FInance Questions - Accounting
Complete
Final Exam
Read the following overview and instructions carefully.
This exam covers Units 5 - 10. Some questions will relate to concepts, others will require you to
calculate an answer. This is an open book (i.e., use of textbook, slides, lecture videos, and
practice problems are allowed) but you may not use any internet sources outside of the course
canvas site on the FSU webpage unless explicitly stated by professor on the exam.
For math problems, you will be asked to upload your work (e.g., excel, word document, or
screenshot of handwritten work). It is recommended to use Excel for any quantitative problems
to avoid rounding errors. DO NOT hardcode answers (i.e., leave the formulas you used).
Clearly label all final answers. Your formulas should NOT be copied and pasted from the
practice problems. You should be doing all your own work from scratch.
All workbooks should be formatted professionally (i.e., something you would turn over to a
client). Formats should NOT look like my practice problem solutions. You should be formatting
all your own tables from scratch.
When you upload an excel file, it is OK to have separate tabs for each question. Please make
sure tabs are labeled to make it easy to locate your answers. It is also OK to add text boxes to
excel and add any written description along with the problem, but please makes sure that they are
formatted professionally and have used the Spell Check function in Excel.
If Excel is NOT used, round all intermediate results to at least four decimal places to ensure an
accurate response. Only the final answer should be rounded to two decimal places. Clearly
label all final answers.
You will be submitting your assignment via TurnItIn which will allow for a plagiarism
review.
Questions
Question 1 [40 points]:
Lululemon is considering investing in new machinery that will generate sustainably created
athleisure shirts and pants. The discount rate is 10\%, and the initial investment in equipment
$12.5 million. The machinerys economic life is 25 years and the equipment will be depreciated
on a straight-line basis over the projects life and has no salvage value. The following financial
information is estimated for production from the machinery:
Sales price per shirt: $65
Sales price per pant: $115
Variable Costs per shirt: $2.75
Variable Costs per pant: $5.00
Fixed Costs of production per Year: $140,000
Tax Rate=21\%
Number of shirts sold per year: 10,100
Number of pants sold per year: 9,750
1. What is the accounting break-even level for production of a) shirts, and b) pants? [5
points]
2. What is the financial break-even level for production of a) shirts, and b) pants? [5 points]
3. What is the base-cash cash flow of this project (i.e., accounting for both shirts and pants)?
[5 points]
4. What is the base-case NPV of this project? [5 points]
5. Assume that your projection for price of shirts, fixed costs, and variable costs of pants
were only accurate within +/- 15\%. Calculate the best-case and worst-case NPV figures.
Do you think Lululemon should take on this project? Why or why not? [15 points]
6. What is the sensitivity of the NPV to changes in the fixed costs? Explain what your
answer tells you about a $10,000 increase in projected fixed costs for pants. [5 points]
Note: When calculating break-evens for each product type, view each product in isolation (e.g.,
for shirts, assume that all depreciation and costs are attributed to shirts and ignore all pant
specific figures. This solves for a world where only shirts are produced and no pants are
produced).
Note: When asked about the project level, you should be accounting for both shirt and pant
production together.
Question 2 [40 points]:
Note: You are allowed to access the hyperlinks to FINRA Morningstar included in the question.
The following Microsoft bond (Links to an external site.) has a coupon rate of 5.2\%. Identify the
Last Trade Yield.
• Would you expect this bond to be trading at a premium or a discount? Why? [10 points]
• Look at the Price/Yield chart on the hyperlinked page. What is the current bond price?
The par/offer price was $100. Is this bond trading at a premium or a discount? How can
you tell? [10 points]
• What is the difference between the coupon rate and the yield on this bond (i.e., what do
they mean for the investor who purchased/held the bond)? [10 points]
• FINRA Morningstar (Links to an external site.) documents the yield curve, which shows
the maturity and yield (in \%) for various treasury bonds. The yield curve is found on the
Market At-A-Glance tab in the Bond Yield and Performance At-A-Glance section -
Treasury Yield. The graph on the right depicts this as a line graph for current
compared to 1 year ago. What do you notice about the relationship between maturity and
yield? Which of the bonds has the most interest rate risk? Why? [10 points]
http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C495885&symbol=MSFT.GC
https://finra-markets.morningstar.com/BondCenter/Default.jsp
Note: Watch the FINRA Training video in the Course Resource Module.
Question 3 [10 points]:
Lululemon needs to raise $60 million and wants to issue 15-year zero-coupon bonds for this
purpose. Assume the required return on the bond issue will be 4.8\% Spear-Its tax rate is
21\%. The par value of each bond is $1000. How many bonds would the company need to issue
to raise the money it requires?
Question 4 [10 points]:
Note: You are allowed to access the hyperlink to FRED included in the question.
Identify what the current (i.e., most recent) rate/yield is for the Three-Month Treasury
Bill (Links to an external site.)(TBill) and the rate for October 2019. The Consumer Price Index
(CPI) is commonly used as a measure of inflation. Inflation can be measured as (Year 1 CPI -
Year 0 CPI) / Year 0 CPI.
1) What is the approximate and exact real rate of interest currently? [5 points]
2) What was the approximate and exact real rate of interest in October 2019? [5 points]
Note: Watch the FRED Training video in the Course Resource Module.
Question 5 [ 30 points]
1. Why can dividends be used to value a firms stock price? Amazon and Facebook do not
pay dividends. Why do they choose not to pay dividends and why are investors willing to
purchase their stock even though no dividends are paid? [15 points]
2. Verizon is expected to pay a $2.510 dividend next year. This will grow at 5\% a year for
the following four years. Afterwards, the company will maintain a constant 1.5\% growth
rate in dividends in perpetuity. If the required return on the stock is 6\%, what is the
current share price? [10 points]
3. Allstate preferred offers preferred dividend of 7.52\% based on a $10 par. This dividend
will be paid in perpetuity stating five years from now. If the market requires a 9.05\% rate
of return, how much does a share of preferred stock cost today? [5 points]
Question 6 [ 55 points]
Suppose you have $90,000 to invest in a two-stock portfolio. Complete the following eight steps
to gather information about your portfolio: [8 points]
• Pick two publicly traded companies listed on a U.S. stock exchange (excluding Tesla and
Proctor & Gamble).
o View a list of the companies that trade on the NYSE (New York Stock
Exchange)(Links to an external site.) (Links to an external site.)
https://fred.stlouisfed.org/series/GS3M
https://fred.stlouisfed.org/series/GS3M
https://fred.stlouisfed.org/series/CPIAUCSL
https://fred.stlouisfed.org/series/CPIAUCSL
https://www.nyse.com/listings_directory/stock
https://www.nyse.com/listings_directory/stock
o View a list of the companies that trade on the NASDAQ(Links to an external
site.) (Links to an external site.)
o View a list of the companies that trade on the AMEX (American Stock
Exchange) (Links to an external site.)
• Download the Monthly historical price data from October 2016 – October 2021
from Yahoo!Finance (Links to an external site.) for each company
• Calculate the monthly returns for each company over the time period using the adjusted
close (Adj Close) price
• Use the average() function in excel to find the average monthly return for each company
over the time horizon. This will reflect the expected return for each stock.
• Use the stdev.s() function in excel to find the standard deviation of the monthly returns
for each company.
• Use the correl() function in excel to find the correlation coefficient between the returns of
each stock
• Find the Beta from the summary information page on Yahoo!Finance (Links to an
external site.)
• Prepare a table that contains the average return, standard deviation, correlation, and beta
information for the two stocks.
Note: Watch the Two-Stock Portfolio Training video in the Course Resource Module which
walks through how to do Steps 2 – 8 above in Excel using Tesla and Proctor & Gamble.
Use the information above to answer the following questions:
1. You can split your $90,000 anyway you want into your two-stock portfolio (i.e., except
100\% in one-stock or 50\%/50\% split between the two). Decide how much of the $90,000
you want to invest in Stock 1 and put the remainder of the $90,000 in Stock 2. Calculate
the weights for each stock in your portfolio [ 7 points]
2. What is the expected return of your portfolio? [ 5 points]
3. What is the standard deviation of your portfolio? [ 10 points]
4. What is the beta of your portfolio? [ 5 points]
5. Forget that you have calculated the expected return above. Assume all you know is each
company’s beta, and that the market risk premium is 5.50\% and the risk-free rate is
0.04\% (using the 3-month T-bill yield as the risk-free proxy). Using the Capital Asset
Pricing Model (CAPM), what is the expected return for each company? [ 5 points]
6. How does the correlation coefficient of the two stocks impact the standard deviation of
your portfolio? Would a positive or negative correlation drive the risk of your portfolio
up, and why? [15 points]
Question 7 [20 points]:
Use the same two companies from above and answer the three questions below.
1. Make a table that includes the trailing and forward P/E Ratios for each of your two
companies. [4 points]
https://www.advfn.com/nasdaq/nasdaq.asp
https://www.advfn.com/nasdaq/nasdaq.asp
https://www.advfn.com/amex/americanstockexchange.asp
https://www.advfn.com/amex/americanstockexchange.asp
https://finance.yahoo.com/
https://finance.yahoo.com/
https://finance.yahoo.com/
2. How do the companies PE Ratios compare to those of several prominent market indices?
[6 points]
3. What are some factors discussed in the lectures that can drive a firms P/E ratio?
Summarize the results of your P/E table and provide a brief overview for what you think
may be driving the differences between the two companies as well as between trailing
and forward P/E ratio for a given company. [10 points]
Note: Review the Price-to-Earnings (P/E) page in the Course Resource Module which
contains information on how to locate a companys P/E ratio on Yahoo!Finance as well as data
on the P/E ratios for several market indexes (e.g., Dow Jones, S&P 500, etc.).
Note: You must use companies that have positive earnings, otherwise P/E ratio is not
meaningful (and often labeled as N/A or missing). If one or both of your companies has
negative earnings, select different public firms with positive earnings. You cannot use Telsa for
one of your companies.
Question 8 [45 points]:
Spear-It Inc., has the following financing outstanding:
• Debt: 300,000 bonds with a coupon rate of 4.0\% and a current price of 120\% of par. The
bonds have 20 years to maturity and a par value of $1,000. The bond has semiannual
compounding.
• Equity: 2.7 million shares of common stock with a current price of $130 per share and
the beta of the stock is 1.19.
• Market: The corporate tax rate is 21\%, the expected market return is 9.5\%, and the risk-
free rate is 0.02\%.
Spear-It is considering purchasing Broke N Bored Grill, a privately held restaurant. Broke N
Bored currently has debt outstanding with a market value of $15 million. The EBIT for Broke N
Bored next year is projected to be $13 million. EBIT is expected to grow at 9\% per year for the
next five years before slowing to 2\% in perpetuity. Change in Net Working Capital, Capital
Spending, and Depreciation as a percentage of EBIT are expected to be 5\%, 4\%, and 6\%,
respectively. Broke N Bored has 12.5 million shares outstanding and the tax rate is 21\%.
1. What is the after-tax cost of debt for Spear-It Inc? [5 points]
2. What is the cost of equity for Spear-it Inc? [2.5 points]
3. What is the weight of debt and weight of common stock for Spear-It Inc? [5 points]
4. What discount rate should Spear-It use to evaluate the potential purchase of Broke N
Bored? [2.5 points]
5. What are the Cash Flows for Broke N Bored expected to be in Years 1 - 5 (i.e., what is
CF(A) for Years 1 - 5)? [10 points]
6. What is the terminal value of Broke N Boreds cash flows? [10 points]
7. What is the total value of Broke N Bored Grill worth to Spear-It today? [5 points]
8. What is the value of Broke N Bored equity? [2.5 points]
https://finance.yahoo.com/
9. What is the maximum price per share Spear-It should be willing to pay for Broke N
Bored? [2.5 points]
Completion
To successfully complete the Final Exam, you must answer all questions and submit your
answers by the end of day on Friday in the final week of the course (i.e., Friday 11:59 PM ET).
Upload your written document and excel workbook.
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f. Three Social Entrepreneurship Models
g. Social-Founder Identity
h. Micros-enterprise Development
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ness Horizons
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When considering both O
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Identify a specific consumer product that you or your family have used for quite some time. This might be a branded smartphone (if you have used several versions over the years)
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aragraphs (meaning 25 sentences or more). Your assignment may be more than 5 paragraphs but not less.
INSTRUCTIONS:
To access the FNU Online Library for journals and articles you can go the FNU library link here:
https://www.fnu.edu/library/
In order to
n that draws upon the theoretical reading to explain and contextualize the design choices. Be sure to directly quote or paraphrase the reading
ce to the vaccine. Your campaign must educate and inform the audience on the benefits but also create for safe and open dialogue. A key metric of your campaign will be the direct increase in numbers.
Key outcomes: The approach that you take must be clear
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nment
Topic
You will need to pick one topic for your project (5 pts)
Literature search
You will need to perform a literature search for your topic
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you been involved with a company doing a redesign of business processes
Communication on Customer Relations. Discuss how two-way communication on social media channels impacts businesses both positively and negatively. Provide any personal examples from your experience
od pressure and hypertension via a community-wide intervention that targets the problem across the lifespan (i.e. includes all ages).
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in body of the report
Conclusions
References (8 References Minimum)
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*** In-Text Citations and References using Harvard style.
*** In Task section I’ve chose (Economic issues in overseas contracting)"
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w or quality improvement; it was just all part of good nursing care. The goal for quality improvement is to monitor patient outcomes using statistics for comparison to standards of care for different diseases
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visual representations of information. They can include numbers
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ame workbook for all 3 milestones. You do not need to download a new copy for Milestones 2 or 3. When you submit Milestone 3
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making the appropriate buying decisions in an ethical and professional manner.
Topic: Purchasing and Technology
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https://youtu.be/fRym_jyuBc0
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and word limit is unit as a guide only.
The assessment may be re-attempted on two further occasions (maximum three attempts in total). All assessments must be resubmitted 3 days within receiving your unsatisfactory grade. You must clearly indicate “Re-su
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After the components sending to the manufacturing house
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No matter which type of health care organization
With a direct sale
During the pandemic
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3. Furman v. Georgia is a U.S Supreme Court case that resolves around the Eighth Amendments ban on cruel and unsual punishment in death penalty cases. The Furman v. Georgia case was based on Furman being convicted of murder in Georgia. Furman was caught i
One major ethical conflict that may arise in my investigation is the Responsibility to Client in both Standard 3 and Standard 4 of the Ethical Standards for Human Service Professionals (2015). Making sure we do not disclose information without consent ev
4. Identify two examples of real world problems that you have observed in your personal
Summary & Evaluation: Reference & 188. Academic Search Ultimate
Ethics
We can mention at least one example of how the violation of ethical standards can be prevented. Many organizations promote ethical self-regulation by creating moral codes to help direct their business activities
*DDB is used for the first three years
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The inbound logistics for William Instrument refer to purchase components from various electronic firms. During the purchase process William need to consider the quality and price of the components. In this case
4. A U.S. Supreme Court case known as Furman v. Georgia (1972) is a landmark case that involved Eighth Amendment’s ban of unusual and cruel punishment in death penalty cases (Furman v. Georgia (1972)
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In my opinion
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While you must form your answers to the questions below from our assigned reading material
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5 The family dynamic is awkward at first since the most outgoing and straight forward person in the family in Linda
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4 In order to get the entire family to come back for another session I would suggest coming in on a day the restaurant is not open
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After viewing the you tube videos on prayer
Your paper must be at least two pages in length (not counting the title and reference pages)
The word assimilate is negative to me. I believe everyone should learn about a country that they are going to live in. It doesnt mean that they have to believe that everything in America is better than where they came from. It means that they care enough
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Single Subject Chris is a social worker in a geriatric case management program located in a midsize Northeastern town. She has an MSW and is part of a team of case managers that likes to continuously improve on its practice. The team is currently using an
I would start off with Linda on repeating her options for the child and going over what she is feeling with each option. I would want to find out what she is afraid of. I would avoid asking her any “why” questions because I want her to be in the here an
Summarize the advantages and disadvantages of using an Internet site as means of collecting data for psychological research (Comp 2.1) 25.0\% Summarization of the advantages and disadvantages of using an Internet site as means of collecting data for psych
Identify the type of research used in a chosen study
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effect relationship becomes more difficult—as the researcher cannot enact total control of another person even in an experimental environment. Social workers serve clients in highly complex real-world environments. Clients often implement recommended inte
I think knowing more about you will allow you to be able to choose the right resources
Be 4 pages in length
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One thing you will need to do in college is learn how to find and use references. References support your ideas. College-level work must be supported by research. You are expected to do that for this paper. You will research
Elaborate on any potential confounds or ethical concerns while participating in the psychological study 20.0\% Elaboration on any potential confounds or ethical concerns while participating in the psychological study is missing. Elaboration on any potenti
3 The first thing I would do in the family’s first session is develop a genogram of the family to get an idea of all the individuals who play a major role in Linda’s life. After establishing where each member is in relation to the family
A Health in All Policies approach
Note: The requirements outlined below correspond to the grading criteria in the scoring guide. At a minimum
Chen
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Losinski forwarded the article on a priority basis to Mary Scott
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