FIN504 ALL MODULE DISCUSSION , MODULE 3,4,5,6,7 HOMEWORK AND FINAL PAPER

FIN504 ALL MODULE DISCUSSION , MODULE 3,4,5,6,7 HOMEWORK AND FINAL PAPER Click Link Below To Buy: http://hwcampus.com/shop/fin504-module-discussion-module-34567-homework-final-paper/ Contact Us: [email protected] MODULE 1 DQ 1 Reconcile high standards of ethical business practices with the concept of shareholder wealth maximization and stakeholder theory. What responsibility do executives have to their shareholders and their stakeholders? MOD 1 DQ 2 What role do financial institutions play in financial management? What role do financial markets have in financial management? Please compare and contrast the two. WEEK 2 DQ 1 Identify two publicly traded corporations in the same industry and compare and contrast their current ratios, quick ratios, and debt to equity ratios. Explain what these ratios mean and how they help the reader understand the differences between the two companies. MOD 2 DQ 2 What are two key elements of the financial planning process? Why is cash planning as vital as profit planning? Can you provide a contemporary example where cash flow and profits did not go hand-in-hand? MOD 3 DQ 1 How does the concept of the time value of money affect decisions made across the four executive roles of management – planning, organizing, leading, and controlling? Why is this concept important for the contemporary executive to understand? MOD 3 DQ 2 Why is the time value of money important for an individual to understand in regard to their private life? What can an individual do with this information? MOD 4 DQ 1 How would you explain yield to maturity (YTM) to a friend with no background in finance? MOD 4 DQ 2 What are interest rate fundamentals? Explain term structure and risk premiums. How do these concepts come into play in the real world (mortgage rates, bond prices, etc.)? MOD 5 DQ 1 Explain the meaning of risk, return, and risk preferences? Why is risk not the chance of taking a loss? Mod 5 dq 2 For the average business leader who is not in a finance role, how do risk, return, and the cost of capital impact him or her? How can you synthesize this into the workplace? mod 6 dq 1 Explain how a net present value (NPV) profile is used to compare projects. How does this compare to internal rate of return (IRR)? How does reinvestment affect NPV and IRR? mod 6 dq 2 Capital budgeting can be affected by exchange rate risk, political risk, transfer pricing, and strategic risk. Explain how these factors may and can impact capital budgeting. mod 7 dq 1 Explain what capital structure is. Find two publicly traded companies and compare and contrast their capital structures. mod 7 dq 2 Explain the cash conversion cycle (CCC) and net working capital. Why is this important to the contemporary executive? How do executive decisions regarding CCC and net working capital affect the company? Provide an example. mod 8 dq 1 Introduce the company that you have selected for the Case Study Analysis. Why did you select this company? Explain the process you are using to assess your company's future financial health. mod 8 dq 2 Describe your experience building the financial analysis. What has been the easiest, the most difficult? What has surprised you? What have you learned? MODULE 3 Details: Using Excel, and the Gitman chapter 5 Excel resource, if needed, complete the following problems from chapter 5 in Principles of Managerial Finance: 1. P5-2 2. P5-3 3. P5-13 4. P5-20 5. P5-30 6. P5-36 7. P5-43 Please show all work for each problem. Uma Corp. Present Value of Expected Future Savings Period: 2013 through 2023 Discount rate for years 2013 - 2018 0.07 Discount rate for years 2019 - 2023 0.11 Annual Present Year Period Savings PV Lump Sum PV Annuity PV Lump Sum Value 2013 1 110000 =C10/(1+$E$5)^B10 =D10 2014 2 120000 =C11/(1+$E$5)^B11 =D11 2015 3 130000 =C12/(1+$E$5)^B12 =D12 2016 4 150000 =C13/(1+$E$5)^B13 =D13 2017 5 160000 =C14/(1+$E$5)^B14 =D14 2018 6 150000 =C15/(1+$E$5)^B15 =D15 2019 7 90000 =C16*((1-(1/(1+$E$6)^B14))/$E$6) =E16/(1+$E$5)^B15 =F16 2020 8 90000 2021 9 90000 2022 10 90000 2023 11 90000 =SUM(C10:C20) =SUM(G10:G20) MODULE 4 Details: Using Excel, and the Gitman chapters 6 and 7 Excel resource, if needed, complete the following problems from chapters 6 and 7 in Principles of Managerial Finance: 1. P6-1 2. P6-10 3. P6-13 4. P6-20 5. P7-1 6. P7-6 7. P7-14 Please show all work for each problem. Chapter 6 Interest Rates and Bond Valuation Given Data: CSM Corporation Coupon-interest rate 0.06 Par Value 1000 Maturity 15 years Current bond price 874.42 Assume that interest on the CSM bond is paid semiannually. Compound period m 2 Modified n = =B7*B11 Modified payment = =(B5*B6)/B11 Annual r 0.074 modified r = =B14/B11 Trial and Error method: Choose various required rates to determine the current bond value. Cell B14 should be blank. Cell B15 should have the formula: B14/B11 The spreadsheet will recalculate each time. Continue the process until the value of the bond equals the current price of the bond (in this problem it is a premium of $874.42. Remember that for a bond to be priced at a premium, the coupon rate must be greater than the YTM. Remember that for a bond to be priced at a discount, the coupon rate must be less than the YTM. Year Periods Payment PV Payments 2011 0 1 =$B$13 =(C31/((1+$B$15)^B31)) =$B$13 PVA =G31*((1-(1/((1+$B$15)^B60)))/$B$15) 2012 2 =$B$13 =(C32/((1+$B$15)^B32)) 3 =$B$13 =(C33/((1+$B$15)^B33)) 2013 4 =$B$13 =(C34/((1+$B$15)^B34)) =B6 PV =(G34/((1+$B$15)^B61)) 5 =$B$13 =(C35/((1+$B$15)^B35)) 2014 6 =$B$13 =(C36/((1+$B$15)^B36)) Bond Value =SUM(I31:I35) 7 =$B$13 =(C37/((1+$B$15)^B37)) 2015 8 =$B$13 =(C38/((1+$B$15)^B38)) Current Bond Value =B8 9 =$B$13 =(C39/((1+$B$15)^B39)) 2016 10 =$B$13 =(C40/((1+$B$15)^B40)) 11 =$B$13 =(C41/((1+$B$15)^B41)) 2017 12 =$B$13 =(C42/((1+$B$15)^B42)) Prove the following: 13 =$B$13 =(C43/((1+$B$15)^B43)) When k = 0.08 value = 827.08 2018 14 =$B$13 =(C44/((1+$B$15)^B44)) ????? value = =B8 15 =$B$13 =(C45/((1+$B$15)^B45)) 0.06 value = 1000 2019 16 =$B$13 =(C46/((1+$B$15)^B46)) 17 =$B$13 =(C47/((1+$B$15)^B47)) 2020 18 =$B$13 =(C48/((1+$B$15)^B48)) 19 =$B$13 =(C49/((1+$B$15)^B49)) 2021 20 =$B$13 =(C50/((1+$B$15)^B50)) 21 =$B$13 =(C51/((1+$B$15)^B51)) 2022 22 =$B$13 =(C52/((1+$B$15)^B52)) 23 =$B$13 =(C53/((1+$B$15)^B53)) 2023 24 =$B$13 =(C54/((1+$B$15)^B54)) 25 =$B$13 =(C55/((1+$B$15)^B55)) 2024 26 =$B$13 =(C56/((1+$B$15)^B56)) 27 =$B$13 =(C57/((1+$B$15)^B57)) 2025 28 =$B$13 =(C58/((1+$B$15)^B58)) 29 =$B$13 =(C59/((1+$B$15)^B59)) 2026 30 =$B$13 =(C60/((1+$B$15)^B60)) 2026 30 =B6 =(C61/((1+$B$15)^B61)) Bond Value =SUM(D31:D61) Current Bond Price =B8 Chapter 7 Stock Valuation Given Data: Most Recently Paid Dividend $3.00 Do Growth Rate in Earnings 7% g Required rate of return 10% r model: Po = (Do (1 + g )) / (r - g) Current Price of stock Po = $107.00 One year later: Most Recently Paid Dividend $3.21 Do Growth Rate in Earnings 7% g Risk Premium 6.74% RPa t-bill rate 5.25% Rf New required return 11.99% rnew New intrinsic value of stock $68.83 Po MODULE 5 Details: Using Excel, and the Gitman chapters 8 and 9 Excel resource, if needed, complete the following problems from chapters 8 and 9 in Principles of Managerial Finance: 1. P8-1 2. P8-4 3. P8-14 4. P8-23 5. P9-1 6. P9-2 7. P9-17 Please show all work for each problem. Forecasted Returns, Expected Values, and Standard Deviations for Assets A, B, and C and Portfolios AB, AC, and BC Assets Portfolios Year A B C AB AC BC 2013 0.1 0.1 0.12 =SUMPRODUCT($C$24:$D$24,C7:D7) =($C$24*C7)+($E$24*E7) =SUMPRODUCT($D$24:$E$24,D7:E7) 2014 0.13 0.11 0.14 =SUMPRODUCT($C$24:$D$24,C8:D8) =($C$24*C8)+($E$24*E8) =SUMPRODUCT($D$24:$E$24,D8:E8) 2015 0.15 0.08 0.1 =SUMPRODUCT($C$24:$D$24,C9:D9) =($C$24*C9)+($E$24*E9) =SUMPRODUCT($D$24:$E$24,D9:E9) 2016 0.14 0.12 0.11 =SUMPRODUCT($C$24:$D$24,C10:D10) =($C$24*C10)+($E$24*E10) =SUMPRODUCT($D$24:$E$24,D10:E10) 2017 0.16 0.1 0.09 =SUMPRODUCT($C$24:$D$24,C11:D11) =($C$24*C11)+($E$24*E11) =SUMPRODUCT($D$24:$E$24,D11:E11) 2018 0.14 0.15 0.09 =SUMPRODUCT($C$24:$D$24,C12:D12) =($C$24*C12)+($E$24*E12) =SUMPRODUCT($D$24:$E$24,D12:E12) 2019 0.12 0.15 0.1 =SUMPRODUCT($C$24:$D$24,C13:D13) =($C$24*C13)+($E$24*E13) =SUMPRODUCT($D$24:$E$24,D13:E13) Statistics: Expected value =AVERAGE(C7:C13) =AVERAGE(D7:D13) =AVERAGE(E7:E13) =AVERAGE(G7:G13) =AVERAGE(H7:H13) =AVERAGE(I7:I13) Standard deviation =STDEV(C7:C13) =STDEV(D7:D13) =STDEV(E7:E13) =STDEV(G7:G13) =STDEV(H7:H13) =STDEV(I7:I13) Note: In each two stock portfolio, the weights of each security is equal 0.5 0.5 0.5 Chapter 9 The Cost of Capital Nova Corporation Debt Net Proceeds maturity 10 Required bond price 980 coupon rate 6.50% Flotation percent 2.00% par $1,000 Flotation cost $20 coupon payment $65 Net Proceeds $960 Trial and error YTM 7.0714% End of Year(s) Cash Flow PV 0 $960 $960.00 1 - 10 $(65) (455.03) 10 $(1,000) (504.97) $0.00 (The YTM of 7.0714% equates the NPV to zero) Before-tax Cost of Debt 7.0714% Tax rate 40.00% After-tax Cost of Debt 4.24% (a) Preferred Stock Par value $100.00 Expected sale price $102.00 Annual percentage rate 6% Flotation cost $4.00 Annual dividend $6.00 Net Proceeds $98.00 Cost of Preferred Stock 6.12% (b) Common Stock Gordon Model Expected dividend $3.25 Expected growth rate 5% Current price $35.00 Flotation cost $2.00 Adjusted Price $33.00 Cost of Common Stock 14.85% (c) Weighted Average Cost of Capital Weight in debt 0.35 Weight in preferred stock 0.12 Weight in common stock 0.53 Sum of weights 1.00 WACC 10.09% (d) MODULE 6 Details: Using Excel, and the Gitman chapters 10, 11, and 12 Excel resource, if needed, complete the following problems from chapters 10, 11, and 12 inPrinciples of Managerial Finance: 1. P10-1 2. P10-5 3. P10-21 4. P11-3 5. P11-12 6. P12-2 7. Integrative Case 5: Lasting Impressions Company Please show all work for each problem. The Drillago Company Calculation of the NPV, IRR, and the Payback Period Facts of case: maturity (n) 10 years cost-of-capital (k) 0.13 Initial outlay (pv) 15000000 Excel function =IRR(B12:B22) Estimated Trial and error 0.147630974 Cash NPV Technique IRR Technique Year Outflows/Inflows PV PV Payback Technique 0 =-B7 =B12/(1+$B$6)^A12 =B12/(1+$E$9)^A12 1 600000 =B13/(1+$B$6)^A13 =B13/(1+$E$9)^A13 =B12+B13 2 1000000 =B14/(1+$B$6)^A14 =B14/(1+$E$9)^A14 =G13+B14 3 1000000 =B15/(1+$B$6)^A15 =B15/(1+$E$9)^A15 =G14+B15 4 2000000 =B16/(1+$B$6)^A16 =B16/(1+$E$9)^A16 =G15+B16 5 3000000 =B17/(1+$B$6)^A17 =B17/(1+$E$9)^A17 =G16+B17 6 3500000 =B18/(1+$B$6)^A18 =B18/(1+$E$9)^A18 =G17+B18 7 4000000 =B19/(1+$B$6)^A19 =B19/(1+$E$9)^A19 =G18+B19 =G19/B19 8 6000000 =B20/(1+$B$6)^A20 =B20/(1+$E$9)^A20 =G19+B20 9 8000000 =B21/(1+$B$6)^A21 =B21/(1+$E$9)^A21 =G20+B21 10 12000000 =B22/(1+$B$6)^A22 =B22/(1+$E$9)^A22 =G21+B22 =SUM(C12:C22) =SUM(E12:E22) =A18+H19 years Recap: NPV =C23 Accept the project as the NPV > 0. IRR =E8 Approximately as it equates the NPV to Zero. Accept the project as the IRR (14.76%) > Cost of Capital (13%) Payback =H23 years approximately The Damon Corporation Calculation of the Initial Investment Installed cost of proposed machine Cost of proposed machine $145,000 plus: Installation costs 15,000 Total installed cost - proposed $160,000 (depreciable value) After-tax proceeds from sale of present machine Proceeds from sale of present machine $70,000 less: Tax on sale of present machine 14,080 Total after-tax proceeds - present $55,920 Change in net working Capital 18,000 Initial investment $122,080 Tax on sale of old machine Change in Working Capital cost of old machine $120,000 Increase in receivables $15,000 MACRS increase in inventory 19,000 year 1 20% 24,000 increase in payables 16,000 year 2 32% 38,400 Net working capital $18,000 year 3 19% 22,800 Book Value $34,800 Sale price of old machine $70,000 Gain on sale $35,200 Tax rate 40% Tax Expense $14,080 Depreciation Expense for Proposed and Present Machines for the Damon Corporation Year Cost Applicable MACRS depreciation Depreciation With proposed machine 1 $160,000 20% $32,000 2 160,000 32% 51,200 3 160,000 19% 30,400 4 160,000 12% 19,200 5 160,000 12% 19,200 6 160,000 5% 8,000 Total 100% $160,000 With present machine 1 $120,000 12% $14,400 2 120,000 12% 14,400 3 120,000 5% 6,000 4 0 5 0 6 0 Total $34,800 Calculation of Operating Cash Inflows for Damon Corporation Proposed and Present Machines Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 With proposed machine Earnings before depr. and int. and taxes $105,000 $110,000 $120,000 $120,000 $120,000 $- Depreciation #REF! #REF! #REF! #REF! #REF! #REF! Earnings before interest and taxes #REF! #REF! #REF! #REF! #REF! #REF! Taxes 40% #REF! #REF! #REF! #REF! #REF! #REF! Net operating profit after taxes #REF! #REF! #REF! #REF! #REF! #REF! Depreciation #REF! #REF! #REF! #REF! #REF! #REF! Operating cash inflows #REF! #REF! #REF! #REF! #REF! #REF! With present machine Earnings before depr. and int. and taxes $95,000 $95,000 $95,000 $95,000 $95,000 $- Depreciation #REF! #REF! #REF! #REF! #REF! #REF! Earnings before interest and taxes #REF! #REF! #REF! #REF! #REF! #REF! Taxes 40% #REF! #REF! #REF! #REF! #REF! #REF! Net operating profit after taxes #REF! #REF! #REF! #REF! #REF! #REF! Depreciation #REF! #REF! #REF! #REF! #REF! #REF! Operating cash inflows #REF! #REF! #REF! #REF! #REF! #REF! The Damon Corporation Calculation of the Terminal Cash Flow After-tax proceeds from sale of proposed machine Proceeds from sale of proposed machine $24,000 Book value as of end of year 5 8,000 Net gain $16,000 Tax on gain 40% 6,400 Total after-tax proceeds - proposed $9,600 After-tax proceeds from sale of present machine Proceeds from sale of present machine $8,000 Book value as of end of year 5 0 Net gain $8,000 Tax on gain 40% 3,200 Total after-tax proceeds - present $4,800 Change in net working capital #REF! Terminal Cash Flow #REF! Mutually Exclusive Projects Project Alpha Project Beta Annual Annual Cash 10% Cash 10% Year Outflow/Inflow PVIF NPV PVIFA ANPV Year Outflow/Inflow PVIF NPV PVIFA ANPV 0 -5,500,000 1.0000 $(5,500,000) 0 -6,500,000 1.0000 $(6,500,000) 1 300,000 0.9091 272,727 1 400,000 0.9091 363,636 2 500,000 0.8264 413,223 2 600,000 0.8264 495,868 3 500,000 0.7513 375,657 3 800,000 0.7513 601,052 4 550,000 0.6830 375,657 4 1,100,000 0.6830 751,315 5 700,000 0.6209 434,645 5 1,400,000 0.6209 869,290 6 800,000 0.5645 451,579 6 2,000,000 0.5645 1,128,948 7 950,000 0.5132 487,500 7 2,500,000 0.5132 1,282,895 8 1,000,000 0.4665 466,507 8 2,000,000 0.4665 933,015 9 1,250,000 0.4241 530,122 9 1,000,000 0.4241 424,098 5.7590 10 1,500,000 0.3855 578,315 $350,116 $60,794 11 2,000,000 0.3505 700,988 12 2,500,000 0.3186 796,577 6.8137 $383,499 $56,284 Reviewing the NPV's calculated for the two mutually exclusive projects, we see that project Alpha would be preferred over project Beta as Alpha has a NPV of $383,499 relative to the NPV of Beta which is $350,116. However, when we compare these mutually exclusive projects on the basis of their respective ANPVs, project Beta would be preferred over project Alpha because it provides the higher annualized net present value ($60,794 versus $56,284). MODULE 7 Details: Using Excel, and the Gitman chapters 13, 14, 15, and 16 Excel resource, if needed, complete the following problems from chapters 13, 14, 15, and 16 in Principles of Managerial Finance: 1. P13-5 2. P13-22 3. P14-3 4. P14-15 5. P15-4 6. P15-5 7. P15-10 8. P16-18 9. P16-20 Please show all work for each problem. Chapter 16 Current Liabilities Management Fixed Rate Loan Given Data: Days 365 Loan $200,000.00 Prime Rate 7.00% Maturity 60 days Prime Excess 2.00% a. The total dollar interest cost on the First American Loan Loan Prime+ Maturity Total Dollar Interest $200,000.00 9.00% 0.164383562 $2,958.90 b. The 60-day rate on the loan Total Dollar Interest Loan 60-day Rate $2,958.90 $200,000.00 1.4795% c. Effective annual rate of interest on fixed 60-day loan 60-day Rate Periods in Year Effective Annual Rate 1.4795% 6.083333333 9.3453% Floating Rate Loan Given Data: Days 365 Loan $200,000.00 Prime Rate 7.00% 7.50%$$ Maturity 60 30 Prime Excess 1.50% d. The Initial Rate Prime Rate Prime Excess Initial Rate-1st 30 day rate 7.00% 1.50% 8.50% e. Interest Rate for first and last 30-day periods Intial Rate + Maturity First 30 Day Rate 8.50% 0.082191781 0.6986% initial rate + Maturity Last 30 day rate 9.00% 0.082191781 0.7397% f. Total Dollar Interest Cost Loan 1st 30 Days Last 30-Days Total Interest Cost $200,000.00 0.6986% 0.7397% $2,876.71 g. 60-Day rate of Interest Total Interest Cost Loan 60-Day Rate $2,876.71 $200,000.00 1.4384% h. Effective Annual Interest Rate on 60-Day Loan 60-Day Rate Periods in Year Effective Annual Rate 1.4384% 6.083333333 9.0762% Chapter 13 Leverage and Capital Structure Calculation of Share Value Estimates Associated with Alternative capital Structures Capital Structure Expected Estimated Estimated Debt Ratio EPS Required Return Share Value 0 1.75 0.114 =B10/C10 10 1.9 0.118 =B11/C11 20 2.25 0.125 =B12/C12 30 2.55 0.1325 =B13/C13 40 3.18 0.18 =B14/C14 50 3.06 0.19 =B15/C15 60 3.1 0.25 =B16/C16 Rock-O Corporation Stockholders' Equity Section Before the Reverse Stock Split Common stock 900,000 shares $1.00 par $900,000 Paid-in-Capital 7,000,000 Retained Earnings 3,500,000 Total Stockholders' Equity $11,400,000 Reverse Stock Split Stock Split 2 3 Common stock 600,000 shares $1.50 par $900,000 Paid-in-Capital 7,000,000 Retained Earnings 3,500,000 Total Stockholders' Equity $11,400,000 Analysis of Initiating a Cash Discount for Eboy Corporation Increase in units due to discount 50 Selling price @net 30 $4,200 Variable Cost Per Unit $2,600 Additional Profit Contribution from Sales: $80,000 Cost of Marginal Investment in AccCounts Receivable Variable cost per unit $2,600 Raw Material annual usage 1450 Accounts Receivable $443,000 Sales $3,544,000 Days 365 Collection Period 45.625 AR Turnover 8.0 Average investment presently (w/o discounts) $471,250 Variable cost per unit $2,600.00 Raw Material annual usage 1500 Expected AR Turnover due to discount 12.0 Average investment presently (with cash discounts) $325,000 Reduction in accounts receivable investment $146,250 Opportunity cost of funds 12.5% Cost Savings from reduced investment in AR $18,281 Cash Discount term 2.00% Percentage of customers to take discount 70% Raw Material annual usage (new) 1500 Selling price per unit $4,200 Cost of Cash Discount $88,200 Net Profit from initiation of proposed cash discount $10,081 MODULE 8 Details: Complete your 2,500-word (excluding tables, figures, and addenda) financial analysis of your chosen company selected in Module 2. Following the nine-step assessment process introduced below and detailed in Assessing a Company’s Future Financial Health: 1. Analysis of fundamentals: goals, strategy, market, competitive technology, and regulatory and operating characteristics. 2. Analysis of fundamentals: revenue outlook. 3. Investments to support the business unit(s) strategy(ies). 4. Future profitability and competitive performance. 5. Future external financing needs. 6. Access to target sources of external finance. 7. Viability of the 3-5-year plan. 8. Stress test under scenarios of adversity. 9. Current financing plan. As you conduct the analysis, you will compile research on your chosen company, including analyst reports and market information. Disclose all assumptions made in the case study (e.g., revenue growth projections, expense controls) and provide supporting reasons and evidence behind those assumptions. Finally, in order to assess the long-term financial health of the chosen company, synthesize the research data and outcomes of the nine-step assessment process. Prepare this assignment according to the APA guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required. This assignment uses a grading rubric. Instructors will be using the rubric to grade the assignment; therefore, students should review the rubric prior to beginning the assignment to become familiar with the assignment criteria and expectations for successful completion of the assignment.