What amount should Ruiz record on March 1, 2010 as paid-in capital from stock warrants? (Points : 4) $28,800 $33,600 $41,600 $40,000 3. (TCO A) On January 1, 2010, Trent Company granted Dick Williams, an employee, an option to buy 100 shares of Trent Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $900. Williams exercised his option on September 1, 2010, and sold his 100 shares on December 1, 2010.
Lease term 10 4) The lease is noncancelable with no renewal option. The lease terms is 10 years (the same as the estimated economic life). Lease payments 60000 5) At the end of the lease, the jousting ring will revert to Kingdom Leasing Inc. and have an unguaranteed residual value of $30000. Their implicit interest rate is 10%. manuf cost 250000 6) Kingdom Leasing, Inc.
80% of market value ($150,000×80%) $120,000 (-) outstanding mortgage loan $ 50,000 $ 70,000 ∴ Maximum home equity loan Michael can borrow is $ 70,000. Question 2 Louise McIntyre’s monthly gross income is $2,000. Her employer withholds $400 in federal, state and local income taxes and $160 in Social Security taxes per month. Louise contributes $80 per month for her IRA. Her monthly credit payments for Visa, MasterCard and Discover cards are $35, $30 and $20 respectively.
• NPAT* excluding sass & bide put option revaluation $129 million, down 5.1% • Strong cash flow supports final dividend of 8 cps, full year dividend 18 cps, fully franked “Continued execution of five-point plan” * Excludes sass & bide put option revaluation: FY2012 ($3.0 million gain) and FY2013 ($2.2 million expense) Image: TBC (TBC) Image: Orla Kiely DELIVERING OUR PLAN / 3 Full year highlights • Sales and gross profit growth in key categories • Myer Exclusive Brands now 20.0% of sales mix • sass & bide double-digit sales and profit growth • Increased recognition of our customer service journey • Ongoing investment: new stores, refurbishments, brands, online • MYER one strengthened with Platinum tier, app launched • Online sales, page views and average monthly visits doubled • Net debt down 11.2%, lending facilities refinanced Image: sass & bide OVERVIEW / 4 12 September 2013 2 MYER Full Year Results 2013 • • • • • Overview Financial update Delivering our five-point plan Investing for the future Outlook Image: Wayne by Wayne Cooper (Myer Exclusive Brand) Financial
Problems and Cases 5. C. Colbert bought an apartment house with $60,000 cash and a mortgage loan of $100,000. The loan was made at an interest rate of 10.5 percent and requires annual payments for 25 years. What are the payments on this loan? Answer: $944.18 7.
Levered’s perpetual debt has a market value of $300 million and the required return on its debt is 7%. Levered’s stock sells for $100 per share, and there are 5 million shares outstanding. Unlevered has 8 million shares outstanding worth $90 each. Unlevered has no debt. These firms operate in the Modigliani-Miller world with no taxes.
Question 5. (TCOs 3, 4, 5, & 7) During the past two years, through extensive advertising and improved customer relations, Beech Corporation estimated that it had developed customer goodwill worth $100,000. For the current year, determine the amount of goodwill Beech Corporation may amortize. Question 6. (TCOs 3, 4, 5, & 7) Damien, not a dealer in real estate, sold real estate with a basis of $250,000 for $500,000 cash, a note for $250,000, and the buyer assumed Damien’s mortgage on the property of $125,000.
(TCOs 3, 4, 5, & 7) During the past two years, through extensive advertising and improved customer relations, Beech Corporation estimated that it had developed customer goodwill worth $100,000. For the current year, determine the amount of goodwill Beech Corporation may amortize. Question 6. (TCOs 3, 4, 5, & 7) Damien, not a dealer in real estate, sold real estate with a basis of $250,000 for $500,000 cash, a note for $250,000, and the buyer assumed Damien’s mortgage on the property of $125,000. During the year, the purchaser paid Damien $30,000 principal and $72,000 interest on the note and paid $6,000 principal and $18,000 interest on the mortgage he assumed.
Phuket Beach Hotel Lease Option Years Room Revenue Revenue Reduction Rental Income Depreciation Repairs & Maint. Revenue Reduct. Additional Oper. Inc. Taxes Net Inc. After Tax Depreciation Initial Investment After-tax Cash Flow NPV IRR MIRR Equivalent Annual Annuity 0 Monthly Lease Rent Escalation 1 13,200,000 (1,650,000) 2,040,000 (192,500) (10,000) (1,650,000) 187,500 (56,250) 131,250 192,500 (770,000) (770,000) $165,016.99 20.8% 16.3% 52,906 323,750 300,650 Revenue Red.% 0.00% 6.25% 12.5% 18.75% 25.00% Revenue Red.% 2 13,464,000 (1,683,000) 2,040,000 (192,500) (10,000) (1,683,000) 154,500 (46,350) 108,150 192,500 170,000.00 5.00% 3 14,137,000 (1,767,125) 2,142,000 (192,500) (10,000) (1,767,125) 172,375 (51,713) 120,663 192,500 313,163 NPV $ 3,942,358.36 $ 2,053,687.68 $ 165,016.99 ($1,723,653.69) (3,612,324) NPV 0.00% $ 3,942,358.36 6.25% $ 2,053,687.68 12.5% $ 165,016.99 18.75% ($1,723,653.69) 25.00% (3,612,324) Taxes WACC(COC): 4 14,844,000 (1,855,500) 2,142,000 (192,500) (10,000) (1,855,500) 84,000 (25,200) 58,800 192,500 251,300 IRR 190.3% 111% 20.8% 20.8% 20.8% IRR MIRR MIRR 30% rd 10.75% wd 10% re 25% we 12% 75% WACC = kd*(1-T)*wd + ke*we WACC = rd * (1-T) * wd + re*we 74.2% 53.3% 16.3% -100% -100% 74.2% 53.3% 16.3% #Num -100% #Num -100% This is what the IRR looks like at 18.75% and 25% revenue reductions 190.3% 111% 20.8%
* $18 M purchase price * $1.8 M selling price * Investment in PPE (2007) was $16 M * Investment in PPE (2008) was $2 M * $4 M in Sales (2008) * $10 M in Sales (2009-2013) * COGS: 75% of Sales * SG&A: 5% of Sales * $2 M Operating Savings (2008) * $3.5 M Operating Savings (2009-2013) * Depreciation was on a straight-line basis for 6 years beginning in 2008 * $18 M / 6 years = $3 M * 40% tax rate * NWC: 10% of Sales * Salvage value was zero * The FCF per year was determined using the following: * Net Income + Depreciation Expense - ∆ Net Working Capital + Investment in PPE After generating the FCF for each year, I had to solve for NPV and IRR to value the investment. I calculated 2 NPVs—one using Excel’s NPV equation and the other by discounting each year’s FCF using the WACC I calculated earlier. Both methods gave me negative NPVs. * Excel NPV: ($489,344.33) * Discounted FCF NPV: ($538,153.89) Lastly, I used Excel to