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8.1 Consider the following 2007 data for Newark General Hospital (in millions of dollars):              Static Budget         Flexible Budget          Actual Results Revenues $4.7                       $4.8                             $4.5 Costs           4.1                         4.1                                4.2 Profits         0.6                         0.7                                0.3   a Calculate and interpret the profit variance   b Calculate and interpret the revenue variance   c Calculate and interpret the […]

4-9B. (Financial forecasting—discretionary financing needed) Symbolic Logic Corporation (SLC) is a technological leader in the application of surface mount technology in the manufacture of printed circuit boards used in the personal computer industry. The firm has recently patented an advanced version of its original path-finding technology and expects sales to grow from their present level […]

1. After objectives and standards are set, what step comes next in the control process? _________    2. When a soccer coach tells her players at the end of a losing game:  “You really played well and stayed with the game plan,” she is using a/an _________ as a measure of performance.       3. When […]

MINI CASE: SOLVING FOR THE OPTIMAL INTERNATIONAL PORTFOLIO   Suppose you are a financial advisor and your client, who is currently investing only in the U.S. stock market, is considering diversifying into the U.K. stock market. At the moment, there are neither particular barriers nor restrictions on investing in the U.K. stock market. Your client […]

MINI CASE: ECONOMIC EXPOSURE OF ALBION COMPUTERS PLC   Consider Case 3 of Albion Computers PLC discussed in the chapter. Now, assume that the pound  is expected to depreciate to $1.50 from the current  level of $1.60 per pound. This implies that the pound  cost of the imported part, i.e., Intel’s microprocessors, is £341 (=$512/$1.50). […]

Kohers Inc. is considering a leasing arrangement to finance some manufacturing tools that it needs for the next 3 years. The tools will be obsolete and worthless after 3 years. The firm will depreciate the cost of the tools on a straight-line basis over their 3-year life. It can borrow $4,800,000, the purchase price, at […]

1.  Develop a different arrangement of interest payments among the counterparties and the swap bank in Example 10.1 that still leaves each counterparty with an all-in cost 1/2 percent below each’s best rate and the swap bank with a 1/4 percent inflow. 2.  Alpha and Beta Companies can borrow at the following rates.             Alpha               […]

1. Cray Research sold a super computer to the Max Planck Institute in Germany on credit and invoiced DM 10 million payable in six months. Currently, the six-month forward exchange rate is $1.50/DM and the foreign exchange advisor for Cray Research predicts that the spot rate is likely to be $1.43 in six  months. (a) […]

PROBLEMS    1. Assume that FASB 8 is still in effect instead of FASB 52.  Construct a consolidated balance sheet for Centralia Corporation and its affiliates after a depreciation of the Spanish peseta from Ptas140.00/$1.00 to Ptas150.00/$1.00 that is the counterpart to Exhibit 14.8 in the text.  Centralia and its affiliates carry inventory and fixed […]

         1.    Future Value (Year 5) = $10,000 (1.05)5 = $12,762.82 New Balance (Year 5) = $12,762.82 – $7,500 = $5,262.85 Future Value (Year 8) = $5,262.82 (1.05)3 = $6,092.37    2.  PV of $10,000 = $10,000 x 0.3855 = $3,855 PV of Annuity of $400 = $400 x 12.4622 = $4,984.88 Value of Bond […]