SU MBA6010 2019 JUNE All Weeks Projects Latest
MBA6010 Managerial Finance
Week 1 Project
Instructions
Assume you have just earned your master's degree in finance and are now employed by the Cosmo K Manufacturing Group. Your employment is contingent on your successful completion of several tasks over the next four weeks and the successful completion of a comprehensive exam to obtain company certification in finance. Each week, you will be assigned projects of interest to the company that will test your competence in finance.
Gerry has decided that you need some experience in evaluating other firms in the marketplace. Accordingly, he has asked you to select any company listed on the NYSE or the NASDAQ. For your selected company, identify and download the most recent financial statements for the last three to five years, to include the following:
Balance sheet
Income statement
Per share data
Tasks:
Gerry would like you to complete the following tasks and submit your report by the end of the week:
Identify the predominant industry in which your company operates. Find the industry averages for that industry for the following ratios:
Current ratio
Debt ratio
Quick ratio
Debtequity ratio
Total asset turnover
Profit margin
Inventory turnover
Return on assets
Receivables turnover
Return on equity
Calculate as many of the listed ratios for your selected company as possible using the financial statements you acquired.
Conduct a trend analysis for the last three to five years. What trends can you identify? What do they indicate?
Compare the ratios for the last common year to the industry averages. What conclusions can you draw regarding your company's performance? What are your company's strengths and weaknesses?
Identify the changes that need to be made by the company to improve its performance, as compared to the industry, on the basis of the ratios.
Conduct a DuPont analysis for your selected company. What conclusions can you draw for improving your company's performance on the basis of this analysis?
MBA6010 Managerial Finance
Week 2 Project
Instructions
Your probationary period at the Cosmo K Manufacturing Group continues. Your supervisor, Gerry, assigns you a project each week to test your competence in finance. This week, Gerry has asked you to evaluate several investment opportunities available to the company. Your instructions are to consider each situation independently of the others, unless otherwise indicated.
Evaluating Investment Opportunities
Consider the following situations and answer the related questions:
Your company has the opportunity to make an investment that promises to pay $24,000 after 6 years. If your company has a required return of 8.5% on this type of investment, what is the maximum amount that the company should pay for the investment? Explain your answer.
In the previous scenario, assume that your company negotiated a deal where it would pay $12,000 for the investment and receive a payment of $24,000 at the end of 7 years. What is the IRR on this investment? Should the company make the investment? Explain your answer.
Another investment opportunity available to your company involves the purchase of some common stock from Zorp Corporation. The company has asked you to evaluate the stock, which paid a dividend of $4.25 last year and is currently selling for $36 per share. If your company decides to buy the stock, the stock will be held for 5 years and then sold. The growth rate on the stock is constant at 3% per year, and your company's required return on the stock would be 11%. What is the maximum price per share that your company should pay for the stock?
Zorp Corporation also has some bonds for sale that your company is considering. These bonds have a $1,000 par value and will mature in 16 years. The coupon rate on the bonds is 5% paid annually, and they are currently selling for $987 each. The bonds are call protected for the next 4 years, and after this period, they are callable at 105. On the basis of this information, answer the following questions:
What is the YTM on these bonds?
If the bonds are called immediately after the call protection period, what would be the yield to call (YTC)?
If the bonds paid interest semiannually instead of annually, would the YTC, the YTM, or both change? Explain your answers.
MBA6010 Managerial Finance
Week 3 Project
Your probationary period at the Cosmo K Manufacturing Group continues. Your supervisor, Gerry, assigns you a project each week to test your competence in finance.
The company is considering the addition of a new office machine that will perform many of the tasks now performed manually. For this week's task, Gerry has given you the responsibility of evaluating the cash flows associated with the new machine. He has requested the report to be delivered within the week.
Evaluation of a New Office Machine
The Cosmo K Manufacturing Group currently has sales of $1,400,000 per year. It is considering the addition of a new office machine, which will not result in any new sales but will save the company $105,500 before taxes per year over its 5year useful life. The machine will cost $300,000 plus another $12,000 for installation. The new asset will be depreciated using a modified accelerated cost recovery system (MACRS) 5year class life. It will be sold for $25,000 at the end of 5 years. Additional inventory of $11,000 will be required for parts and maintenance of the new machine. The company evaluates all projects at this risk level using an 11.99% required rate of return. The tax rate is expected to be 35% for the next decade.
Tasks:
Answer the following questions:
What is the total investment in the new machine at time = 0 (T = 0)?
What are the net cash flows in each of the 5 years of operation?
What are the terminal cash flows from the sale of the asset at the end of 5 years?
What is the NPV of the investment?
What is the IRR of the investment?
What is the payback period for the investment?
What is the profitability index for the investment?
According to the decision rules for the NPV and those for the IRR, is the project acceptable?
Is there a conflict between the two decision methods? If so, what would you use to make a recommendation?
What are the pros and cons of the NPV and the IRR? Explain your answers.
MBA6010 Managerial Finance
Week 4 Project
Your probationary period at the Cosmo K Manufacturing Group continues.
For this week's project, Gerry has asked you to consider two mutually exclusive investments and incorporate risk considerations into the process of evaluation.
The Cosmo K Manufacturing Group is considering the addition of a new smelting machine or a new paving machine. The two investments are mutually exclusive; if one is selected, the other is rejected. The annual cash flows after taxes and the effects of depreciation, which begin one year from project start, and their respective probabilities are given below:
.0%">.34%">
Smelting Machine 
.66%">
Paving Machine 

.16%">
Probability 
.18%">
Net Cash Flows per Year 
.16%">
Probability 
.52%">
Net Cash Flows per Year 
.16%">
0.2 
.18%">
$14,100.00 
.16%">
0.2 
.52%">
$2,000.00 
.16%">
0.5 
.18%">
$16,000.00 
.16%">
0.5 
.52%">
$16,000.00 
.16%">
0.2 
.18%">
$17,000.00 
.16%">
0.2 
.52%">
$22,000.00 
.16%">
0.1 
.18%">
$20,000.00 
.16%">
0.1 
.52%">
$33,000.00 
Each project has an expected life of 4 years and will cost $45,000. The riskier project will be evaluated at the company's WACC plus 3%, and the less risky project will be evaluated at the company's WACC. Cosmo K has the following capital structure:
.0%">.34%">
Debt: 
.66%">
30% 
.34%">
Preferred stock: 
.66%">
16% 
.34%">
Common stock: 
.66%">
54% 
This capital structure is current and consistent with the company's objectives and so will be used to raise any new funds. All new debt will be raised using longterm bonds, with no shortterm debt being used for the new project. New bonds will have a coupon rate of 13%. The company's common stock is currently selling for $65 per share, paid a dividend of $4.25 last year, and has an expected growth rate of 6% indefinitely. There will be no floatation costs on new common stock. Preferred stock can be sold for $90 per share and pays a dividend of $10, with a floatation cost of $2 per share. Currently, the market risk premium is 5% and the riskfree rate is 8%. Cosmo K's beta coefficient is currently 1.23 and is expected to be consistent for the foreseeable future. The tax rate is expected to be 40% for the next decade.
Tasks:
Answer the following questions:
What is the component cost of capital for the company? Calculate using the CAPM.
What is the company's WACC?
What are the expected cash flows for the investments?
What is the standard deviation for each investment?
What is the coefficient of variation for each investment?
Given the data above, which investment has the higher risk?
What is the expected net present value (NPV) for each investment?
What is the internal rate of return (IRR) of the investments?
According to the decision rules for the NPV and those for the IRR, is there an acceptable project? Explain your answer.
Is there a conflict between the two decision methods? If so, what would you use to recommend a project?
MBA6010 Managerial Finance
Week 5 Project
Exam
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Access dates: 
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1/2/1900 12:00:00 AM to 1/1/2018 12:00:00 AM 
.32%">
Can be reviewed in Gradebook on: 
.68%">
1/1/2017 11:59:00 PM 
.32%">
Number of times this exam can be taken: 
.68%">
1 
.32%">
Time allowed to complete: 
.68%">
3 
This is the last week of your probationary period at the Cosmo K Manufacturing Group. You have demonstrated your competence in finance by successfully completing the four projects that your supervisor, Gerry, assigned you each week.
Your task this week is to successfully complete the comprehensive exam for your company certification.
This section consists of 45 multiplechoice questions. Read the questions and select the correct option.
Question 1 Your firm has average daily receipts of $2,500. These receipts are available after 6 days on average. The interest rate that could be earned is .02% (.0002) per day. What is the approximate cost of the float per day?
Question 1 options:
a) $2.50
b) $3.00
c) $30.00
d) $50.00
e) None of these
Question 2 The common stock of Grady Co. had an 11.25% rate of return last year. The dividend amount was $.70 a share which equated to a dividend yield of 1.5%. What was the rate of price appreciation on the stock?
Question 2 options:
a) 1.50%
b) 8.00%
c) 9.75%
d) 11.25%
e) 12.75%
Question 3 The systematic response coefficient for productivity, βp, would produce an unexpected change in any security return of ____ βP if the expected rate of productivity was 1.5% and the actual rate was 2.25%.
Question 3 options:
a) 0.75%
b) –0.75%
c) 2.25%
d) 2.25%
e) 1.5%
Question 4 You recently purchased a stock that is expected to earn 12% in a booming economy, 8% in a normal economy and lose 5% in a recessionary economy. There is a 15% probability of a boom, a 75% chance of a normal economy, and a 10% chance of a recession. What is your expected rate of return on this stock?
Question 4 options:
a) 5.00%
b) 6.45%
c) 7.30%
d) 7.65%
e) 8.30%
Question 5 A symmetric, bellshaped frequency distribution that is completely defined by its mean and standard deviation is the _____ distribution.
Question 5 options:
a) gamma
b) poisson
c) bimodal
d) normal
e) uniform
Question 6 A bond that makes no coupon payments and is initially priced at a deep discount is called a _____ bond.
Question 6 options:
a) treasury
b) municipal
c) floatingrate
d) junk
e) zero coupon
Question 7 ________ standardizes items on the income statement and balance sheet as a percentage of total sales and total assets, respectively.
Question 7 options:
a) Tax reconciliation statement
b) Statement of standardization
c) Statement of cash flows
d) Commonbase year statement
e) Commonsize statement
Question 8 Which of the following are all components of the statement of cash flows?
Question 8 options:
a) Cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities
b) Cash flow from operating activities, cash flow from investing activities, and cash flow from divesting activities
c) Cash flow from internal activities, cash flow from external activities, and cash flow from financing activities
d) Cash flow from brokering activities, cash flow from profitable activities, and cash flow from nonprofitable activities
e) None of these
Question 9 Marshall's & Co. purchased a corner lot in Eglon City five years ago at a cost of $640,000. The lot was recently appraised at $810,000. At the time of the purchase, the company spent $50,000 to grade the lot and another $4,000 to build a small building on the lot to house a parking lot attendant who has overseen the use of the lot for daily commuter parking. The company now wants to build a new retail store on the site. The building cost is estimated at $1.2 million. What amount should be used as the initial cash flow for this building project?
Question 9 options:
a) $1,200,000
b) $1,840,000
c) $1,890,000
d) $2,010,000
e) $2,060,000
Question 10 Beta is useful in the calculation of the _________.
Question 10 options:
a) company's variance
b) company's discount rate
c) company's standard deviation
d) unsystematic risk
e) company's market rate
Question 11 It will cost $3,000 to acquire a small ice cream cart. Cart sales are expected to be $1,400 a year for three years. After the three years, the cart is expected to be worthless as that is the expected remaining life of the cooling system. What is the payback period of the ice cream cart?
Question 11 options:
a) 83 years
b) 1.14 years
c) 1.83 years
d) 2.14 years
e) 2.83 years
Question 12 One of the reasons why cash flow analysis is popular is because ________.
Question 12 options:
a) cash flows are more subjective than net income
b) cash flows are hard to understand
c) it is easy to manipulate, or spin the cash flows
d) it is difficult to manipulate, or spin the cash flows
e) none of these
Question 13 Risk that affects at most a small number of assets is called _____ risk.
Question 13 options:
a) portfolio
b) nondiversifiable
c) market
d) unsystematic
e) total
Question 14 The internal rate of return tends to be ________.
Question 14 options:
a) easier for managers to comprehend than the net present value
b) extremely accurate even when cash flow estimates are faulty
c) ignored by most financial analysts
d) used primarily to differentiate between mutually exclusive projects
e) utilized in project analysis only when multiple net present values apply
Question 15 A levered firm is a company that has ________.
Question 15 options:
a) accounts Payable as the only liability on the balance sheet
b) some debt in the capital structure
c) all equity in the capital structure
d) all of the above
e) none of the above
Question 16 Given the following information, leverage will add how much value to the unlevered firm per dollar of debt? Corporate tax rate: 34%
Personal tax rate on income from bonds: 20%
Personal tax rate on income from stocks: 0%
Question 16 options:
a) $0.175
b) $0.472
c) $0.528
d) $0.825
e) None of these
Question 17 Holden Bicycles has 1,000 shares outstanding each with a par value of $0.10. If they are sold to shareholders at $10 each, what would the capital surplus be?
Question 17 options:
a) $100
b) $900
c) $9,900
d) $10,000
e) $11,000
Question 18 Bradley Snapp has deposited $6,000 in a guaranteed investment account with a promised rate of 6% compounded annually. He plans to leave it there for 4 full years when he will make a down payment on a car after graduation. How much of a down payment will he be able to make?
Question 18 options:
a) $2,397.00
b) $3,288.00
c) $6,321.32
d) $7,574.86
e) $8,857.59
Question 19 A project has an initial cost of $2,100. The cash inflows are $0, $500, $900, and $700 over the next four years, respectively. What is the payback period?
Question 19 options:
a) 1 year
b) 2 year
c) 3 year
d) 4 year
e) Never
Question 20 Net working capital is defined as ________.
Question 20 options:
a) total liabilities minus shareholders' equity
b) current liabilities minus shareholders' equity
c) fixed assets minus longterm liabilities
d) total assets minus total liabilities
e) current assets minus current liabilities
Question 21 An investment is available that pays a taxfree 6%. The corporate tax rate is 30%. Ignoring risk, what is the pretax return on taxable bonds?
Question 21 options:
a) 4.20%
b) 6.00%
c) 7.67%
d) 8.57%
e) None of these
Question 22 Jamestown Ltd. currently produces boat sails and is considering expanding its operations to include awnings for homes and travel trailers. The company owns land beside its current manufacturing facility that could be used for the expansion. The company bought this land ten years ago at a cost of $250,000. Today, the land is valued at $425,000. The grading and excavation work necessary to build on the land will cost $15,000. The company currently owns some unused equipment valued at $60,000. This equipment could be used for producing awnings if $5,000 is spent for equipment modifications. Other equipment costing $780,000 will also be required. What is the amount of the initial cash flow for this expansion project?
Question 22 options:
a) $800,000
b) $1,050,000
c) $1,110,000
d) $1,225,000
e) $1,285,000
Question 23 The average compound return earned per year over a multiyear period is called the _____ average return.
Question 23 options:
a) arithmetic
b) standard
c) variant
d) geometric
e) real
Question 24 Standard deviation measures _____ risk.
Question 24 options:
a) total
b) nondiversifiable
c) unsystematic
d) systematic
e) economic
Question 25 A bond with semiannual interest payments, all else equal, would be priced _________ than one with annual interest payments.
Question 25 options:
a) higher
b) lower
c) the same
d) it is impossible to tell
e) either higher or the same
Question 26 A company owning gold mines will probably have a _____ inflation beta because an ___ increase in inflation is usually associated with an increase in gold prices.
Question 26 options:
a) negative; anticipated
b) positive; anticipated
c) negative; unanticipated
d) positive; unanticipated
e) None of these
Question 27 Calhoun Computech used internal financing as a source of longterm financing for 80% of its total needs in 2011. The company borrowed an additional 15% of its total needs in the longterm debt markets in 2011. What were Calhoun's net new stock issues, in percentage terms, for 2011?
Question 27 options:
a) 10%
b) 5%
c) 5%
d) 10%
e) 15%
Question 28 Phil's Carvings, Inc. wants to have a weighted average cost of capital of 9%. The firm has an aftertax cost of debt of 5% and a cost of equity of 11%. What debtequity ratio is needed for the firm to achieve its targeted weighted average cost of capital?
Question 28 options:
a) .33
b) .40
c) .50
d) .60
e) .67
Question 29 A corporate bond is quoted at a current price of 102.767. What is the market price of a bond with a $1,000 face value?
Question 29 options:
a) $1,000.28
b) $1,002.77
c) $1,027.67
d) $1,102.77
e) $1,276.70
Question 30 Financial ratios that measure a firm's ability to pay its bills over the short run without undue stress are known as _____ ratios.
Question 30 options:
a) asset management
b) longterm solvency
c) shortterm solvency
d) profitability
e) market value
Question 31 You own 25% of Unique Vacations, Inc. You have decided to retire and want to sell your shares in this closely held, all equity firm. The other shareholders have agreed to have the firm borrow $1.5 million to purchase your 1,000 shares of stock. What is the total value of this firm today if you ignore taxes?
Question 31 options:
a) $4.8 million
b) $5.1 million
c) $5.4 million
d) $5.7 million
e) $6.0 million
Question 32 The _____ tells us that the expected return on a risky asset depends only on that asset's nondiversifiable risk.
Question 32 options:
a) Efficient Markets Hypothesis (EMH)
b) Systematic Risk Principle
c) Open Markets Theorem
d) Law of One Price
e) Principle of Diversification
Question 33 Erosion can be explained as the ________.
Question 33 options:
a) additional income generated from the sales of a newly added product
b) loss of current sales due to a new project being implemented
c) loss of revenue due to employee theft
d) loss of revenue due to customer theft
e) loss of cash due to the expenses required to fix a parking lot after a heavy rain storm
Question 34 Winslow, Inc. stock is currently selling for $40 a share. The stock has a dividend yield of 3.8%. How much dividend income will you receive per year if you purchase 500 shares of this stock?
Question 34 options:
a) $152
b) $190
c) $329
d) $760
e) $1,053
Question 35 The Smythe firm expects a total cash need of $9,000 over the next 4 months. They have a beginning cash balance of $1,000, and cash is replenished when it hits zero. The fixed cost of selling securities to replenish cash balances is $4.00. The interest rate on marketable securities is 8% per annum. There is a constant rate of cash disbursement and no cash receipts during the month.
Question 35 options:
a) $20.00
b) $45.25
c) $54.17
d) $69.48
e) None of these
Question 36 If the expected rate of inflation was 3% and the actual rate was 6.2%; the systematic response coefficient from inflation, βI, would result in a change in any security return of ___ βI.
Question 36 options:
a) 9.2
b) 3.2
c) 3.2
d) 3.0
e) 6.2
Question 37 The person generally directly responsible for overseeing the tax management, cost accounting, financial accounting, and information system functions is the ________.
Question 37 options:
a) treasurer
b) director
c) controller
d) chairman of the board
e) chief executive officer
Question 38 The best fit line of a pairwise plot of the returns of the security against the market index returns is called the ________.
Question 38 options:
a) Security Market Line
b) Capital Market Line
c) Characteristic Line
d) Risk Line
e) None of these
Question 39 The annual annuity stream of payments with the same present value as a project's costs is called the project's _____ cost.
Question 39 options:
a) incremental
b) sunk
c) opportunity
d) erosion
e) equivalent annual
Question 40 The longterm debts of a firm are liabilities ________
Question 40 options:
a) that come due within the next 12 months
b) that do not come due for at least 12 months
c) owed to the firm's suppliers
d) owed to the firm's shareholders
e) the firm expects to incur within the next 12 months
Question 41 The characteristic line is graphically depicted as _________.
Question 41 options:
a) the plot of the relationship between beta and expected return
b) the plot of the returns of the security against the beta
c) the plot of the security returns against the market index returns
d) the plot of the beta against the market index returns
e) none of these
Question 42 Over the period of 1926 to 2011, small company stocks had an average return of ____%
Question 42 options:
a) 8.8
b) 10.2
c) 12.4
d) 14.6
e) 16.5
Question 43 You are comparing two annuities which offer monthly payments for ten years. Both annuities are identical with the exception of the payment dates. Annuity A pays on the first of each month while annuity B pays on the last day of each month. Which one of the following statements is correct concerning these two annuities?
Question 43 options:
a) Both annuities are of equal value today
b) Annuity B is an annuity due.
c) Annuity A has a higher future value than annuity B.
d) Annuity B has a higher present value than annuity A.
e) Both annuities have the same future value as of ten years from today.
Question 44 Which one of the following statements is correct concerning the organizational structure of a corporation?
Question 44 options:
a) The vice president of finance reports to the chairman of the board.
b) The chief executive officer reports to the board of directors.
c) The controller reports to the president.
d) The treasurer reports to the chief executive officer.
e) The chief operations officer reports to the vice president of production.
Question 45 The rate at which a stock's price is expected to appreciate (or depreciate) is called the _____ yield.
Question 45 options:
a) current
b) total
c) dividend
d) capital gains
e) earnings

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SU MBA6010 2019 JUNE All Weeks Projects Latest