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FIN 370 Week 3 My Finance Lab

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Question;FIN 370 Week 3 My Finance Lab;Problem 1 - Campbell Industries;Problem 2 (Deere);All of;Deere?s net working capital values for this period are negative. While the;magnitude of 2008?s is smaller than 2007?s, it is still higher than 2006?s;initial value. Looking at Deere?s accounts for 2007 and 2008, we see that;Deere?s cash fell very slightly, but its short-term investments completely;disappeared (Deere didn?t have any of these in 2006, either). Net receivables;rose, inventory rose significantly. These last two accounts were extremely;influential on the company?s liquidity position. Deere might want to tighten up;its credit policy (to reduce accounts receivable) and investigate its inventory;position. There are some issues on the current liability side, too. Deere?s;accounts payable doubled in 2008, its short-term debt fell slightly, and its;other current liabilities disappeared. Deere?s A/P increase undoubtedly helped;fund its increases in inventory and A/R. However, ominously, the dollar;increase in A/P is much larger than the increases in these two CA accounts.;Overall, Deere?s liquidity position is fairly consistent: Net working capital;is negative throughout the period, with the current ratio improving slightly in;2007.;Problem 3 (Marvel Manufacturing);The;Marvel Mfg. Company is considering whether or not to construct a new robotic;production facility. The cost of it is $582,000 and it?s expected to have a six;year life with annual depreciation expense of $97,000 and no salvage value.;Annual Sales from the new facility is expected 2,010 units with a price of $930;per unit. Variable production costs are $570 per unit while fixed cash expenses;are $75,000 per year;a. find;the accounting and the cash break-even units of production. (round to nearest;interger);b. will;the plant make a profit based on its current expected level of operations?;c. will;the plant contribute cash flow to the firm at the expected level of operations?;Problem 4 (Breakeven);Given;the info below.;a.;calculate the missing info for each project;b. note;that projects c and d share the same accounting break even. If the sales are;above the breakeven point, which project would you prefer? Why?;c.;calculate the cash break even for each of the projects. What do the differences;in accounting and cash break even tell you about the four projects?;project;accounting breakeven point units price per unit variable cost per unit fixed;costs (fill in the blanks on the chart listed).;Breakeven;point in units -Price per unit- Variable cost per unit -fixed costs;depreciation;Project;A 6210-(find price per unit)$56- $99,000-$26,000;Project;B 770- $960- (findvariable cost per unit)-$499,000-$103,000;Project;C 2000- $21- $15 $4,900-(find depreciation);Project;D 2000- $21- $6-(find fixed cost)-$12,000;Problem 5 (Sharp Corporation);(Cash;budget) The Sharpe Corporation?s projected sales for the first eight months of;2011are as follows;January;$ 90,600 May $299,000;February;120,700 June 269,300;March;134,900 July 224,400;April;240,000 August149,500;Of;Sharpe?s sales, 10 percent is for cash, another 60 percent is collected in the;month following sale, and 30 percent is collected in the second month following;sale. November and December sales for 2010 were $220,800 and $174,200;respectively.;Sharpe;purchases its raw materials two months in advance of its sales equal to 60;percent of their final sales price. The supplier is paid one month after it;makes delivery. For example, purchases for April sales are made in February and;payment is made in March.;In;addition, Sharpe pays $9,000 per month for rent and $20,100 each month for;other expenditures.;Tax;prepayments of $21,800 are made each quarter, beginning in March.;The;company?s cash balance at December 31, 2010, was $21,100, a minimum balance of;$15,000 must be maintained at all times. Assume that any short-term financing;needed to maintain the cash balance is paid off in the month following the;month of financing if sufficient funds are available.;Interest;on short-term loans (11 percent) is paid monthly. Borrowing to meet estimated;monthly cash needs takes place at the beginning of the month. Thus, if in the;month of April the firm expects to have a need for an additional $56,110, these;funds would be borrowed at the beginning of April with interest of $514 (11% ?;1/12 ? $56,110) owed for April and paid at the beginning of May.;a.;Prepare a cash budget for Sharpe covering the first seven months of 2011.(nov;sales = $220,800, dec sales = $174,200, jan sales = $90,600;b.;Sharpe has $200,900 in notes payable due in July that must be repaid or;renegotiated for an extension. Will the firm have sufficient cash to repay the;notes?;Problem 6;You;just received a $4,000 bonus.;a.;Calculate the future value of $4,000, given that it will be held in the bank for9;years;and;earn an annual interest rate of 8%.;b.;Recalculate part (A) using a compounding period that (1) semiannual and (2);bimonthly;c.;Recalculate parts (A) and (B) using an annual interest rate of 16%?;d.;Recalculate part (A) using a time horizon of 18 years at an annual interest;rate of 8%?;e. What;conclusions can you draw when you compare the answers in parts (c) and (d) with;the answers in parts (a) and (b)?;1. Problem 4 -6 (Related to Checkpoint 4.2);(Capital structure analysis) The liabilities and;owners? equity for Campbell Industries is found below:Accounts payable $;453,000;Notes payable 250,000;Current liabilities $ 703,000;Long-term debt $1,263,000;Common equity $5,067,000;Total liabilities and equity $7,033,000;a. What percentage of the firm?s assets does the firm finance using debt;(liabilities)? (round to one decimal place);2. Problem 5-1 (Related to Checkpoint 5.2);(Future value)To what amount will $ 4800 invested for 10 years at 10;percent compounded annually accumulate?;3.;The following table contains current asset and current liability balances for;Deere and Company (DE);Measure the liquidity of Deere;Co. for each year using the company?s net working capital and current ratio. Is;the trend in Deere?s liquidity improving over this period? Why or why not?;4.;Problem 5-6 (Related to Checkpoint 5.2) (Compound interest with non-annual;periods)You just received a $4,000 bonus.;a. Calculate the future value of $4,000, given that it will be held in the bank;for9 years;and earn an annual interest rate of 8%.;b. Recalculate part (A) using a compounding period that (1) semiannual and (2);bimonthly;c. Recalculate parts (A) and (B) using an annual interest rate of 16%?;d. Recalculate part (A) using a time horizon of 18 years at an annual interest;rate of 8%?;e. What conclusions can you draw when you compare the answers in parts (c) and;(d) with the answers in parts (a) and (b)?;5. Problem 13-8 (Related to Checkpoint;13.4) (Break even analysis)The Marvel Mfg. Company is considering whether;or not to construct a new robotic production facility. The cost of it is;$582,000 and it?s expected to have a six year life with annual depreciation;expense of $97,000 and no salvage value. Annual Sales from the new facility is;expected 2,010 units with a price of $930 per unit. Variable production costs;are $570 per unit while fixed cash expenses are $75,000 per year;a. find the accounting and the cash break-even units of production.;b. will the plant make a profit based on its current expected level of;operations?;c. will the plant contribute cash flow to the firm at the expected level of;operations?6. Problem 13-9 (Break-even analysis)given;the info below.a. calculate the missing info for each project;b. note that projects c and d share the same accounting break even. If the;sales are above the breakeven point, which project would you prefer? Why?;c. calculate the cash break even for each of the projects. What do the;differences in accounting and cash break even tell you about the four projects?;project accounting breakeven point units price per unit variable cost per unit;fixed costs (fill in the blanks on the chart listed).7. Problem 17-11 (Preparation of a cash budget);The Sharpe Corporation?s projected sales for the first eight months of 2011;are as follows: Of Sharpe?s sales, 10 percent is for cash, another 60 percent is collected;in the month following;sale, and 30 percent is collected in the second month following sale. November;and December;sales for 2010 were $220,800 and $174,200, respectively.;Sharpe purchases its raw materials two months in advance of its sales equal to;60 percent of their;final sales price. The supplier is paid one month after it makes delivery. For;example, purchases;for April sales are made in February and payment is made in March.;In addition, Sharpe pays $9,000 per month for rent and $20,100 each month for;other expenditures.;Tax prepayments of $21,800 are made each quarter, beginning in March.;The company?s cash balance at December 31, 2010, was $21,100, a minimum balance;of $15,000 must be maintained at all times. Assume that any short-term;financing needed to maintain the cash balance is paid off in the month;following the month of financing if sufficient funds are available.;Interest on short-term loans (11 percent) is paid monthly. Borrowing to meet;estimated monthly;cash needs takes place at the beginning of the month. Thus, if in the month of;April the firm expects to have a need for an additional $56,110, these funds;would be borrowed at the beginning of April with interest of $514 (11% ? 1/12 ?;$56,110) owed for April and paid at the beginning of May.;a.;Prepare a cash budget for Sharpe covering the first seven months of 2011.;b.;Sharpe has $200,900 in notes payable due in July that must be repaid or;renegotiated for an extension. Will the firm have sufficient cash to repay the;notes?

 

Paper#47585 | Written in 18-Jul-2015

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