H 3.5 5 7 D -8.50 4.15 5.08
I 2 4 8 E -10.00 6.84 4.33
J 2 4 5 E -7.00 5.68 3.83
K 2 3 5 G -6.00 1.91 3.17
L 4 7 12 H,I -15.00 15.39 7.33
M 4 8 16 J,F -20.00 27.36 8.67 5.23

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Decision Trees Problems

Problem 1 Decision Trees

In an earlier example you constructed a decision tree showing event in order to calculate the probabilities of  three siblings by gender
You were asked to calculate the probabilities of siblings with different numbers if siblings and genders
This time you will have to construct a tree calculating the probabilities of a mother giving birth to two consequtive sets of twins after two different pregnancies.

Construct the decision tree and answer the following questions

1 - What is the probability of having two boy and two girls?
2 - What is the probability of having twin boys followed by twin girls?
3 - What is the probability of a girl having two or more brothers
4 - What is the probability of having both boys and girls amongst your two sets of twins?
***************************************************

Problem 2

Decision Trees
In an earlier example , you explored a decision tree for a business trying to do a product rollout by December
For this example you are going to examine another situation

In this case a company needs to make a decision about their manufacturing facility
They can
A) not expand their business at all
B) expand their operations here in the US, or
C) expand their operations by outsourcing to China

For each scenario, there are three possible events that can occur
1) Business conditions can remain unchanged, with salkes and revenue remaining unchanged
2) Business conditions can improve, allowing more growth
3) or Business conditions can worsen reducing sales and revenues

The business currently makes about $200 million dollars a year.
If business conditions improve, revenues would increase by 50%
If business conditions worsen revenues would drop by 50%

Outsourcing would cost the company about $100 million the first year to set up a manufacturing facility overseas, but would  save about 20%/year (i.e., savings equal to 20% of revenue), thus increasing net earnings
Expanding locally would increase costs by $50million the first year
If neither expansion nor outsourcing occurs, potential increases in sales would not be achieved

If the probabilities of changes in business conditions are as noted below,
Calculate the expected payoff for each choice, A, B, or C and each of the events based on two years of  earnings/costs/savings

economy unchanged 50.00% savings from outsourcing 20.00%
economy improves 20.00% cost to outsource -100
economy worsens 30.00% cost to expand -50

Represent in a decision tree
Identify the optimum choice
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Problem 3

In your readings you had an example of a project PERT chart that had durations of different steps characterized in terms of Best case duration, worse case duration, and most likely duration

For the table below,
draw a PERT network diagram
calculate the estimated duration for each activity (TE - estimated time) cumulative single tail probability table
identify the critical path based on the expected time
what is the probability of completing the project in 30 days


a m b predecessors TE variance Expected Time Critical path
A 2 5 6 - -9.00 -0.69 4.67
B 4 8 10 - -14.00 1.00 7.67 1.00
C 2 3 5 A -6.00 11.98 3.17
D 1.5 3 6 C -7.50 3.84 3.25
E 4 5 8 B -9.00 2.60 5.33
F 5 10 15 B -20.00 37.86 10.00 6.15
G 3 7 10 D -14.00 22.74 6.83
H 3.5 5 7 D -8.50 4.15 5.08
I 2 4 8 E -10.00 6.84 4.33
J 2 4 5 E -7.00 5.68 3.83
K 2 3 5 G -6.00 1.91 3.17
L 4 7 12 H,I -15.00 15.39 7.33
M 4 8 16 J,F -20.00 27.36 8.67 5.23

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Identify a company that engages in B2B arrangements with other companies

UMT MGT222. E-Commerce

Assignment 1

This assignment's goal is to help you better understand what business-tobusiness (B2B) e-business transactions entail. B2B transactions are company-tocompany transactions. For example, Wal-Mart has established sophisticated B2B systems with its various suppliers, enabling it to order stock electronically from the suppliers when stocks in its stores become depleted. Another example is that financial institutions typically have B2B arrangements with their major corporate clients, enabling these clients to engage in various financial transactions electronically (e.g., move funds between accounts, purchase stocks).


Written Assignment

Identify a company that engages in B2B arrangements with other companies.
What is the nature of the B2B transactions that are carried out (e.g., ordering supplies, making financial transactions)? What technical architecture supports these transactions? What are the benefits and drawbacks of the B2B arrangement that this company engages?


Your paper should not exceed five (5) pages, single-spaced using one-inch

margins and a 12-point font. Carefully and completely cite your references.

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Time Value of Money Project.xlsx

Question: 1
What is the market value of the following bond?

Coupon 8% 8%
Maturity date 2038 22
Interest paid semiannually 44
Par Value $1000 1000
Market interest rate 10% 10%

Type your formula and solve in the cell below
 
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Question: 2
 What is the market value of the following bond?

Coupon 9%
Maturity date 2028
Interest paid semiannually
Par Value $1000
Market interest rate 8%

Type your formula and solve in the cell below
 
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Question: 3

What is the yield to maturity of the following bond?

Coupon                                  9%        9%
Maturity date                      2027        11
Interest paid semiannually 22
Par Value $1000             1000 45
Market price                       $955.00 955


Type your formula and solve in the cell below
4.84%

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Question:4

What is the current yield of bond in Question 3?
Type your formula and solve in the cell below
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Question : 5
The risk free rate is 7%, the return in the market is 10%, and the beta is 1.30.  What return must you receive to be satisfied that you are being fairly compensated for the risk of the firm?

Type your formula and solve in the cell below
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Question : 6
What should a zero coupon bond maturing for $1000 in 9 years with a 7% market rate sell for?

Type your formula and solve in the cell below

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Question:  7
Preferred stock has a dividend of $12 per year.  The required return is 6%.  What should the price per share be?

Type your formula and solve in the cell below
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Question : 8
Hurricane Corporation expects to grow its dividend by 5% per year.  The current dividend is $2 per share.  The required return is 8%.

A. What is the estimated value of a share of common stock?
B. If price is $40 and dividends were $1.50 per share but expected to grow at 4% per year, what would be the required rate of return?  

Part A
Type your formula and solve in the cell below

Part B
Type your formula and solve in the cell below
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Question : 9

Compute the expected return for the following investment
State of nature   Probability Return
     Boom                          25% 20%
     Average                  60% 8%
     Recession                  15% 0%

Type your formula and solve in the cell below
 
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Question: 10
The following are the expected returns on a portfolio of investments.  
What is the expected rate of return on the portfolio?

Investment       # of Shares Price Per Share Expected return
A. 2000 $20 10%
B. 3000 $10 15%
C. 1000 $15 8%

Type your formula and solve in the cell below

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Question : 11

You take out a $200,000 mortgage for 30 years at 6%.  
What is your monthly payment? Solve Below
 
Fill out the ammortization table to answer the following questions.
What is the principle and interest on the 1st payment?
What is the principle and interest on the 12th payment?
How much interest will you pay over the 30 years?
NOTE:Completing the table will automatically transfer the final 3 questions to the answer page.
Month Beginning Balance Interest Princpal Ending Balance

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Question: 12
You bought a house 8 years ago with a $250,000 mortgage.  It was a 15 year loan with monthly payments which will pay off the loan when you make the last payment. The interest rate was 6%.  What is your monthly payment? Rate NPR PV PMT
6% 15 250000 ($25,740.69)
Interest
Complete the ammortization table to answer the following questions. 15000 ($128.70)

What is your current loan balance?
  Month Beginning Balance Monthly Paymt Interest Princpal Ending Balance
1 $250,000 ($128.70) ($2,016.35) $252,016.35
How much interest will you pay in the upcoming year? 2 $250,000 ($2,145.06) #VALUE! #VALUE! #VALUE!

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Question : 13
Use yellow cells to insert your formual to solve the problem.

You want to retire as a millionaire. How much do you need to put away each month if:
You use common stocks and have an average return of 10%?
You use corporate bonds and have an average return of 6%?
You use government bonds and have an average return of 4%?
You put your money in a CD at 3.5% interest rate?
NOTE:   If you are over 45 use $100,000 instead of $1,000,000
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Question : 14

You are offered a contract with a signing bonus. If they offered you either $215,000 in cash or $2,000 a month for 15 years, guaranteed, which do you take (based strictly on the math)? Your safe rate of return is 7.5%.

Computer the value of the $2,000 a month here:
Which is greater?   The lump sum or the cash flow?
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Question : 15
You are 30 years old and planning to retire at age 62.  You want to plan your finances for living 35 years past age 62 and then die dead broke. You determine that you will need $3000 per month for the 35 years. At age 62, you plan to go live in the tropics on the beach and live on coconuts, rum and fishing. You need to conclude your retirement savings at age 55 because all your spare money then will go to your kids education.  Ignore inflation.

The question is how much money do you need to save each month between now and 55 so that you can quit contributing and have enough money for the $3000 per month starting at age 62.   The expected return on your investments over the whole period is 10% per year.  


Show your work on this page and type your final answer below:

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A manufacturing company is thinking of launching a new product

A manufacturing company is thinking of launching a new product. The company expects to sell $950,000 of the new product in the first year and $1,500,000 each year thereafter. Direct costs including labor and materials will be 45% of sales. Indirect incremental costs are estimated at $95,000 a year. The project requires a new plant that will cost a total of $1,500,000, which will be a depreciated straight line over the next 5 years. The new line will also require an additional net investment in inventory and receivables in the amount of $200,000.

Assume there is no need for additional investment in building the land for the project. The firm's marginal tax rate is 35%, and its cost of capital is 10%.

To receive full credit on this assignment, please show all work, including formulae and calculations used to arrive at financial values.

Assignment Guidelines

Using the information in the assignment description:
Prepare a statement showing the incremental cash flows for this project over an 8-year period.
Calculate the payback period (P/B) and the net present value (NPV) for the project.
Answer the following questions based on your P/B and NPV calculations:
Do you think the project should be accepted? Why?
Assume the company has a P/B (payback) policy of not accepting projects with life of over 3 years.
If the project required additional investment in land and building, how would this affect your decision? Explain.
Your submitted assignment (130 points) must include the following:

A double-spaced Word document of 2–3 pages that contains your calculation values, your complete calculations, any formulae that you used, and your answers to the two questions listed in the assignment guidelines.
You must include your explanation of how you used Excel for your calculations if applicable.

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