For further query you can Contact Us :
Login | New Register
The sales manager of ABC Inc. submitted the forecasted credit sales of products for the
the last six months of 2014 for budgetary purposes.
1) Sales Forecast 2014 (Units)
July $ 200,000
August $ 225,000
September $ 164,000
The company is in the process of preparing a cash budget and must determine the
expected cash collections by month. To this end, the following information has been
Collections on credit sales:
45% in month of Sales
35% in the first month following sales
20% in the second month following sales
Given these data., the total cash collected during July, August and September would be:
XYZ Inc. is working on its cash budget for June. The budgeted beginning cash balance is $14,000.
Budgeted Cash Receipts total $183,000 and budgeted Cash Disbursements total $182,000. The
desired ending Cash Balance is $33,000. The company has a line-of-credit agreement with its bank
up to $80,000 to borrow in case the Cash Balance at the end of a month does not meet the
aforementioned minimum balance.
) Kimmel Company. has provided the following data concerning a proposed investment project:
Initial investment $250,000
Life of the project 10 years
Annual net cash inflows $32,000
Salvage value $5,000
The company uses a discount rate of 15%.
Compute the net present value of the project.
The management of Erion Corporation is considering the purchase of an automated molding machine that would cost $280,534, would have a useful life of 5 years, and would have no salvage value. The automated molding machine would result in cash savings of $74,000 per year due to lower labor and other costs.
Determine the internal rate of return on the investment in the new automated molding machine. Show your work!
1 You have a savings account in which you leave the funds for one year
without adding or withdrawing from the account. What would you rather have: a daily
compounded rate of 0.040%, a weekly compounded rate of 0.325%, a monthly compounded
rate of 1.15%, a quarterly compounded rate of 4.00%, a semi-annually compounded rate of
9%, or an annually compounded rate of 16%?
What is the EAR of a daily compounded rate of 0.040%
What is the EAR of a weekly compounded rate of 0.325%
What is the EAR of a monthly compounded rate of 1.15%
What is the EAR of a quarterly compounded rate of 4.00%
What is the EAR of a semiannually compounded rate of 9%
What is the EAR of a annually compounded rate of 16%
What periodic rate would you rather have for your savings account?
2 What is the effective annual rate of a mortgage rate that is advertised at 8.25% (APR)
over the next twenty years and paid with semi-annual payments?
3 Sam Hinds, the dentist is going to remodel the dental reception area and two new workstations. The cost of the equipment for the project is $16,000, and the purchase will be financed with a 9% loan over six years. What will Sam have to pay for this equipment if the loan calls for semiannual payments (2 per year) and weekly payments (52 per year)? Compare the annual cash outflow of the two
payments. Why does the weekly payment plan have less total cash outflow each year?
What will Sam have to pay for this equipment if the loan calls for semiannual payments?
What will Sam have to pay for this equipment if the loan calls for weekly payments?
Why does the weekly payment plan have less total outflow each year?
4 Cooley Landscaping needs to borrow $28,000 for a new
front-end dirt loader. The bank is willing to loan the money at 9% interest for the next 7
years with annual, semiannual, quarterly, or monthly payments. What are the different
payments that Cooley Landscaping could choose for these different payment plans?
9% interest for the next 7 years annual payments ?
9% interest for the next 7 years semiannual payments?
9% interest for the next 7 years quarterly payments?
9% interest for the next 7 years monthly payments?
5 Denise has her heart et on being a millionaire. What payment does Denise need to make at the end of each 6 months over the coming 43 years at 9% APR to reach her retirement goal of 1.1 million?
What semi-annually payment does Denise need to make to reach her retirement goal?
Price the bonds from the following table with annual coupon payments.
Par Value Coupon Rate Years to Maturity YTM Price
1000 11 15 11 ?
5000 6 15 5 ?
5000 9 10 10 ?
5000 7 10 7 ?
What is the yield of the following bonds if interest is paid annually?
Par Value Coupon Rate Years to Maturity YTM Price
5000 10% 30 ? 5500
1000 8% 25 ? 700
1000 7% 5 ? 1000
5000 6% 30 ? 3110
What is the yield of the following bonds if interest is paid quarterly?
Par Value Coupon Rate Years to Maturity YTM Price
5000 10% 15 ? 5000
1000 8% 10 ? 1230
1000 12% 25 ? 1400
5000 5% 25 ? 2450
What is the yield of the following bonds if interest is paid monthly?
Par Value Coupon Rate Years to Maturity YTM Price
5000 8% 10 ? 3530
5000 9% 10 ? 4390
1000 11% 30 ? 1090
5000 12% 10 ? 5900
Par Value Coupon Rate Years to Maturity YTM Price Coupon Frequency
5000 ? 15 9% 4178.39 monthly
1000 ? 5 11% 886.94 semiannual
1000 ? 5 5% 1173.18 annual
5000 ? 20 6% 7900.46 Quarterly
Horizontal and Vertical Analysis
What is the difference between horizontal and vertical analysis of financial statements? How is each type calculated and presented for viewing by company stakeholders?
Produce a report to an interested shareholder, with little accounting knowledge, which evaluates the information provided in the most recent financial statements for one of the four companies listed below.
The report should:
• Explain the purpose of an Income Statement and Statement of Financial Position and the meaning of key figures in the report. This should include demonstrating the importance of applying key principles to enhancing the usefulness of Financial Statements. (50%)
• Calculate and interpret the key financial ratios. (35%)
• Interpret the Cash Flow Statement of the company. (10%)
• Marks for professionalism: appropriate use of referencing, extent and evidence of research, structure of essay, coverage of issues, presentation and use of appropriate language. (5%)
1. Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:
Balance Sheet June 30
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 90,000
Accounts receivable . . . . . . . . . . . . . .. . . 136,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,000
Plant and equipment, net of depreciation . . . . . . . . . . . . . . 210,000
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . $ 498,000
Liabilities and Stockholders’ Equity
Accounts payable . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . $ 71,100
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . 327,000
Retained earnings . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 99,900
Total liabilities and stockholders’ equity . . . . . . . . .. . . . . . . $ 498,000
Beech’s managers have made the following additional assumptions and estimates:
1. Estimated sales for July, August, September, and October will be $ 210,000, $ 230,000, $220,000, and $ 240,000, respectively.
2. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 45% in the month of sale and 55% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
3. Each month’s ending inventory must equal 20% of the cost of next month’s sales. The cost of goods sold is 60% of sales.
Using the new assumptions described above, complete the following requirements:
1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30.
Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.
Cash Flow Calculation
Consider the following data for ABC enterprises (all numbers in €):
· Today is January 1, 2013
· Income statement for 2012 shows:
o Revenues for 500,000
o Cost of Goods sold: 350,000
o Selling, General & Administrative Costs: 25,000
· Applicable tax rate = 35%
· Investment in working capital for 2013 is expected to amount to 20,000 and capex will be 40,000.
· Depreciation that same year has been estimated at 15,000.
· Evolution of the above magnitudes is expected to be the following:
o Revenues are expected to grow at a rate of 5% until 2017
o Cost of goods sold: 70% of revenues
o G&A costs: 5% of revenues
o Investment in working capital is expected to grow at a rate of 5% until 2017
o Both CAPEX and depreciation are expected to follow the same growth rates which are: 4% until 2015 and 2% the two years after that.
With respect to the cost of capital, available data is the following:
· The firm’s balance sheet shows 200,000 in financial debt which bears an annual interest rate of 5% and 500,000 in equity.
· Industry’s average unlevered beta = 1.13
· Market risk premium = 7%
· Government bond with 20 years´ maturity stands at 3%
Please, forecast cashflows for 2013 – 2017, estimate the Residual Value and perform the corresponding firm valuation.
Preparation of a Budget [Total: 36 Marks]
Completion of a Workbook of Spreadsheets
The aim of this assignment is to produce a workbook of spreadsheets in which any changes in data in the Data Sheet will result in an update of the whole workbook. Therefore you must link the output with the Data Sheet and you should not enter numbers directly into any blue cells in the output areas (you will lose considerable marks for not using formulas). Marks will be awarded for the functionality and flexibility of your workbook. Please ensure you follow all instructions as there will be no compensation for loss of marks due to failure to follow instructions. Ignore interest calculations and GST.
Relationship of Assignment 2 to Learning Outcomes (Refer Administration Guide).
L.O.2. Analysing transactions and preparing financial statements should help you to understand the accounting process from the recording of transactions through to the summary of information provided in the various general purpose financial statements.
L.O.3. Some of the transactions will help you understand the impact of accounting policies such as depreciation and accrual accounting with the latter especially evident when comparing the Income Statement and Cash Flow Statement.
L.O.6. As the scenario is set in the future preparing the assignment should also help with understanding the planning process and the use of tools such as excel to look at different scenarios and see their impact on the profit, cash flow and resources of a business.
Question: Ken Brolley trading as Brolley Enterprises
Brolley Enterprises is a wholesaler selling high quality umbrellas to retail shops around New Zealand. The owner, Ken Brolley, runs the office in Levin while the sales woman, June Doon, travels around making contact with customers and collecting orders.
Ken requires your help in preparing a budget for the quarter 1 October 2015 to 31 December 2015 and provides you with the following information.
Annual sales run at approximately 15,000 units per year.
The monthly estimated sales of umbrellas are October 800; November 1,100; and December 3,200 units. The expected selling price is $45 per umbrella. Of the sales, 20% will be for cash with the balance on credit. Brolley’s terms are that credit sales must be paid for by the 20th of the month following purchase.
During the last quarter of the year the firm concentrates on beach umbrellas and in December there is always a high demand for umbrellas as Christmas presents.
Brolley Enterprises buys the umbrellas for $31 each which includes the cost of delivery to Brolley’s customers. Brolley doesn’t keep any inventories. The supplier is paid in the month Brolley buys the umbrellas.
Some Accounts Payable are due on the 20th of the month following purchase. As at 30 September they consisted of Accounts Payable - General expenses of $580.
The sales person uses a company vehicle but the owner has agreed to sell the existing vehicle at its net book value of $4,000 to a friend at the beginning of October. This sale will take place the same day the company takes delivery of a new vehicle. The cost of the new vehicle will be $33,800 which will be paid to Studie Motors. The new vehicle is expected to have a useful life of 6 years and an estimated residual value of $5,000. The business is taking out a loan on October 1 from the ENDS Bank of $22,000 to help fund this. The first three months of this loan are interest free.
Vehicle expenses are estimated at $750 per month payable in the month incurred.
Each month Brolley incurs approximately $450 of advertising expenses through Print Media Ltd. Print Media’s terms are that advertising accounts are payable the day an advertisement appears in the media.
The insurance premium for the business is $2,400 for the year. The annual premium for 1 October 2015 to 30 September 2016 is due for payment on 7 October 2015.
Rent for the Levin Office is $1,100 a month payable on the first day of each month.
General Expenses for running the office amount to $600 a month and these are normally paid the month after they are incurred.
June Doon is paid $6,000 salary per month on the 20th of each month.
The owner is not paid a salary but withdraws $10,000 a month from the business bank account.
Opening Balances as at 1 October 2015.
Cash at Bank $12,000
Accounts Receivable $43,100
Accounts Payable – General expenses $580 (Refer Current Liabilities page 7)
Workbook Spreadsheet Completion
The aim of this assignment is to produce a workbook of spreadsheets in which any changes in data in the Data Sheet spreadsheet will result in an update of the whole workbook. Therefore you must link the output worksheets with the Data Sheet and you should not enter numbers directly into the output areas. Marks will be awarded for the functionality and flexibility of your Workbook. All entries should be made in blue shaded cells, though not all blue shaded cells require entries. Round all workings to the nearest dollar amount.
(i) On the Data Sheet spreadsheet enter the given data which has not yet been entered.
(ii) On the Sales & Other Budgets spreadsheet complete the tables given i.e:
a. Sales, COGS and Collection budget for the quarter ended 31 December 2015.
b. Depreciation table.
c. Selling expenses budget for the quarter ended 31 December 2015.
d. General and Administrative Budget for the quarter ended 31 December 2015.
e. Annual Fixed Costs table.
(iii) On the CVP spreadsheet complete the Cost-Volume-Profit analysis based on annual costs. Calculate the number of units and sales in dollars at the break-even point.
(iv) On the Cash Flow spreadsheet complete the Projected Cash Flow Statement Activities for the each of the three months October, November and December and the totals for the quarter 1 October to 31 December 2015.
(v) On the Income Statement spreadsheet complete the Projected Income Statement for the quarter ended 31 December 2015. N.B. A month by month Income Statement is not required.
(Total 180 raw marks)
(180/6 = 30 marks)
Task 5: Investment Appraisal (LO5)
Be able to use financial appraisal techniques to make strategic investment decisions for an organisation
Sandyfoot Ltd is considering two capital expenditure proposals. Both proposals for Tennis Racquets and both are expected to operate for four years. Only one proposal can be expected. The Following information is available
Profit/(Loss) after Depreciation
Proposal A Proposal B
Initial Investment 36,000 36,000
Year 1 6,500 4,500
Year 2 3,500 2,500
Year 3 13,500 4,500
Year 4 -1,500 14,500
Estimated Scrap value at end of yr 4 3,000 3,000
Based on the Information above you are required to:
5.1 Identify two advantages and disadvantages of financial appraisal methods to analyse competing investment projects in the public and private sector
5.2 Make a justified strategic investment decision for Sandyfoot Ltd with the use of the above relevant financial information by calculating payback period and return on capital employed
5.3 Write a brief report to the board of directors of Sandyfoot Ltd by highlighting the other factors that need to be considered for strategic investment decision with the use of information from a post audit appraisal
Sources of Finance
2.2 Scenario 3
Cash asset of Sandyfoot Ltd is £15000 while net profit in 2014 is £17500. In regards to continue a quality program for the Tennis Racquets, the company wants to raise £50,000 while there are two options available, such as
i) Bank Short Term Loan at 10% APR
ii) Long Term borrowing for 5 years at 8% interest rate.
You are required to recommend the company whether short term or long term borrowing will be suitable for the company by assessing the sources of funds available to Sandyfoot Ltd for this specific project.
Our Assignment Experts are extremely Professional in providing Assignment Help upto PhD level
Sign up to our newsletter and get exclusive deals you wont find anywhere else straight to your inbox!
© 2015 MSA Homework Help All Rights Reserved
Disclaimer: MSA Homework Help provides reference papers to the student and we strongly recommend you not to submit the papers as it is. Please use our solutions as model answer to improve your skills.