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Managerial Analysis 5

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Instructions

						Instructions
NAME:
	To complete the homework assignments in the templates provided:
	1.	The question is provided for each problem. You may need to refer to your textbook for additional information in a few cases.
	2.	You will enter the required information into the shaded cells.
	3.	The cells are coded:
		a) T requires a text answer. Essay questions require references; use the textbook.
		b) C requires a calculation, using Excel formulas or functions. You cannot perform the operation on a calculator and then type the answer in the cell. You will enter the calculation in the cell, and only the final answer will show in the cell. I will be able to review your calculation and correct, if necessary.
		c) F requires a number only. In some problems, a “Step 1” is added to help you solve the problem.
		d) Formula requires a written formula, not the numbers. For example, the rate of return = [(1 + nominal)/ (1+inflation)]-1, or D (debt) + E (equity) = V (value).
	4.	Name your assignment file as "LastnameFirstinitial-BUSN602-Week#", and submit by midnight ET, Day 7.

DQ12-9

	Discussion Question 12-9
	Explain what is meant by “market efficiency.” What are the characteristics of an efficient market?
	Answer:
	T

DQ12-18

	Discussion Question 12-18
	How does systematic risk differ from unsystematic risk?
	Answer:
	T

DQ12-20

	Discussion Question 12-20
	What is meant by the Capital Asset Pricing Model? Describe how it relates to expected return and risk.
	Answer:
	T

P12-6

	Problem 12-6

	Find the real return on the following investments:
	Stock	Nominal Return	Inflation
	A	10%	3%
	B	15%	8%
	C	-5%	2%
	Answers:
	Enter the answers in blue shaded cells
	Stock	Real Return Kathleen: Real return is computed as: nominal return minus inflation rate	Click on the cell for directions
	A	C
	B	C
	C	C

P12-7

	Problem 12-7

	Find the real return, nominal after-tax return, and real after-tax return on the following:
	Stock	Nominal Return	Inflation	Tax Rate
	X	13.5%	5.0%	15%
	Y	8.7%	4.7%	25%
	Z	5.2%	2.5%	28%
	Answer:
	Enter the answers in blue shaded cells
	Stock	Real Return Kathleen: nominal return minus the inflation rate	Nominal after-tax return Kathleen: nominal return (1-tax rate)	Real after-tax return Kathleen: nominal after-tax return minus the inflation rate	Click on the cell for directions
	X	C	C	C
	Y	C	C	C
	Z	C	C	C

DQ13-13

	Discussion Question 13-13
	How are industry-operating differences reflected in a firm’s financial statements?
	Answer:
	T

P13-2

	Problem 13-2

	Use your knowledge of balance sheets to fill in the amounts missing below.
	Answers:
		Enter the answers in blue shaded cells
		ASSETS			LIABILITIES
		Cash	$10,000		Accounts payable	$12,000
		Accounts receivable	100,000		Notes payable	50,000
		Inventory	C		Total current liabilities
		Total current assets	$220,000		Long-term debt
		Gross P&E	500,000		Total Liabilities	$190,000
		Less accumulated depreciation
		Net P&E	$375,000		EQUITY
		Total assets			Common stock ($1 par, 100,000 shares)
					Paid-in capital
					Retained earnings	150,000
			TIP: A=L+E		Total stockholders’ equity
					Total liabilities and equity

P13-5

	Problem 13-5

	Use your knowledge of income statements to fill in the missing items below.
	Answers:
		Enter the answers in blue shaded cells
		Sales
		COGS	575,000
		Gross profit	$1,600,000
		G&A expense	200,000
		Sales & Mkting expense		TIP: first determine Income before taxes and operating income
		Depreciation	50,000
		Operating income
		Interest	100,000
		Income before taxes
		Income taxes (30%)
		Net income	$700,000