6 pat Bo [sg £ € € ¢ ic € au) 8 B ae gc 6 é Db [s9|8 A A Di 5 B 8 ata 8 8 ae 8 A . 5 ao [8 8 Teo a A ¢ ZI | By c os c D_ {eal c D. bonus) | 70] 8 | c eee] A a . ara 8 A o € 1. Refer to Module 4 pp. 17 and 18 for further discussion on Risks and Returns, 15% = $50,000 ‘900,000 ~ 50,000 = 350,000 5. Unit sales: (247,500 + 315,000) + 22.5 ‘Additional sales: 25,000 units - 18,000 units 7. Average hours for 8 units: 10,000 x 80% x 80% x 80% = 5,120 411. Application rate: 300,000 + (25,000 x 6) = 2 ‘Applied FOH: 162,500 x 2 = 325,000 13. AR turnover: 360 days + 90 days = 4 times [AR balance: 300,000 = 4 = 75,000 ‘Average investment in AR: 75,000 x 70% 15, Invest: [60% (15 M) + 40% (2M)} - 9.5 M Not invest: 100,000 NOTE: P 650,000, since already Incurred, is considered as sunk costs. 17. Average: (1,000 + 250) + 11 units 19. £0Q: Square root of [2 (40,000) 10 = 5) Number of orders: 40,000 = 400 = 100 Frequency: 350 + 100 = every 3.5 days 21, Depreciation: 100,000 + 5 years = 20,000 Post-tax savings: 30,000 (0.6) + 20,000 (0.4) 23. Cost of preferred stock: 8 + (92 ~ 5) 25, LEV: (AH - 40) 7 = 14 favorable LRV: 38 (AR - 7) = 19 unfavorable 26. Refer to MAS ~ G for further discussion on Black-Scholes model, 27. Division 8: Rol is 125% [20+16] of target Rol. 28. EPS = 3.75M+3M= 1.25 Price-Eamings = 12 = Price + 1.25 al Pre-Board Exarni jations (Batch 37 * May 2019 batch) ANSWERS and SOLUTIONS/CLARIFICATIONS to selected items 29. Accept: IRR (20%) > cost of capital (16%) ‘Accept: Payback (2.7 years) <3 years 31. CAPM: cost of equity = 6% + 2 (13% - 6%) 33, AR turnover: 220,000 + 22,000 = 10 times, ‘Age of AR: 365 days + 10 times 34.19 balanced scorecard, shareholders’ Perspective fs a.k.a, FINANCIAL perspective. 35. Comparative: COSTS vs, SAVINGS Lockbox: 4,250 vs, 5,240 Drafts: 8,000 vs. 6,500, EFT: 12,600 vs. 14,000 36, AFOH: 1.6M BAAH: 1.5 + 430,000 (0.5) 42. ROE: 96,000 + [(467,000 + 534,000) + 2} 40. Coste (OUT): 95,000 + (5,500 - 3,900) Savings (IN): 3,000 + 40% (2,000 loss) 42, Cost of RE: [3 (1,09) = 36] = 9% 43. Segment margin (segment B): 15,000 ~ 8,500 ~ 3,000 ~ 1,500 45, MPPV earliest”): 500,000 (2.02 - 2) BONUS item since P 2 standard price was Unintentionally omitted from the given data, 46. Year 2 shows a higher PE ratio of 20 times. 48, Relevant costs: 20,000 (7 + 12 +5 + 6) 50. Intial costs: 160,000 + 30,000 + 35,000 51. 40% {(160,000 + 30,000) + 5) x 0.909 53. Feb sales: (66,000 +44,000) :-20=5,500 units Mar sales: 150,000 ~ 20 = 7,500 units February purchases = sales + €1 - 81 = = 5,500 + 30% (7,500) ~ 30% (5,500) 55, Rol = 500,000 + 2M = 25% = margin x 1.25 56, Expected sales (100%): 92,000 units After-tax cash flow: 92,000 x 5 (100% -40%) ‘Tax savings from depreciation: 200,000 x 40% NPV: 356,000 (3.605) ~ 1,000,000 57. Approach X: 10,000 [36 (90%) ~ 30} = 24,000, Approach ¥: 12,000 (4.2) ~ 30,000 = 20,400 Approach Z: 14,000 (32 - 30) = 28,000 59. Let "xt ~ weight of long-term debt “Lex” = weight of common equity (8%) 60% (x) + 15% (1 ~ x) = 10.41% 61. Absorption costing: 10,000 (5 + 2) 62. The coefficient of determination (2) ranges from 0 to + 1.0 64. Conformance costs Prevention costs: 10,100 + 18,900 Appraisal costs: 11,200 + 16,400 66. Profit: 20% (20 M) + 10,000 = 400 Mark-up based on cost: 400 + 300 68, 40% (20,000) x 4.355 ENO - NOTE: MAS ~ G, MAS preweck materials shall be given on May 2 (MAS preweek lecture),