Basic
1.
To calculate the payback period, we need to find the time that the project has recovered its
initial investment. After three years, the project has created:
$1,600 + 1,900 + 2,300 = $5,800
in
ch1
Student: _
1.
Which of the following is not one of the central questions in evaluating a company's business prospects?
A. What is the company's present situation?
B. What are the key product or se
Basic
1.
The return of any asset is the increase in price, plus any dividends or cash flows, all divided
by the initial price. The return of this stock is:
R = [($102 91) + 2.40] / $91 = .1473 or 14.7
CHAPTER 1
The correct answer for each question is indicated by a
.
Top of Form
1
INCORREC
T
The competitive moves and business approaches a company's management
are using grow the business, attract an
EXERCISE 11-1 (15- 20 minutes)
(a)
(b)
10, 13, 15, 16, 17, 19, 23
1.
Long-term investments in the balance sheet.
2.
Property, plant, and equipment in the balance sheet.
3.
Research and development exp
EXERCISE 9-1 (15- 20 minutes)
Items 1, 3, 5, 7, 8, 11, 13, 14, 16, and 17 would be reported as
inventory in the financial statements.
The following items would not be reported as inventory:
2. Cost of
EXERCISE 8-1 (10- 15 minutes)
(a)
(b)
Cash includes the following:
1. Commercial savings account-First National Bank of Yojimbo .
1. Commercial checking account-First National Bank of Yojimbo .
2. Mon
1.
It is important to remember that equity will not increase by the same percentage as the other
assets. If every other item on the income statement and balance sheet increases by 15
percent, the pro
1.
Using the formula for NWC, we get:
NWC = CA CL
CA = CL + NWC = $3,720 + 1,370 = $5,090
So, the current ratio is:
Current ratio = CA / CL = $5,090/$3,720 = 1.37 times
And the quick ratio is:
Quick r
Basic
1.
a.
The new market value will be the current shares outstanding times the stock price plus
the rights offered times the rights price, so:
New market value = 500,000($81) + 60,000($70) = $44,70
Basic
1.
With the information given, we can find the cost of equity using the dividend growth model.
Using this model, the cost of equity is:
RE = [$2.40(1.055)/$52] + .055 = .1037 or 10.37%
2.
Here w
Basic
1.
The portfolio weight of an asset is total investment in that asset divided by the total portfolio
value. First, we will find the portfolio value, which is:
Total value = 180($45) + 140($27) =
Basic
1.
a.
The total variable cost per unit is the sum of the two variable costs, so:
Total variable costs per unit = $5.43 + 3.13
Total variable costs per unit = $8.56
b.
The total costs include all
Basic
1.
The $6 million acquisition cost of the land six years ago is a sunk cost. The $6.4 million
current aftertax value of the land is an opportunity cost if the land is used rather than sold
off.
Basic
1.
To solve this problem, we must find the PV of each cash flow and add them. To find the PV
of a lump sum, we use:
PV = FV / (1 + r)t
[email protected]% = $950 / 1.10 + $1,040 / 1.102 + $1,130 / 1.103 + $1
Basic
1.
The simple interest per year is:
$5,000 .08 = $400
So after 10 years you will have:
$400 10 = $4,000 in interest.
The total balance will be $5,000 + 4,000 = $9,000
With compound interest we u
1.
To find owners equity, we must construct a balance sheet as follows:
CA
NFA
TA
Balance Sheet
$5,100
CL
23,800
LTD
OE
$28,900
TL & OE
$4,300
7,400
?
$28,900
We know that total liabilities and owners