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FIN 571 Week 3 Interpreting Financial Results Home Depot Answer
FIN 571 Week 3 Interpreting Financial Results Home Depot Answer
Review the assigned companys financial statements from the past three years.
Calculate the financial ratios for the assigned companys financial statements, and then
interpret those results against company historical data as well as industry benchmarks:
Compare the financial ratios with each of the preceding three (3) years (e.g. 2014 with
2013; 2013 with 2012; and 2012 with 2011).
Compare the calculated financial ratios against the industry benchmarks for the
industry of your assigned company.
Use Yahoo Finance for help Write a 500 to 750 word summary of your analysis.
Show financial calculations where appropriate.
PROJ 591 Sustainability Proj Management Final Week 7 Course Project Answer
Course Project: Development of a Green Multiuse Academic Building
The embedded US Green Building Council link below is to www.usgbc.org
The project for this course is a group assignment where each group will follow project
management best practices and prepare several key project management deliverables to
support the efficient and effective delivery of a green multiuse academic building. To
learn more about green building practices, view the Tutorial and visit the US Green
Building Council http://www.usgbc.org/ to learn about their LEED program, which
stands for Leadership in Energy and Environment Design. LEED is a series of
guidelines to ensure buildings are sustainable. The guidelines address the following
issues that you should consider for your project:
Site Location
Water Conservation
Energy Efficiency
Materials
Indoor Air Quality
The project for this course is a group assignment where each group will follow project
management best practices and prepare several key project management deliverables to
support the efficient and effective delivery of a green multiuse academic building. The
required deliverables will center around the most common and value-added components
of any project following a standard project management methodology.
Each group will submit specific deliverables over the course of the 8-week semester with
a concluding final report and a PowerPoint presentation of the summary documents.
Please note that each team needs only one person to submit the assignment via the
Dropboxmake sure to include all the members in each deliverable. The PowerPoint
presentation should include annotated footnotes that provide clarification of any
highlights from the individual slides. The final written report will be submitted during
Week 7 and must include the following components.
1. The project charter
2. The scope statement
3. The work breakdown structure (WBS)
4. The communications plan
5. The risk register
The component parts of the final report will be developed as draft documents
(milestones) during each weekly session, according to the schedule as provided below.
Other considerations include
report formatting and documentation;
using case study references;
graphic images;
consistency between groups;
quality versus quantity;
team members cooperation; and
problem resolutions.
Topic Due Date Description
Project Charter Week 2 Using the template provided in Doc Sharing (Project Charter
Template), develop a project charter. The charter should include (1) background and
description, (2) objectives and benefits, (3) initial risks, (4) assumptions, (5) constraints,
(6) success criteria, and (7) management of change requests.
Scope Statement Week 3 Using the template provided in Doc Sharing (Scope Statement
Template), develop a scope statement. The scope statement should include (1) detailed
background and description, (2) specific project deliverables, (3) expectations of what is
in scope, (4) clear identification of what is not in scope (exclusions), and (5) additional
risks identified since the creation of the charter.
Work Breakdown Structure (WBS) Week 4 Using the example provided in Doc Sharing
(WBS Example), develop a three-level WBS reflecting the decomposition of major
deliverables to a lower level of detail.
Communications Plan Week 5 Using the template provided in Doc Sharing
(Communication Plan Template), develop a communications plan. The communications
plan should include (1) what information needs to be communicated, (2) to whom this
information needs to be communicated, (3) the frequency of this communication, (4) the
format of the communication, and (5) who is responsible for the communication.
Risk Register Week 6 Using the template provided in Doc Sharing (Risk Register
Template), develop a risk register. The risk register should include (1) a minimum of 10
risks, (2) the probability of each risk on a scale of 1 to 5, (3) the impact of each risk on a
scale of 1 to 5, (4) the risk score, and (5) the risk response (mitigation, contingency, and
many more).
Final Course Project Week 7 The Final Course Project is the comprehensive collection
of the deliverables completed through the course to date and provides detailed insight
into the projects goals, objectives, scope, risk, and communications efforts.
PROJ 591 Sustainability Proj Management Final Week 7 Course Project Answer
Liabilities:
Accounts payable $29,439 19.8% $22,236 24.4%
Notes payable 6,047 4.1% 15,754 17.3%
Accrued expenses 34,024 22.9% 35,921 39.5%
Short-term notes 0.0% 0 0.0%
Paid-in capital 15,319 10.3% 15,755 17.3%
Retained earnings (53,356) 35.8% (102,926) 113.0%
Common equity (37,094) 24.9% (86,154) 94.6%
Total liabilities and equity $148,883 100.0% $91,0447 100.0%
1. Prepare a common-size income statement and common-size balance sheet for each
firm for both years.
2. How much profit (loss) was each company making per dollar of sales?
a. To what would you attribute any differences?
3. What difference do you notice in the common-sized balance sheets that could account
for the problems of GM relative to Toyota?
Mini Case GM vs. Toyota common-size income statement and common-size balance sheet
Answer
$150,000
$120,000
10. (TCO 3) Mark deposited $1,000 today, in an account that pays eight percent interest,
compounded semi-annually. Which one of the following statements is correct concerning
this investment? (Points : 3)
Mark will earn more interest in year 4 than he will in year 3.
Mark will receive equal interest payments every six months over the life of the
investment.
Mark would have earned more interest if he had invested in an account paying 8
percent simple interest.
Mark would have earned more interest if he had invested in an account paying annual
interest.
Mark will earn less and less interest each year over the life of the investment
11. (TCO 3) Mr. Smith will receive $7,500 a year for the next 14 years from his trust. If
the interest rate on this investment is eight percent, what is the approximate current
value of these future payments? (Points : 3)
$61,800
$53,500
$113,400
$97,200
12. (TCO 3) Your neighbor just received a credit offer in an e-mail. The company is
offering him $6,000 at 12.8 percent interest. The monthly payment is only $110. If he
accepts this offer, how long will it take him to pay off the loan? (Points : 3)
81.00 months
81.50 months
83 months
82.17 months
90.70 months
13. (TCO 3) Fine Oak Woodworks is considering a project that has cash flows of $5,000,
$3,000, and $8,000 for the next three years. If the appropriate discount rate of this
project is 10 percent, which of the following statements is true? (Points : 3)
The current value of the projects inflows is $16,000
The approximate current value of the projects inflows is $13,000
The current value of the projects inflows is somewhere in between $14,000 and $16,000
The project should be rejected because its present value is negative
14. (TCO 4) You are considering two investments. Investment I is in a software
company, and Investment II is an engineering company. The investments offer the
following cash flows:
Year Software Company Engineering Company
If the appropriate discount rate is 10 percent, what is the approximate present value of
the Engineering Company investment? (Points : 3)
$33,200
$34,500
$42,000
$43,500
15. (TCO 3) North Bank offers you an APR of 9.76 percent compounded semiannually,
and South Bank offers you an effective rate of 9 percent on a business loan. Which bank
should you choose and why? (Points : 3)
South Bank because its effective rate is higher.
North Bank because the APR is lower.
South Bank because its effective rate is lower.
North Bank because its effective rate is lower
1. (TCO 3) Tim needs to borrow $5,000 for two years. The loan will be repaid in one
lump sum at the end of the loan term. Which one of the following interest rates is best
for Tim? (Points : 3)
7.5 percent simple interest
7.5 percent interest, compounded monthly
8.0 percent simple interest
8.0 percent interest, compounded annually
8.0 percent interest, compounded monthly
2. (TCO 3) Which one of the following is an example of an annuity, but not a
perpetuity? (Points : 3)
unequal payments each month, for 18 months
payments of equal amount each quarter forever
unequal payments each year forever
equal payments every six months for 48 months
unending equal payments every other month
3. (TCO 3) Fanta Cola has $1,000 par value bonds outstanding at 12 percent interest.
The bonds mature in 25 years. What is the current price of the bond if the YTM is 16
percent? Assume annual payments. (Points : 3)
$1315
$1300
$756
$1000
4. (TCO 6 and 8) Which one of the following statements is correct? (Points : 3)
Bond issuers maintain a listing of bondholders when bonds are issued in bearer form.
An indenture, is a contract between a corporation and its shareholders.
Collateralized bonds are called debentures.
The description of any property used to secure a bond issue is included in the bond
indenture
5. (TCO 3) Bonds issued by Blue Sky Airlines have a face value of $1,000 and currently
sell for $1,180. The annual coupon payments are $125. If the bonds have 20 years until
maturity, what is the approximate YTM of the bonds? (Points : 3)
10.50%
11.50%
11.75%
12%
6. (TCO 3) Bean Coffee issued preferred stock many years ago. It carries a dividend of
$8 per share, fixed. As time has passed, yields have decreased from the original eight
percent (at the time of issuance) to six percent. What was the current price of the stock?
Hint: Yield is the same as required rate of return. (Points : 3)
$100
$133
$102
$86.40
None of the above
7. (TCO 3) Intelligence Research, Inc. will pay a common stock dividend of $1.60 at the
end of the year. The required rate of return by common stockholders is 13 percent. The
firm has a constant growth rate of seven percent. What is the current price of the stock?
(Points : 3)
$23
$32
$27
$29
8. (TCO 3) Royal Electric paid a $4 dividend last year. The dividend is expected to grow
at a constant rate of six percent over the next four years. Common stockholders require
a 13 percent return. What are the values of the dividends for years 1, 2 and 3,
respectively? (Points : 3)
$4, $4.5 and $4.8
$4.24, $4.76 and $5.05
$4.24, $4.49, $4.76
$4, $4.50, $5.05
9. (TCO 6) Which of the following is true regarding the primary market? (Points : 3)
it is the market where the largest number of shares are traded on a daily basis.
it is the market in which the largest number of issues are listed.
it is the market with the largest number of participants.
it is the market where new securities are offered.
it is the market where shareholders trade most frequently with each other
10. (TCO 6) A member of the NYSE who trades on the floor of the exchange for his or
her personal account is called a(n): (Points : 3)
specialist.
independent broker.
floor trader.
stand-alone agent.
dealer
11. (TCO 6) The annual interest on a bond divided by the bonds market price is called
the: (Points : 3)
yield to maturity.
yield to call.
total yield.
required yield.
current yield
12. (TCO 6) Star Industries has one outstanding bond issue. An indenture provision
prohibits the firm from redeeming the bonds during the first two years. This provision
is referred to as a _____ provision. (Points : 3)
deferred call
market
liquidity
debenture
sinking fund
13. (TCO 8) Which of the following is true regarding bonds? (Points : 3)
Most bonds do not carry default risk.
Municipal bonds are free of default risk.
Bonds are not sensitive to changes in the interest rates.
Moodys and Standard and Poors provide information regarding a bonds interest rate
risk.
None of the above is true
14. (TCO 6) Which of the following is not a floating-rate bond? (Points : 3)
A bond that adjusts the coupon payments based on an interest rate index, such as the Tbill.
An EE Savings Bond issued by the U.S. government.
A bond that does not have any coupons until maturity.
A bond that adjusts the coupon and face value payment based on inflation.
TIPS
15. (TCO 6) Which of the following is true regarding put bonds? Select all that apply:
(Points : 3)
Have coupons that depend on the companys income
Can be exchanged for a fixed number of shares before maturity only
Can be exchanged for a fixed number of shares before maturity
Allow the holder to require the issuer to buy the bond back
$42,000
none of these
Question 11. 11. (TCO 8) Which of the following statements is true regarding systematic
risk? (Points : 4)
is diversifiable
is the total risk associated with surprise events
it is measured by beta
it is measured by standard deviation
Question 12. 12. (TCO 8) Which statement is true regarding risk? (Points : 4)
the expected return is usually the same as the actual return
a key to assess risk is determining how much risk an investment adds to a portfolio
risks can always be decreased or mitigated by the financial manager
the higher the risk, the lower the return investors require for the investment
Question 13. 13. (TCO 8) The stock of Chocolate Galore is expected to produce the
following returns, given the various states of the economy. What is the expected return
on this stock?
State of Economy
Probability of State of Economy
Rate of Return
Recession
.02
-.06
Normal
.88
.11
Boom
.10
.17
(Points : 4)
7.33 percent
9.82 percent
11.26 percent
11.33 percent
11.50 percent
Question 14. 14. (TCO 8) You own a portfolio that consists of $8,000 in stock A, $4,600
in stock B, $13,000 in stock C, and $5,500 in stock D. What is the portfolio weight of
stock D? (Points : 4)
17.68 percent
17.91 percent
18.42 percent
19.07 percent
19.46 percent
Question 15. 15. (TCO 8) You currently own a portfolio valued at $24,000 that has a
beta of 1.1. You have another $8,000 to invest, and would like to invest it in a manner
such that the risk of the new portfolio matches that of the overall market. What does the
beta of the new security have to be? (Points : 4)
.46
.55
.61
.70
.90
1. (TCO 8) If the financial markets are strong form efficient, then: (Points : 4)
only the most talented analysts can determine the true value of a security.
only company insiders have a marketplace advantage.
technical analysis provides the best tool to gain a marketplace advantage.
no one person has an advantage in the marketplace.
every security offers the same rate of return.
Question 2. 2. (TCO 5) Royal Petroleum Co. can buy a piece of equipment that can be
financed with debt at a cost of 9 percent (after-tax) and common equity at a cost of 16
percent. Assume debt and common equity each represent 50 percent of the firms capital
structure. What is the weighted average cost of capital? (Points : 4)
between 4.5% and 8%
more than 13%
between 12 and 13%
between 13 and 14%
none of the above
Question 3. 3. (TCO 5, 6 and 7) An issue of common stock is expected to pay a dividend
of $4.80 at the end of the year. Its growth rate is equal to eight percent. If the required
rate of return is 13 percent, what is its current price? (Points : 4)
$103.68
$36.92
$96.00
none of these
Question 4. 4. (TCO 5, 6 and 7) Which of the following is not true regarding the cost of
debt? (Points : 4)
It is the return that the firms creditors demand on new borrowing.
It is the interest rate that the firm pays on current/existing borrowing.
An appropriate method to compute the cost of debt is using the YTM of current bonds
outstanding.
It needs to be converted into an after-tax cost.
Question 5. 5. (TCO 5) Which of the following is not true regarding the cost of retained
earnings? (Points : 4)
it is relevant to the WACC
does not require new funds to be raised
has associated flotation costs
has a cost, which is the opportunity cost associated with stockholder funds
Question 6. 6. (TCO 4) A project has the following cash flows. What is the internal rate
of return?
Year
0
1
2
3
Cash flow
-$195,600
$99,800
$87,600
$75,300
(Points : 4)
less than 5%
between 5 and 15%
between 15 and 18%
more than 21%
Question 7. 7. (TCO 5, 6 and 7) Which one of the following is a correct statement
regarding a firms weighted average cost of capital (WACC)? (Points : 4)
the WACC can be used as the required return for all new projects.
the WACC of a leveraged firm will decrease when the tax rate decreases.
an increase in the market risk premium will tend to decrease a firms WACC.
the WACC is a starting point for the subjective approach to setting discount rates.
a reduction in the risk level of a firm will tend to increase the firms WACC.
Question 8. 8. (TCO 5, 6 and 7) The six percent preferred stock of FKH Manufacturing
is selling for $62 a share. What is the firms cost of preferred stock, if the tax rate is 34
percent and the par value per share is $100? (Points : 4)
5.98%
7.06%
8.05%
9.68%
10.10%
Question 9. 9. (TCO 2) Which one of the following occurs if a firm files for Chapter 7
bankruptcy, but does not generally occur if the firm files for Chapter 11 bankruptcy?
(Points : 4)
a petition is filed in federal court
administrative fees are incurred
a list of creditors is compiled
pre-bankruptcy shareholders tend to lose part, if not all, of their investment in the firm
a trustee-in-bankruptcy is elected by the creditors
Question 10. 10. (TCO 5) Which of the following statements is false regarding the cost of
capital? (Points : 4)
The cost of capital should consider the flotation costs.
All other being equal, it is preferable to use market value weights than book value
weights.
The WACC is the most appropriate discount rate for all projects.
Should include the cost of retained earnings.
Question 11. 11. (TCO 2) Select any actions that do not affect the cash account. (Points :
4)
Goods are sold cash
An interest payment on a notes payable is made
A payment due is received from a client
Dividends are paid to shareholders
Inventory is purchased and paid for with credit
Question 12. 12. (TCO 2) Which of the following statements is true? (Points : 4)
There is an opportunity cost associated with not offering credit.
The costs of the credit application process and the costs expended in the collection
process are not carrying costs of granting credit.
Character, refers to the ability of a firm to meet its credit obligations out its operating
cash flows.
The optimal credit policy, is the policy that produces the largest amount of sales for a
firm.
Question 13. 13. (TCO 2) Which one of the following industries is most apt to have the
shortest cash cycle? (Points : 4)
electric utility company
airplane manufacturer
fast-food restaurant
furniture store
clothing manufacturer
Question 14. 14. (TCO 2) Delphinias has the following estimated quarterly sales for
next year. The accounts receivable period is 30 days. What is the expected accounts
receivable balance at the end of the second quarter? Assume each month has 30 days.
Q1
Q2
Q3
Q4
Sales
$1,800
$1,700
$2,100
$1,900
(Points : 4)
$567
$600
$821
$1,134
$1,200
Question 15. 15. (TCO 1) Why is maximization of the current value per share a more
appropriate financial management goal than profit maximization? (Points : 4)
Because by maximizing the current stock value, you also maximize the companys profit
for the year.
Because this criterion is non-ambiguous.
Because financial managers always act in the best interest of shareholders.
$50,00175,000
25
$75,001100,000
34
$100,001335,000
39
$335,00110,000,000
34
John has taxable income of $389,745. What is Johns average tax rate? (Points : 4)
33%
34%
36%
37%
38%
Question 4. 4. (TCO 3) Regional Bank offers you an APR of 19 percent compounded
semiannually, and Local Bank offers you an EAR of 19.50 percent for a new automobile
loan. You should choose ______________ because its _______ is lower. (Points : 4)
Regional Bank, APR
Local Bank, EAR
Regional Bank, EAR
Local Bank, APR
Question 5. 5. (TCO 3) You deposited $11,000 in your bank account today. Which of the
following will decrease the future value of your deposit, assuming that all interest is
reinvested? Assume the interest rate is a positive value. Select all that apply: (Points : 4)
a decrease in the interest rate
increasing the initial amount of your deposit
increasing the frequency of the interest payments
decreasing the length of the investment period
Question 6. 6. (TCO 3) Amy needs to save $20,000 in cash to buy a new car five years
from today. She expects to earn 6.5 percent, compounded annually, on her savings. How
much does she need to deposit today, if this is the only money she saves for this purpose?
(Points : 4)
$12,468.07
$12,502.14
$14,597.62
$17,044.32
$17,129.01
Question 7. 7. (TCO 3) Paper Pro needed a new store. The company spent $65,000 to
refurbish an old shop and create the current facility. The firm borrowed 75 percent of
the refurbishment cost at eight percent interest for 11 years. What is the amount of each
monthly payment? (Points : 4)
$91.05
$284.13
$556.50
$682.87
$731.60
Question 8. 8. (TCO 3) John borrowed $5,500 four years ago at an annual interest rate
of 10 percent. The loan term is seven years. Since he borrowed the money, Sonny has
been making annual payments of $550 to the bank. Which type of loan does John have?
(Points : 4)
interest-only
pure discount
compounded
amortized
complex
Question 9. 9. (TCO 3) Fanta Cola has $1,000 par value bonds outstanding at 12 percent
interest. The bonds mature in 25 years. What is the current price of the bond, if the
YTM is 11 percent? Assume annual payments. (Points : 4)
$1080
$1085
$925
$1000
Question 10. 10. (TCO 6) The market where one shareholder sells shares to another
shareholder is called the _____ market. (Points : 4)
primary
main
secondary
principal
dealer
Question 11. 11. (TCO 7) Which one of the following statements concerning financial
leverage is correct? (Points : 4)
Financial leverage increases profits and decreases losses.
Financial leverage has no effect on a firms return on equity.
Financial leverage, refers to the use of common stock.
Financial leverage magnifies both profits and losses.
Increasing financial leverage will always increase the earnings per share.
Question 12. 12. (TCO 3) What is the approximate yield to maturity for a seven-year
bond that pays 11 percent interest on a $1000 face value annually if the bond sells for
$952?(Points : 4)
10.5%
10.6%
11.5%
12.1%
Question 13. 13. (TCO 8) Which of the following is true regarding bonds? (Points : 4)
Most bonds do not carry default risk.
Municipal bonds are free of default risk.
Bonds are not sensitive to changes in the interest rates.
Moodys and Standard and Poors provide information regarding a bonds interest rate
risk.
None of the above is true
Question 14. 14. (TCO 8) Which one of the following bonds is the most sensitive to
interest rate movements? (Points : 4)
zero-coupon, five year
seven percent annual coupon, five year
zero-coupon, 10 year
five percent semi-annual coupon, 10 year
five percent annual coupon, 10 year
Question 15. 15. (TCO 6) A sinking fund is an account managed by a bond trustee for
the sole purpose of: (Points : 4)
paying interest payments on a semi-annual basis.
redeeming bonds early.
Question 17. 17. (TCO 1) The marketing department helps keep the organization
focused on creating value both for it and for customers. This is accomplished by
(Points : 5)
Question 18. 18. (TCO 1) Which of the following acts as a barrier to the development of
relationship marketing? (Points : 5)
Question 19. 19. (TCO 1) Your neighbor is tired of conventional soft drinks and wants
something different. Coincidentally, Cadbury Beverages Inc. has begun distributing
Country Time lemonade through the supermarket at a price comparable to that of soft
drinks. Which of the conditions needed for marketing to occur is described in this
situation? (Points : 5)
Question 20. 20. (TCO 6) Kraft produces Lunchables, a prepackaged meal usually
consisting of several crackers, small slices of meat, and small slices of cheese. Some
versions contain Capri Sun drinks. Others are called Cracker Stackers and Fun Fuel.
The box is bright yellow and the quantity of food contained within is small. The target
market for Kraft Lunchables is most likely (Points : 5)
Question 21. 21. (TCO 3) Which element of the marketing mix is demonstrated when
the Mars Company has a sale on M&Ms brand candies? (Points : 5)
Question 22. 22. (TCO 5) The Lemon Tree is a high-fashion boutique selling top-of-theline womens clothing and accessories. The keys to its success include knowing the
customers changing tastes and providing something different from other retailers. In
addition, because of the high value of the merchandise, The Lemon Trees management
is exploring the use of computerized inventory controls and sales order processing.
From this description, one can infer that the environmental category of least importance
to The Lemon Tree is (Points : 5)
Question 23. 23. (TCO 7) In 1998, F. Hoffman-LaRoche Ltd. and BASF AG, two
international pharmaceutical companies, were ordered to pay $725 million in fines for
plotting to raise and fix prices of vitamins used in virtually every home in the United
States. This is an example of how _____ forces affect the marketing environment.
(Points : 5)
Question 24. 24. (TCO 6) Mile High Frozen Foods is a distributor for McDonalds. It
also bakes the buns used by McDonalds in several states. Mile High purchases flour,
yeast, and sesame seeds, manufactures the buns, and then distributes them to the retail
stores. Mile High Frozen Foods is operating in a(n) _____ market. (Points : 5)
Question 25. 25. (TCO 1) Several years ago, SwissAir made some unwise investments to
pay for a planned expansion. As a result, the company had to make some cost-cutting
moves that alienated its customers. Eventually the company declared bankruptcy,
regrouped, and found itself able to resume business. Its board of directors recently
announced that the company would like to resume flying. Before resuming flying,
SwissAir needed to determine what percentage of its former customers it could expect to
return to the airline. If not enough former customers were willing to use SwissAir again,
the resumption of flights would not be profitable. The determination of the percentage
35. (TCO 4) You are the product manager responsible for a horrible product failure, but
in your wisdom, you are evaluating why the product failed. What factors would you
consider in your evaluation? What actions could you have taken to prevent the failure?
Does product innovation need a willingness to accept failure? (Points : 30)