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2008-11-10_152302_Final_Exam

2008-11-10_152302_Final_Exam - PART 1 Post as Word or Excel...

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PART 1 – Post as Word or Excel attachment – Total 5 points MAKE SURE THAT YOU SHOW ALL YOUR WORK FOR PART 1 PROBLEMS Problems from the e-text: Principals of Managerial Finance, Brief Fourth Edition, by Lawrence J. Gitman Chapter 2 – 2 points P2-2, P2-16 Chapter 4 – 1 point P4-28 Chapter 11 – 1 point P11-4 Chapter 13 – 1 point P13-3 Problems: P2-2, P2-16, & P4-28 (Please see the attached excel sheet) P11-4) a) ( 29 CDs 000 , 21 48 . 10 $ 98 . 13 $ 500 , 73 $ Q = - = b) Total operating costs = FC + (Q x VC) Total operating costs = $73,500 + (21,000 x $10.48) Total operating costs= $293,580 c) 2,000 x 12 = 24,000 CDs per year. 2,000 records per month exceeds the operating breakeven by 3,000 records per year. Barry should go into the CD business. d) EBIT = (P x Q) - FC - (VC x Q) EBIT = ($13.98 x 24,000) - $73,500 - ($10.48 x 24,000) EBIT = $335,520 - $73,500 - $251,520 EBIT = $10,500
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P13-3) a) AAI = 360 ÷ 6 times inventory = 60 days OC = AAI + ACP = 60 days + 45 days = 105 days CCC = OC - APP = 105 days - 30 days = 75 days Daily Financing = $3,000,000 ÷ 360 = $8,333 Resources needed = Daily financing x CCC = $8,333 x 75 = $624,975 b) OC = 55 days + 35 days = 90 days CCC = 90 days - 40 days = 50 days Resources needed = $8,333 x 50 =$416,650 c) Additional profit =(Daily expenditure x reduction in CCC) x financing rate = ($8,333 x 25) x .13 = $27,082 d) Reject the proposed techniques because costs ($35,000) exceed savings ($27,082).
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PART 2 – 10 points – Use attached template – No deduction for wrong answer 1. A firm's balance sheet shows current assets of $95, net fixed assets of $250, long-term debt of $40, and owners equity of $200. What is the value of the firm's current liabilities if that is the only remaining balance sheet item? A) -$ 50 B) $ 50 C) $105 D) $145 E) $545 2. Calculate net income using the following information: sales = $135; cost of goods sold = $40; selling, general and administrative expense = $35; depreciation = $20.00; interest expense = $20.00; tax rate = 34%.
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