On December 31, 2016, Largo, Inc., had a $750,000 note payable outstanding, due July 31, 2017. Largo borrowed the money to finance construction of a new plant. Largo planned to refinance the note by issuing longterm bonds. Because Largo temporarily had excess cash, it prepaid$250,000 of the note on January 12, 2017. In February 2017, Largo completed a $1,500,000 bond offering. Largo will use the bond offering proceeds to repay the note payable at its maturity and to pay construction costs during 2017. On March 3, 2017, Largo issued its 2016 financial statements. What amount of the note payable should Largo include in the current liabilities section of its December 31, 2016, balance sheet? a.$250,000 b. $750,000 c.$500,000 d. $ 0

Midac Corporation wants to arrange for $50 million in capital to finance the manufacturing of a new consumer product. The current plan is 60% equity capital and 40% debt financing. Calculate the WACC for the following scenario: Equity capital: 60%, or$35 million, via common stock sales for 40% of this amount that will pay dividends at a rate of 5% per year, and the remaining 60% from retained earnings, which currently earn 9% per year. Debt capital: 40%, or $15 million, obtained through two sources-bank loans for$10 million borrowed at 8% per year, and the remainder in convertible bonds at an estimated 10% per year bond dividend rate.

The Robinson Corporation has $\$ 43$ million of bonds outstanding that were issued at a coupon rate of $113 / 4$ percent seven years ago. Interest rates have fallen to $10^{3 / 4}$ percent. Mr. Brooks, the vice president of finance, does not expect rates to fall any further. The bonds have 17 years left to maturity, and Mr. Brooks would like to refund the bonds with a new issue of equal amount also having 17 years to maturity. The Robinson Corporation has a tax rate of 30 percent. The underwriting cost on the old issue was $2.4$ percent of the total bond value. The underwriting cost on the new issue will be $1.7$ percent of the total bond value. The original bond indenture contained a five-year protection against a call, with a 9 percent call premium starting in the sixth year and scheduled to decline by one-half percent each year thereafter. (Consider the bond to be seven years old for purposes of computing the premium.) Assume the discount rate is equal to the aftertax cost of new debt rounded up to the nearest whole number. Calculate the net present value.

Use a calculator. Chris Schmaltz purchases a Toyota Avalon for $34,119. Chris makes a down payment of$5000 and finances the remaining amount for 5 years at an annual interest rate of 7.6%. The sales tax is 6.25% of the selling price, and the license fee is $429. Find the monthly payment.

Union Market Wholesale Ltd and RFL Wholesale are two major wholesale organisations that supply small and medium-sized retail businesses.

$$\begin{array}{|l|l|l|l|l|l|l|l|l|} \hline & \textbf{ Debtors } & \textbf{ Inventories } & \textbf{ Cost of } & \textbf{ Revenue } & \textbf{ Capital } & \textbf{ Long-term } & \textbf{ Creditors } & \textbf{ Credit } \\ &\textbf{ (\$m) } & \textbf{ 31 December} & \textbf{ sales 2014 } & \textbf{ 2014 (\$m) } & \textbf{ employed } & \textbf{ loans 31 } & \textbf{ (accounts } & \textbf{ purchases } \\ && \textbf{ 2014 (\$m) } & \textbf{ (\$m) } && \textbf{ (\$m)} & \textbf { December } & \textbf{ payable) } & \textbf{ 2014 (\$m) } \\ &&&&&& \textbf{ 2014 (\$m) } & \textbf{ 31 December }\\ &&&&&&& \textbf{ 2014 (\$m) } \\ \hline\text { Union Market } & 300 & 73 & 580 & 1120 & 1575 & 500 & 58 & 300 \\ \text { Wholesale Ltd } \\ \hline \text { RFL Wholesale } & 330 & 150 & 750 & 1460 & 2050 & 1025 & 105 & 550 \\ \hline \end{array}$$

RFL Wholesale is planning to invest in a new expansion project costing $\$ 75$ million. It is considering raising finance either by selling inventories or by taking a bank loan. Discuss the advantages and disadvantages of these two options.

Determine the new balance. $$ \scriptstyle\begin{array}{|c|c|c|c|c|c|} \hline \begin{array}{c} \text { Billing } \\ \text { Date } \end{array} & \begin{array}{c} \text { Previous } \\ \text { Balance } \end{array} & \begin{array}{c} \text { Finance } \\ \text { Charge } \end{array} & \begin{array}{c} \text { New } \\ \text { Purchases } \end{array} & \begin{array}{c} \text { Payments } \\ \text { & Credits } \end{array} & \begin{array}{c} \text { New } \\ \text { Balance } \end{array} \\ \hline 01 / 22 & \$ 410.75 & \$ 7.20 & \$ 175.00 & \$ 150.00 & \\ \hline \end{array} $$

Suppose $\$140,000$ is owed on a house. The monthly payment for principal and interest at $8.5\%$ for $30$ years is $140 \cdot \$7.68913 = \$1076.48$. The total interest charged is the total amount paid minus the amount financed. What is the total interest?

The finance committee of a nonprofit summer camp for children is setting the cost for a 5-day camp. The fixed cost for the entire camp is $2400 per day, and includes things such as rent, salaries, insurance, and equipment. An outside food services company will provide meals at a cost of$3 per camper per meal. Campers will eat three meals a day. As a nonprofit camp, the camp must cover its costs, but not make any profit. The committee must come up with a proposal for setting the fee for each camper, based on the number of campers who are expected to attend each week. Is there a minimum camper’s fee? If so, what is it? Explain your reasoning.

Use a calculator. Luis Mahla purchases a used Porsche Boxster for $42,600 and finances the entire amount at an annual interest rate of 5.7% for 5 years. Find the monthly payment. Assume the sales tax is 6% of the purchase price and the license fee is 1% of the purchase price.

Mark Sexton and Todd Story, the owners of S&S Air, have planned to expand their operations. They instructed their newly hired financial analyst, Chris Guthrie, to enlist an underwriter to help sell $35 million in new 10-year bonds to finance construction. Chris has entered into converstations with Renata Harper, an underwriter from the firm of Raines and Warren, about which bond features S&S Air should consider and what coupon rate the issue will likely have.

 Although Chris is aware of the bond features, he is uncertain about the costs and benefits of some features, so he isn’t sure how each feature would affect the coupon rate of the bond issue. You are Renata’s assistant, and she has asked you to prepare a memo to Chris describing the effect of each of the following bond features on the coupon rate of the bond. She would also like you to list any advantages or disadvantages of he seniority of the bond.

Unilever Group is a global company that markets a wide variety of products, including Lever soap, Breyer’s ice cream, and Hellman’s mayonnaise. The income statement and statement of comprehensive income for the Dutch company, Unilever Group is shown below.

$$\begin{array}{c} \textbf{Unilever Group}\\ \textbf{Consolidated Income Statement}\\ \textbf{For the Year Ended December 31, 2009}\\ \textbf{(in millions of euros)}\\ \end{array}$$

$$\begin{array}{lr} \hline \text{Turnover}&\$39,823\\ \text{Operating profit}&5,020\\ \text{}&\\ \text{After (charging)/crediting:}&\\ \quad\text{Restructuring}&(897)\\ \quad\text{Business disposals, impairments, other}&29\\ \text{}&\\ \text{Net Finance costs:}&(593)\\ \quad\text{Finance income}&75\\ \quad\text{Finance costs}&(504)\\ \quad\text{Pensions and similar obligations}&(164)\\ \text{}&\\ \text{Share of net profit/(loss) of joint ventures}&111\\ \text{Share of net profit/(loss) of associates}&4\\ \text{Other income from non-current investments}&374\\ \text{}&\\ \text{Profit before taxation}&\$4,916\\ \text{Taxation}&(1,257)\\ \text{Net profit}&\$3,659\\ \text{}&\\ \text{Earnings per share—basic}&\$1.21\\ \text{Earnings per share—diluted}&\$1.17\\ \end{array}$$

$$\begin{array}{c} \textbf{Consolidated Statement of Comprehensive Income}\\ \textbf{For the Year Ended December 31, 2009}\\ \end{array}$$

$$\begin{array}{lr} \hline \text{Fair value gains (losses), net of tax}&\$65\\ \text{Actuarial gains (losses) on pensions, net of tax}&18\\ \text{Currency retranslation gains (losses), net of tax}&396\\ \text{Net income (expense) recognized directly into equity}&\$519\\ \text{}&\\ \text{Net profit}&3,659\\ \text{Total comprehensive income}&\$4,178\\ \end{array}$$

b. How does Unilever’s income statement presentation differ significantly from that of Mornin’ Joe?

What are Apple's dollar amounts for assets, liabilities, and equity on September 29, 2018? Confirm Apple Inc. that the accounting equation holds in this case. What percent of Apple's assets is financed from creditor financing sources?

Christine took a world cruise that had a cash price of $23,000 by paying 10% down and financing the balance with a 48- month fixed installment loan. The APR on the loan was 6.0%. Before making the 12th payment , Christine decides to pay off the loan. (a) Determine the original finance charge on the 48-month loan. (b) Determine Christine's monthly payment. (c) If the actuarial method is used, determine the amount of interest Christine will save by paying the loan off early. (d) If the rule of 78s is used, determine the amount of interest Christine will save by paying the loan off early. (e) Which method, the actuarial method or the rule of 78s, is more advantageous to the consumer?

The governmental funds of the City of Westchester report $445,000 in assets and$140,000 in liabilities. The following are some of the assets that the government reports.

• Prepaid items—$7,000
• Cash from a bond issuance that must be spent within the school system according to the bond indenture—$80,000
• Supplies—$5,000
• Investments given by a citizen that will be sold soon with the proceeds used to beautify a public park—$33,000
• Cash that the assistant director of finance designated for use in upgrading the local roads—$40,000
• Cash from a state grant that must be spent to supplement the pay of local kindergarten teachers—$53,000
• Cash that the city council (the highest level of decision-making authority in the government) voted to use in renovating a school gymnasium—$62,000

On a balance sheet for the governmental funds, what fund balance value should the City of Westchester report?