Category: Finance

The After-Tax Cost of Capital for Bonds for the Maximus Corporation

Posted on | by Kelvin

 

The Maximus Corporation is considering a new investment, which would be financed from debt. Maximus could sell new $1,000 par value bonds at a new price of $920. The bonds would mature in 13 years, and the coupon interest rate is 10%. Compute the after-tax cost of capital to Maximus for bonds, assuming a 34% tax rate. Show work.

 

The Cost of Capital of Preferred Stock for the Turnip Company

Posted on | by Kelvin

 

The Turnip Company plans to issue preferred stock. Currently, the company’s stock sells for $110. Once new stock is issued, the Turnip Company would receive only $90. The dividend rate is 8%, and the par value of the stock is $100. Compute the cost of capital of the stock to your firm. Show all work.

 

Implementation Failure of an Accounting Information System

Posted on | by Kelvin

Having a business process implemented means that you must have full knowledge of the organization’s products, operations, and goals. Research a company that implemented an AIS change to its operations and did not fully succeed.
Write a paper of 5–6 pages in which you:
Provide detail about the company, its products, and its operations.
Explain some of the reasons that the AIS implementation failed.
Propose in detail a method to avoid this AIS implementation failure.
Explain two areas of the financial statements which were impacted because of the AIS failure.
Provide solutions for the issues that were created in the financial statements and provide a monitoring system to monitor these areas in the future.
Use at least three sources to support your writing. Choose sources that are credible, relevant, and appropriate. Cite each source listed on your source slide at least one time within your assignment. For help with research, writing, and citation, access the library or review library guides.
This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.
The specific course learning outcome associated with this assignment is:
Establish the details of auditing and evaluating an AIS system.
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NPV, IRR, and MIRR for Project S and L.

Posted on | by Kelvin

 

Maine Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable.
WACC: 7.75%
Year 0 1 2 3 4
CFS −$2,000 $1,500 $1,200
CFL −$2,000 $800 $800 $800 $800
Answer the following questions:
1) Calculate NPV, IRR, and MIRR for Project S and L. (Please copy and paste your excel function in here as your work detail).
2) If the decision is made by choosing the project with the higher IRR, how much value will be forgone?
3) Explain the underlying cause of ranking conflicts between NPV and IRR.

 

 

Calculating Average Annual Transportation Inventory for Deb’s Delightful Dresses

Posted on | by Kelvin

Provide thoughtful, supporting details, and examples and graphics as necessary.

  1. Deb’s Delightful Dresses (DDD) needs to ship finished goods from its manufacturing facility to its distribution warehouse. Annual demand for DDD is 3000 gowns. DDD can ship the gowns via regular parcel service (4 days transit time), premium parcel service (2 day transit time), or via public carrier (8 days transit time). Calculate the average annual transportation inventory for each alternative.
  2. Dylan, the owner of Modern Office Chairs (MOC), a company that manufactures office chairs, is interested in measuring inventory effectiveness. Last year the cost of goods sold at MOC was $5,000,000. The average inventory in dollars was $500,000.
  1. Calculate the inventory turnover for MOC.
  2. Calculate the weeks of supply. Assume 52 weeks per year.
  3. Calculate the days of supply. Assume that MOC operates 5 days per week.
  1. Edward’s Electronic, Inc. assembles custom electronics. The outlets needed are bought for $15 each and are ordered in quantities of 1500 units. Annual demand is 6000 outlets, the annual inventory holding cost rate is $5 per unit, and the cost to place an order is estimated to be $75. Calculate the following:
  1. Average inventory level
  2. The number of orders placed per year
  3. The total annual inventory holding cost
  4. The total annual ordering cost
  5. The total annual cost

The Importance of Standard Time in Marble Building

Posted on | by Kelvin

Provide thoughtful, supporting details, and examples and graphics as necessary.

Mark’s Macho Marbles collected the following information to develop a standard time for building marbles.

 

Observations Element (in minutes)
1 2 3 4 5
Cycle 1 2.23 1.30 1.75 2.79 1.62
Cycle 2 2.27 1.28 1.80 2.71 1.60
Cycle 3 2.25 1.34 1.77 2.65 1.62
Cycle 4 2.23 1.35 1.85 2.61 1.62
Cycle 5 2.26 1.31 1.88 2.63 1.64
Cycle 6 2.27 1.27 1.84 2.63 1.66
Cycle 7 2.22 1.37 1.83 2.65 1.62
Cycle 8 2.26 1.31 1.80 2.63 1.66
Cycle 9 2.23 1.35 1.85 2.65 1.60
Cycle 10 2.22 1.33 1.83 2.63 1.62
Rating factor 0.95 0.85 1.15 1.10 1.00
Frequency 1 1 1 1 1

 

  1. Calculate the mean observed time for each element.
  2. Calculate the normal time for each element.
  3. Using an allowance factor of 20 percent of job time, calculate the standard time for each element and for the entire job.
  4. How many units should be completed each hour if the worker performs at 100 percent of the standard?
  5. How many units should be completed each hour if the worker performs at 90 percent of the standard?