Karina, just having completed a Web design course, was tasked by her project

Karina, just having completed a Web design course, was tasked by her project manager with updating the website for a nursing facility. Karina noticed that the website navigation bar was built in a table, which is not the preferred use of the table.

What suggestions do you have for Karina as she plans to update the website using CSS?
What advantages are there to using CSS to create a navigation bar for your website? List two advantages.

Here’s the SOLUTION

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Big-Deal Construction Company specializes in building dams

Big-Deal Construction Company specializes in building dams. During Years 3, 4, and 5, three dams were completed.

The first dam was started in Year 1 and completed in Year 3 at a profit before income taxes of $240,000. The second and third dams were started in Year 2. The second dam was completed in Year 4 at a profit before income taxes of $252,000, and the third dam was completed in Year 5 at a profit before income taxes of $300,000. The company uses percentage-of-completion accounting for financial reporting and the completed-contract method of accounting for income tax purposes. The applicable income tax rate is 50% for each of the Years 1 through 5. Create a table outlining the year 1-5 numbers. One with total book income, one with total taxable income, and then show the difference between the two.

Here’s the SOLUTION

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BUS 252 Homework 3 – The Hilltop Corporation is considering purchasing a replacement

The Hilltop Corporation is considering purchasing a replacement for an older machine that is being used in production.  The old machine is fully depreciated, and would be sold for $50,000 at the same time the new machine is purchased.  Hilltop uses the straight-line method of depreciation (without regard to salvage value) for all of its machinery.

A new and more efficient machine could be purchased to replace the older machine at a price of $500,000.  Initial training for employees on the new machine would cost $7,000.  The new machine would produce annual cash savings of $150,000 for 6 years.  At the end of 6 years, the machine could be sold for $100,000.  For depreciation purposes, the machine has a useful life of 10 years.  At the end of the third year of production, the new machine would require scheduled maintenance and upgrades which costs $40,000.

Additional inventory ($45,000) and cash ($20,000) would be required, if the new machine is purchased.  Corresponding accounts payable would also be anticipated ($25,000).  The tax rate for Hilltop Corporation is 35%.   The required rate of return, annually, for the firm is 16%.

Required: 

1.Calculate the Net Present Value of the new machine, showing detail of how the NPV was found.
2.Calculate and report the Internal Rate of Return on the new machine.  Explain the importance of this rate for making investment decisions with limited resources and considering that there may be competing investment opportunities.
3.What is the undiscounted payback period for this proposed project?  Show your work.
4.Make clear a recommendation to your client, explaining your reasoning. Demonstrate an understanding of Net Present Value, Discount Rates and Internal Rate of Return.

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Lockhart Corporation is a calendar-year corporation

Lockhart Corporation is a calendar-year corporation. At the beginning of 2013, its election to be taxed as an S corporation became effective. Lockhart Corp.’s balance sheet at the end of 2012 reflected the following assets (it did not have any earnings and profits from its prior years as a C corporation):

Asset

Adjusted Basis

FMV

Cash

$?35,000

$?35,000

Accounts receivable

?? 25,000

??25,000

Inventory

?180,000

? 210,000

Land

? 125,000

? 120,000

Totals

$365,000

$390,000

Lockhart’s business income for the year was $65,000 (this would have been its taxable income if it were a C corporation).

  1. During 2013, Lockhart sold all of the inventory it owned at the beginning of the year for $250,000. What is its built-in gains tax in 2013? Be sure to show your work.
  2. Assume the same facts as in part (1), except that if Lockhart were a C corporation, its taxable income would have been $17,000. What is its built-in gains tax in 2013? Be sure to show your work.
  3. Assume the original facts except the land was valued at $115,000 instead of $120,000. What is Lockhart’s built-in gains tax in 2013?

Here’s the SOLUTION

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A manager of a small store wanted to discourage shoplifters by putting signs

A manager of a small store wanted to discourage shoplifters by putting signs around the store saying “Shoplifting is a crime!” However, he wanted to make sure this would not result in customers buying less. To test this, he displayed the signs every other Wednesday for 8 weeks, for a total of 4 days displayed. He recorded the store’s sales for those four Wednesdays and then recorded the store’s sales for the four alternate Wednesdays, when the signs were not displayed. On the Wednesdays with the sign, the sales were 83, 73, 81, and 79. On the Wednesdays without the sign, sales were 84, 90, 82, and 84.

Do these results suggest that customers buy less when the signs are displayed? (Use the .05 significance level.)

a. Use the five steps of hypothesis testing.
b. Sketch the distribution involved.
c. Figure the effect size.
d. Explain what you did to a person who is familiar with the t test for a single sample but is unfamiliar with the t test for independent means.

Here’s the SOLUTION

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Benning Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Benning

Benning Manufacturing Company is negotiating with a customer for the lease of a large machine manufactured by Benning. The machine has a cash price of $820,000. Benning wants to be reimbursed for financing the machine at an 8% annual interest rate. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:

1. Determine the required lease payment if the lease agreement calls for 12 equal annual payments beginning immediately.

2. Determine the required lease payment if the first of 12 annual payments will be made one year from the date of the agreement.

3. Determine the required lease payment if the first of 12 annual payments will begin immediately and Benning will be able to sell the machine to another customer for $52,000 at the end of the 12-year lease.

Here’s the SOLUTION

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FIN 515 Week 8 Final Exam – (TCO A) Which of the following does NOT always increase a company’s

FIN 515 WEEK 8 FINAL EXAM

1. (TCO A) Which of the following does NOT always increase a company’s market value? (Points : 5)
Increasing the expected growth rate of sales
Increasing the expected operating profitability (NOPAT/Sales)
Decreasing the capital requirements (Capital/Sales)
Decreasing the weighted average cost of capital
Increasing the expected rate of return on invested capital

2. (TCO F) Which of the following statements is correct? (Points : 5)
The NPV, IRR, MIRR, and discounted payback (using a payback requirement of 3 years or less) methods always lead to the same accept/reject decisions for independent projects.
For mutually exclusive projects with normal cash flows, the NPV and MIRR methods can never conflict, but their results could conflict with the discounted payback and the regular IRR methods.
Multiple IRRs can exist, but not multiple MIRRs. This is one reason some people favor the MIRR over the regular IRR.
If a firm uses the discounted payback method with a required payback of 4 years, then it will accept more projects than if it used a regular payback of 4 years.
The percentage difference between the MIRR and the IRR is equal to the project’s WACC.

3. (TCO D) Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
a. $26.77
b. $27.89
c. $29.05
d. $30.21
e. $31.42
(Points : 20)

4. (TCO G) Singal Inc. is preparing its cash budget. It expects to have sales of $30,000 in January, $35,000 in February, and $35,000 in March. If 20% of sales are for cash, 40% are credit sales paid in the month after the sale, and another 40% are credit sales paid 2 months after the sale, what are the expected cash receipts for March?
a. $24,057
b. $26,730
c. $29,700
d. $33,000
e. $36,300
(Points : 20)

Final Exam Page 2

1. (TCO H) Zervos Inc. had the following data for 2008 (in millions). The new CFO believes (a) that an improved inventory management system could lower the average inventory by $4,000, (b) that improvements in the credit department could reduce receivables by $2,000, and (c) that the purchasing department could negotiate better credit terms and thereby increase accounts payable by $2,000. Furthermore, she thinks that these changes would not affect either sales or the costs of goods sold. If these changes were made, by how many days would the cash conversion cycle be lowered?
Original    Revised
Annual sales: unchanged
Cost of goods sold: unchanged
Average inventory: lowered by $4,000
Average receivables: lowered by $2,000
Average payables: increased by $2,000
Days in year    $110,000
$80,000
$20,000
$16,000
$10,000
365    $110,000
$80,000
$16,000
$14,000
$12,000
365

a. 34.0
b. 37.4
c. 41.2
d. 45.3
e. 49.8 (Points : 30)

2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its nonfree trade credit? (Assume a 365-day year.)
a. 20.11%
b. 21.17%
c. 22.28%
d. 23.45%
e. 24.63%
(Points : 30)

3. (TCO E) You were hired as a consultant to the Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of common from retained earnings is 11.25%, and the tax rate is 40%. The firm will not be issuing any new common stock. What is Quigley’s WACC?
a. 8.15%
b. 8.48%
c. 8.82%
d. 9.17%
e. 9.54%
(Points : 30)

4. (TCO B) A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?
Year: 1 2 3
Free cash flow: -$15 $10 $40
a. $315
b. $331
c. $348
d. $367
e. $386
(Points : 35)

5. (TCO G) Based on the corporate valuation model, Hunsader’s value of operations is $300 million. The balance sheet shows $20 million of short-term investments that are unrelated to operations, $50 million of accounts payable, $90 million of notes payable, $30 million of long-term debt, $40 million of preferred stock, and $100 million of common equity. The company has 10 million shares of stock outstanding. What is the best estimate of the stock’s price per share?
a. $13.72
b. $14.44
c. $15.20
d. $16.00
e. $16.80
(Points : 35)

6. TCO G) Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions.
Last year’s sales = S0    $350        Last year’s accounts payable    $40
Sales growth rate = g    30%        Last year’s notes payable    $50
Last year’s total assets = A0*    $500        Last year’s accruals    $30
Last year’s profit margin = PM    5%        Target payout ratio    60%

a. $102.8
b. $108.2
c. $113.9
d. $119.9
e. $125.9 (Points : 30)

Here’s the SOLUTION

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FIN 515 Week 4 Business Valuation and Stock Valuation – Midterm Exam

FIN 515 Week 4  Business Valuation and Stock Valuation – Midterm Exam

1. (TCO A) Which of the following statements is CORRECT? (Points : 10)
It is generally more expensive to form a proprietorship than a corporation because, with a proprietorship, extensive legal documents are required.
Corporations face fewer regulations than sole proprietorships.
One disadvantage of operating a business as a sole proprietorship is that the firm is subject to double taxation, at both the firm level and the owner level.
One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership.
If a regular partnership goes bankrupt, each partner is exposed to liabilities only up to the amount of his or her investment in the business.

2. (TCO G) Which of the following statements is CORRECT? (Points : 10)
In the statement of cash flows, a decrease in accounts receivable is reported as a use of cash.
Dividends do not show up in the statement of cash flows because dividends are considered to be a financing activity, not an operating activity.
In the statement of cash flows, a decrease in accounts payable is reported as a use of cash.
In the statement of cash flows, depreciation charges are reported as a use of cash.
In the statement of cash flows, a decrease in inventories is reported as a use of cash.

3. (TCO G) LeCompte Corp. has $312,900 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $620,000, and its net income after taxes was $24,655. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15%. What profit margin would LeCompte need in order to achieve the 15% ROE, holding everything else constant? (Points : 10)
7.57%
7.95%
8.35%
8.76%
9.20%

4. (TCO B) You want to buy a new sports car three years from now, and you plan to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the third deposit, three years from now? (Points : 10)
$11,973
$12,603
$13,267
$13,930
$14,626

5. (TCO B) You sold a car and accepted a note with the following cash flow stream as your payment. What was the effective price you received for the car assuming an interest rate of 6.0%?
Years:    0          1             2             3             4
|———–|————–|————–|————–|
CFs:     $0     $1,000     $2,000     $2,000     $2,000 (Points : 10)
$5,987
$6,286
$6,600
$6,930
$7,277

6. (TCO B) Suppose you borrowed $14,000 at a rate of 10.0% and must repay it in five equal installments at the end of each of the next five years. How much interest would you have to pay in the first year? (Points : 10)
$1,200.33
$1,263.50
$1,330.00
$1,400.00
$1,470.00

7. (TCO D) A 15-year bond with a face value of $1,000 currently sells for $850. Which of the following statements is CORRECT? (Points : 10)
The bond’s coupon rate exceeds its current yield.
The bond’s current yield exceeds its yield to maturity.
The bond’s yield to maturity is greater than its coupon rate.
The bond’s current yield is equal to its coupon rate.
If the yield to maturity stays constant until the bond matures, the bond’s price will remain at $850.

8. (TCO D) Garvin Enterprises’ bonds currently sell for $1,150. They have a six-year maturity, an annual coupon of $85, and a par value of $1,000. What is their current yield? (Points : 10)
7.39%
7.76%
8.15%
8.56%
8.98%

9. (TCO C) Niendorf Corporation’s five-year bonds yield 6.75%, and five-year T-bonds yield 4.80%. The real risk-free rate is r* = 2.75%, the inflation premium for five-year bonds is IP = 1.65%, the default risk premium for Niendorf’s bonds is DRP = 1.20% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t – 1) x 0.1%, where t = number of years to maturity. What is the liquidity premium (LP) on Niendorf’s bonds? (Points : 10)
0.49%
0.55%
0.61%
0.68%
0.75%

10. (TCO C) Assume that to cool off the economy and decrease expectations for inflation, the Federal Reserve tightened the money supply, causing an increase in the risk-free rate, rRF. Investors also became concerned that the Fed’s actions would lead to a recession, and that led to an increase in the market risk premium, (rM – rRF). Under these conditions, with other things held constant, which of the following statements is most correct? (Points : 10)
The required return on all stocks would increase by the same amount.
The required return on all stocks would increase, but the increase would be greatest for stocks with betas of less than 1.0.
Stocks’ required returns would change, but so would expected returns, and the result would be no change in stocks’ prices.
The prices of all stocks would decline, but the decline would be greatest for high-beta stocks.
The prices of all stocks would increase, but the increase would be greatest for high-beta stocks.

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ACC 310 Week 4 Quiz – Relative performance evaluations (RPE)

ACC 310 Week 4 Quiz (Variant 2)

1. Relative performance evaluations (RPE) are not designed to (Points : 1)
A. compare managers to other comparable managers.
B. compare divisions with other comparable divisions.
C. remove the effect of environmental factors that are beyond a manager’s control.
D. restate departmental goals so meaningful comparisons can be made.

2. Which of the following statements is (are) false regarding the effective use of management control systems.
A. In general, cost allocations should not be used in management control systems because clear control over the cost being allocated cannot be determined.
B. The primary reason to use a dual rate allocation system is to focus a manager’s performance evaluation on factors under the manager’s direct control.
A. Only A is false.
B. Only B is false.
C. Both A and B are false.
D. Neither A nor B is false.

3. The method of accounting for joint product costs that will produce the same gross margin for all products is the
A. replacement method.
B. physical quantities method.
C. net realizable value method.
D. units produced method.

4. Which of the following activities is most likely to be classified as value-added for a manufacturing company?
A) inspecting
B) assembling
C)storing
D) ordering

5. The controllability concept states that managers should be held responsible for
A. all items over which they have decision-making authority
B. costs and revenues, but not investments in assets used in their division.
C. only items that are allocated to their divisions on a per-unit basis.
D. fixed compensation items, but not contingent compensation items.

6. Which of the following budgets is not required in a wholesale organization?
A. cash
B. sales
C. production
D. cost of goods sold
marketing and administrative expenses

7. The amount of resources used in an activity-based costing (ABC) system for a specific activity is computed by multiplying the:
A. cost driver rate and the actual cost driver volume.
B.cost driver rate and the planned cost driver volume.
C.overhead rate and the actual cost driver volume.
D. overhead rate and the planned cost driver volume.

8. Assets invested in a responsibility center are included in a performance report of:
A. Cost Center
B. Profit Center (Points : 1)
only A is true.
Both A and B are true.
Neither A nor B is true.
only B is true.

9. The unused resource capacity is the difference between the resources supplied and the resources
A. purchased
B. wasted
C. used
D. on hand

10. Pardee Company makes 30% of its sales for cash and 70% on account. 60% of the account sales are collected in the month of sale, 25% in the month following sale, and 12% in the second month following sale. The remainder is uncollectible. The following information has been gathered for Pardee’s first year of operations.
Total cash receipts in Month 3 will be: (Points : 5)
A. $52,200.
B. $53,290.
C. $50,000.

Here’s the SOLUTION
D. $51,510.

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At the beginning of 2011, Patel Company incurred the following start-up

At the beginning of 2011, Patel Company incurred the following start-up and organization costs: (1) attorneys’ fees with a market value of $20,000, paid with 12,000 shares of $1 par value common stock, and (2) incorporation fees of $12,000.

Calculate total start-up and organization costs.

What will be the effect of these costs on the income statement and balance sheet?

Here’s the SOLUTION

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