Define an aquifer. How common are aquifers in the United States?

What was the state of the economy in post-war United States?

What is happening to the U.S. real exchange rate in each of the following situations? Explain.

a. The U.S. nominal exchange rate is unchanged, but prices rise faster in the United States than abroad.

b. The U.S. nominal exchange rate is unchanged, but prices rise faster abroad than in the United States.

c. The U.S. nominal exchange rate declines, and prices are unchanged in the United States and abroad.

d. The U.S. nominal exchange rate declines, and prices rise faster abroad than in the United States.

Your firm has identified three potential investment projects. The projects and their cash flows are shown here:

$$\begin{array}{ccc} \text{Project} & \text{Cash Flow Today (\$)} & \text{Cash Flow in One Year (\$)} \\ \hline \text{A} & -10 & 20 \\ \text{B} & 5 & 5 \\ \text{C} & 20 & -10 \\ \hline \end{array}$$

Suppose all cash flows are certain and the risk-free interest rate is $10 \%$.

a. What is the NPV of each project?

b. If the firm can choose only one of these projects, which should it choose?

c. If the firm can choose any two of these projects, which should it choose?

A company that is considering adding a new product line has determined that the first cost would be $80 million. The company is not sure about how the product will be received, so it has projected revenues using optimistic, most likely, and pessimistic estimates of$35 million, $25 million, and$10 million, respectively, with equal probability for each. Instead of expanding now, the company could implement a test program for 1 year in a limited area that will cost $4 million. (The full-scale project will still cost$80 million if implemented after the test program is over.) This will provide the company with the option to move forward or cancel the project. The criterion identified to move ahead with full-scale implementation is that revenues must exceed $900,000. In this case, the pessimistic estimate will be eliminated, and equal probability will be placed on the remaining revenue projections. If the company uses a 5-year planning horizon and a MARR of 12% per year, should the company go ahead with the full-scale project now or take the option to implement the test program for 1 year?

A member of a firm’s investment committee is very interested in learning about the management of fixed-income portfolios. He would like to know how fixed-income managers position portfolios to capitalize on their expectations concerning three factors that influence interest rates. Assuming that no investment policy limitations apply, formulate and describe a fixed-income portfolio management strategy for each of the following interest rate factors that could be used to exploit a portfolio manager’s expectations about that factor. (Note: Three strategies are required, one for each of the listed factors.) Changes in yield spreads across/between sectors.

Activity-based costing is preferable in a system: A. when multiple products have similar product volumes and costs B. with a large direct labor cost as a percentage of the total product cost C. with multiple, diverse products D. where management needs to support an increase in sales price

Why did the United States become involved in Vietnam?

What problems existed between Spain and the United States?

Your division is considering two projects. Its WACC is 10%, and the projects’ after-tax cash flows (in millions of dollars) would be as follows:

$$\begin{matrix} \text{ } & \text{0} & \text{1} & \text{2} & \text{3} & \text{4}\\ \text{Project A} & \text{- \$ 30} & \text{\$ 5} & \text{\$ 10} & \text{\$ 15} & \text{\$ 20}\\ \text{Project B} & \text{- \$ 30} & \text{\$ 20} & \text{\$ 10} & \text{\$ 8} & \text{\$ 6}\\ \end{matrix}$$

a. Calculate the projects’ NPVs, IRRs, MIRRs, regular paybacks, and discounted paybacks. b. If the two projects are independent, which project(s) should be chosen? c. If the two projects are mutually exclusive and the WACC is 10%, which project(s) should be chosen? d. Plot NPV profiles for the two projects. Identify the projects’ IRRs on the graph. e. If the WACC was 5%, would this change your recommendation if the projects were mutually exclusive? If the WACC was 15%, would this change your recommendation? Explain your answers. f. The crossover rate is 13.5252%. Explain what this rate is and how it affects the choice between mutually exclusive projects. g. Is it possible for conflicts to exist between the NPV and the IRR when independent projects are being evaluated? Explain your answer. h. Now look at the regular and discounted paybacks. Which project looks better when judged by the paybacks? i. If the payback was the only method a firm used to accept or reject projects, what payback should it choose as the cutoff point, that is, reject projects if their paybacks are not below the chosen cutoff? Is your selected cutoff based on some economic criteria, or is it more or less arbitrary? Are the cutoff criteria equally arbitrary when firms use the NPV and/or the IRR as the criteria? Explain. j. Define the MIRR. What’s the difference between the IRR and the MIRR, and which generally gives a better idea of the rate of return on the investment in a project? Explain. k. Why do most academics and financial executives regard the NPV as being the single best criterion and better than the IRR? Why do companies still calculate IRRs?

Why did many people believe that the Vietnam War reflected racial and economic injustices in the United States?

A vocabulary word appears in italics in the sentence or short passage below. Think about how the word is used in the passage. Then write a definition for the vocabulary word.

We hoped an informal meeting would lead to a $dialogue$ between union and management before a strike began.

DuraTech Manufacturing is evaluating a process improvement project. The estimated receipts and disbursements associated with the project are shown below. $MARR$ is 6 percent/year.

$$\begin{array}{|c|c|c|} \hline \text { End of Year } & \text { Receipts } & \text { Disbursements } \\ \hline 0 & \$ 0 & \$ 5,000 \\ \hline 1 & \$ 0 & \$ 200 \\ \hline 2 & \$ 2,000 & \$ 300 \\ \hline 3 & \$ 4,000 & \$ 600 \\ \hline 4 & \$ 3,000 & \$ 1,000 \\ \hline 5 & \$ 1,600 & \$ 1,500 \\ \hline \end{array}$$

a. What is the annual worth of this investment?

b. What is the decision rule for judging the attractiveness of investments based on annual worth?

c. Should DuraTech implement the proposed process improvement?

Guardian Devices, Inc., manufactures and sellscommercial and residential security equipment.The comparative unclassified balance sheets for December 31, 2013 and 2012 are provided below. Selected missing balances are shown by letters.

$$\begin{array}{c} \textbf{Guardian Devices, Inc.}\\ \textbf{ Balance Sheet}\\ \textbf{December 31, 2013 and 2012}\\ \end{array}$$

$$\begin{array}{lrr} \hline&\textbf{Dec. 31, 2013}&\textbf{Dec. 31, 2012 }\\ \hline\text{Cash}&\$104,000&\$98,000\\ \text{Accounts Receivable (net)}&71,000&67,500\\ \text{Available-for-sale investments (at cost)-Note 1}&a.&36,000\\ \text{Plus valuation allowance for avaialable-for-sale investment}&\underline{}&\underline{6,000}\\ \text{Available-for-sale investments (fair value)}&\underline{\$}&\underline{\$42,000}\\ \text{Interest receivable}&\$ & --\\ \text{Investment in Quest Co. stock—Note 2}&&\$62,000\\ \text{Office equipment (net)}&\underline{60,000}&\underline{65,000}\\ \quad\text{Total assets}&\underline{}&\underline{\$334,500}\\ \text{Accounts payable}&\$56,900&\$45,100\\ \text{Common Stock}&50,000&50,000\\ \text{Excess of issue price over par}&160,000&160,000\\ \text{Retained earnings}&&73,400\\ \text{Less unrealized gain (loss) on available-for-sale invesmetns}&\underline{}&\underline{6,000}\\ \text{Total liabilities and stockholders' equity}&\$ &\$334,500\\ \hline\hline \end{array}$$

Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, 2012, are as follows:

$$\begin{array}{lccc} &\textbf {No. of Shares} & \textbf { Cost per Share } & \textbf { Total Cost } & \textbf { Total Fair Value } \\ \hline \text { Tyndale Inc. Stock } & 600& \$ 24& \$ 14,400&\$17,000\\ \text {UR-Smart Inc. Stock} & 1,200&18& \underline{21,600}& \underline{25,000}\\ &&&\underline{\underline{\$36,000}}&\underline{\underline{\$42,000}} \end{array}$$

Note 2. The Investment in Omaha Co. stock is an equity method investment representing 32% of the outstanding shares of Omaha Co.The following selected investment transactions occurred during 2013: Apr. 21. Purchased 500 shares of Walton Winery, Inc., at $25 including brokerage commission. Walton Winery is classifi ed as an available-for-sale security. Sept. 9. Dividends of$7,500 are received on the Omaha Co. investment. Oct. 1. Purchased $15,000 of Yokohama Co. 6%, 10-year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1. Dec. 31. Omaha Co. reported a total net income of$50,000 for 2013. Guardian recorded equity earnings for its share of Omaha Co. net income. Dec. 31. Accrued interest for three months on Yokohama bonds purchased on October 1. 31. Adjusted the available-for-sale investment portfolio to fair value using the ollowing fair value per-share amounts:

$$\begin{array}{ll} \textbf{Available-for-Sale}\\ \textbf{Investment}&\textbf{Fair Value}\\ \hline \text{Tyndale Inc. Stock}&\text{\$26 per share}\\ \text{UR-Smart,Inc., Stock}&\text{\$ 15 per share}\\ \text{Walton Winery, Inc., stock}&\text{\$30 per share}\\ \text{Yokohama Co. bonds}&\text{101 per \$100 of face value}\\ \end{array}$$

31. Closed the Guardian Devices, Inc., net income of $28,925 for 2013. Guardian paid no dividends during 2013. Instructions Determine the missing letters in the unclassified balance sheet. Provide appropriate supporting calculations.