# Finance

## Accounting and Banking Software

Provide a brief overview of your concept and its key features, including cost, time frame, and anticipated benefits.Company: The Company is Edward Jones – Product is the company is trying to introduce a new accounting and banking software that will revolutionize the accounting industry and transform banking services

## PRESENT VALUE AND THE RISK/RETURN TRADE-OFF

Assignment Overview For this assignment, make sure to first carefully review all of the required readings about present value, future value, risk and return, and the CAPM. Once you are relatively comfortable with these concepts, try working through some of the examples in the background readings and try computing the answers on your own. Once you are confident you both understand the concepts and the computational steps, complete the assignment below. Case Assignment Present your answers to the problem below in a Word document, and also upload an Excel file with your computations. Excel is required for Questions 2 and 3. Excel is optional for Questions 1 and 4, but you are required to show your steps for all quantitative problems. Even if you get the answer wrong, you can still get partial credit if you show your work. Calculate the following: Suppose you wish to raise some money for your favorite local charity. This charity needs $50,000 a year to run its operation and you want to make sure that it is ensured an annual payment of this amount from now on for every year in the foreseeable future. Given an interest rate of 5%, how much would you have to fund this perpetuity to guarantee the charity a payment of $50,000 per year? You decide to put $1,000 in a new bank account and dont plan to withdraw the money for 10 years. If your bank does continuous compounding and the interest rate is 1%, what will be the value of this bank account in 10 years? Suppose you won the lottery but not all of your winnings will come in one year. Instead, you will get a series of annual payments over the next five years. The table below tells you what your payment will be every year for the next five years. Use the information in the table to make the following computations: The present and future value of your lottery ticket if the interest rate is 8% The present and future value of your lottery ticket if the interest rate is 10% Year Payment 1 5000 2 6000 3 7000 4 8000 5 9000 The table below gives the probability of different returns for three different assets. Using this table, calculate the following: The expected return of each asset The standard deviation of returns of each asset The coefficient of variation of each asset Based on your answers to B) and C) above, which asset has the highest total risk and highest relative risk? Asset A Asset B Asset C Probability Return Probability Return Probability Return 0.3 5 0.1 25 0.1 4 0.4 8 0.3 20 0.8 5 0.3 9 0.5 15 0.1 6 0.1 14 Suppose the market return is 8%, the risk-free rate is 1% and the beta for a given stock is 1.2. Answer the following questions based on this information: What is the required return for this stock? If the beta increases by 50% (but risk-free rate remains 1%), what will be the new required return for the stock? What is the percentage-wise change in required return compared to your answer to A) above? If the market return increases by 50% (but beta remains at 1.2), what will be the new required return for the stock? What is the percentage-wise change in required return compared to your answer to A) above? Suppose there are three different companies. The first one, Trendy Tech Inc., has investors who are fair-weather friends. When the stock market is going up, everybody wants to invest in Trendy Tech, but as soon as the market goes down everyone jumps ships and sells their shares. The second company is Oily Oil Inc. Oilys stock price seems to depend only on the price of oil and nothing else. Finally, there is Conglomerated Conglomerate Inc. Conglomerated is a giant company with holdings in almost every industry imaginablefrom cell phones to grocery stores and even amusement parks. Based on this information, which company would you think has the highest beta? The lowest beta? Which one do you think has a beta closest to 1? Assignment Expectations Answer the assignment questions directly. Stay focused on the precise assignment questions. Do not go off on tangents or devote a lot of space to summarizing general background materials. For computational problems, make sure to show your work and explain your steps. For short answer/short essay questions, make sure to reference your sources of information with both a bibliography and in-text citations. See the Student Guide to Writing a High-Quality Academic Paper, including pages 11-14 on in-text citations. Another resource is the Writing Style Guide, which is found under My Resources in the TLC Portal.

## 4-1 Final Project Milestone One: Starbucks

-Starbucks is the topic for this paper the annual report is in the files section -Please use the Guidelines and Rubric file for critical points needed for the paper -Use the Milestone One Resources file for help with the analysis -Please refrain from plagiarism

## Can America afford its twin deficits?

Can America afford its twin deficits

## Finance Handout

The team that creates the community newsletter asked you to create a special handout that can be given out with their next newsletter. In the handout, they would like you to address finance options for lifespan management. Create a 1-page handout that can be given out to the local community in which you describe: Medicare Medicaid Private pay Cash Insurance LTC insurance Third-party You are encouraged to be creative and include graphics as appropriate. For more information on Finance Handout read this: https://en.wikipedia.org/w/index.php?search=Finance+Handout&title=Special%3ASearch&go=Go&ns0=1

## Manufacturing Costs

Mars Inc. is considering the purchase of a new machine which will reduce manufacturing costs by $5,000 annually. The machine falls into the MACRS 3-yr class, (33%, 45%, 15%, and 7%) and it would be sold at the end of its 2-year operating life for $1,800. The machine would require an increase in networking capital by $2,000 when the machine is installed but the required working capital will return to the original level when the machine is sold after 2 years. Mars’s marginal tax rate is 40 percent, and it uses a 12 percent cost of capital to evaluate projects of this nature. If the machine costs $6,000 and the installation cost is $1,000, what is the project’s NPV? If the answer is $123.45, enter 123.45 (two decimals). The Marcos Company issued $100,000 of 30-year, $1,000 par value bonds with a coupon rate of 7% ten years ago. The bonds with a call price of $1,040 were sold at a discount of $30 per bond. The initial flotation cost was $6,000. The company wishes to sell a $100,000 new issue of 6%, 20-year bonds in order to retire its existing bonds. The company intends to sell its new bonds at their face value of $1,000 per bond. The flotation costs of the new issue are estimated to be $8,000. The companys marginal tax rate is 40% and the new bonds are sold three months before the old bonds are called. What is the annual net cash outflow (ANCO) on the old bonds? If the answer is $5,500, just enter 5500 without a dollar sign or comma. You are considering the purchase of a common stock that just paid a dividend of $4.00 (D0 = $4.00). You expect this stock to have a growth rate of 8 percent per year for two years from t=0 to t=2, and then to have a long?run normal growth rate of 4 percent from t=2. If you require a 14 percent rate of return, how much should you be willing to pay for this stock? For more information on Manufacturing Costs read this: https://en.wikipedia.org/wiki/Manufacturing_cost

## Prospectus Template

Use the following information to ensure successful completion of the assignment: Locate the most current version of the prospectus template in the DC Network. Instructors will be scoring this assignment based solely on whether it is submitted. Doctoral learners are required to use APA style for their writing assignments. The APA Style Guide is located in the Student Success Center. This assignment requires that at least two additional scholarly research sources related to this topic, and at least one in-text citation from each source be included. You are required to submit this assignment to LopesWrite. Refer to the LopesWrite Technical Support articles for assistance. Directions: Submit the most recent draft of your research prospectus. The draft should incorporate all revisions made since your prior submission. Be sure to use the most current version of the prospectus template. For more information on Prospectus Template read this: https://en.wikipedia.org/wiki/Prospectus_(finance)

## Importance Of Cash

Write a short article (300 words) for a local business publication in which you explain why cash flow from operations is important information for small business owners. due in 7 hours. 10 pm eastern! For more information on Importance Of Cash read this: https://en.wikipedia.org/w/index.php?search=Importance+Of+Cash&title=Special%3ASearch&go=Go&ns0=1

## Johnson and Johnson Stock

WEEK 6 Paper. Use the link at the top of this section to submit your paper. Click “Browse My Computer” and attach your paper as a MS Word document. Then click “Submit.” Research and Analysis Paper 3: As a new junior analyst for your firm, your first assignment is to research, analyze, and value Johnson & Johnson stock (NYSE listed). Your boss recommends determining prices based on both the discounted cash flow method and comparable P/E ratio method. You are concerned about your bosss recommendation because your Corporate Finance professor explained that these two valuation methods can result in widely differing estimates when using real data. You are hoping the two methods will reach similar prices. Good luck with that! Your assignment is: Find and download the Johnson & Johnson 2019 Annual Report including Form 10-K for the fiscal year ending December 29, 2019. Go to Reuters (http://www.reuters.com) and enter the symbol for Johnson & Johnson (JNJ) in the search box at the top of the web page (select Johnson & Johnson JNJ). From the Reuters, the website collects the following information (you should be able to find this in the free sections) and enter it into an Excel spreadsheet: The current stock price (last trade upper left of page) The EPS (TTM) The number of shares outstanding The Industry PE Ratio (TTM) you may need to look elsewhere for this. From the Key Metrics, tab scroll down to find the Revenue Growth Rate (5Y), enter the number in your spreadsheet. Go to Morningstar (http://www.morningstar.com) and enter JNJ into the Search Quotes and Site box. Select Johnson & Johnson under the U.S. Securities section. Under “Financials” click Income Statement. Copy and paste (or use Export to Excel to create anew file) the most recent three years (2017-2019) of income statements into a new worksheet in your existing Excel file. Repeat this for the balance sheets and the cash flow statements for Johnson & Johnson. Keep (or copy) all the different financial statement data in the same Excel worksheet NOTE: Make sure you are collecting the Annual data, NOT the Quarterly data. To determine the stock value using the discounted cash flow method: Forecast the free cash flows. Start by using the historical data from the financial statements downloaded from Morningstar to compute the three-year average of the following ratios: EBIT/Sales Tax Rate (income tax expense/income before sales) Property, plant & equipment/Sales Depreciation/property, plant & equipment Networking capital/sales Create an empty timeline for the next five years Forecast future sales based on the most recent years total revenue growing at the LT growth rate (5Y average) from Reuters for the first five years of the forecast. Use the average ratios from step 5. a. above to forecast EBIT, property plant & equipment, depreciation, and networking capital for the next five years. Forecast the the free cash flow for the next five years using Eq. 10.2 from the text (Section 10.1 in text). Determine the horizon enterprise value for year 5 using Eq. 10.6 and a long-term growth rate of 4% and a cost of capital of 11% for JNJ. Determine the enterprise value of the firm as the present value of the free cash flows. Determine the stock price using Eq. 10.4. Note: your enterprise value is in thousands of dollars and the number of shares outstanding Is in billions. To calculate an estimate of the JNJ price based on a comparable P/E Ratio, multiply the industry average P/E ratio by JNJ EPS. Compare the stock values from both methods to the actual stock price. Submit a two-page double spaced paper summarizing for your boss your analysis and valuation with a few brief summary exhibits explaining how your analysis and outlook are quantified in your valuation model. Would you recommend investing in the company? Why or why not? For more information on Johnson and Johnson Stock read this:

## Pricing And Transparency

One page minimum with references… Analyze the role of the paradigm shift under the Affordable Care Act and discuss how transparency will play a greater role in the pricing of health care. Will consumers begin to demand increasing transparency in pricing? Do you believe accrediting commissions (e.g., the Joint Commission) will demand greater transparency in pricing How will these demands be weighted as compared to individual consumers demands? For more information on Pricing And Transparency read this: https://en.wikipedia.org/wiki/Transparency_(market)

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