Gibaut & Watson Architecture is considering a project that will produce incremental annual sales of $361,000 and increase cash expenses by $198,000. If the project is implemented, taxes will increase from $31,000 to $47,000. The company is debt-free. What is the amount of the operating cash flow using the top-down approach?

If the economy is normal, the stock of Flores Corporation is expected to return 12 percent. If the economy falls into a recession, the stock’s return is projected at a negative 3.5 percent. The probability of a normal economy is 76 percent. What is the standard deviation of the returns on this stock?

You have a $15,000 portfolio which is invested in Stocks A and B, and a risk-free asset. $6,000 is invested in Stock A. Stock A has a beta of 1.63 and Stock B has a beta of .95. How much needs to be invested in Stock B if you want a portfolio beta of 1.10?

One year ago, you purchased a stock at a price of $58.03 per share. Today, you sold your stock at a loss of 18.23 percent. Your capital loss was $12.59 per share. What was the dividend yield on this stock?

You own a house that you rent for $1,275 per month. The maintenance expenses on the house average $235 per month. The house cost $226,000 when you purchased it 4 years ago. A recent appraisal on the house valued it at $248,000. If you sell the house you will incur $19,840 in real estate fees. The annual property taxes are $2,850. You are deciding whether to sell the house or convert it for your own use as a professional office. What value should you place on this house when analyzing the option of using it as a professional office?

You are considering two mutually exclusive projects. Project A has cash flows of −$125,000, $51,400, $52,900, and $63,300 for Years 0 to 3, respectively. Project B has cash flows of −$85,000, $23,100, $28,200, and $69,800 for Years 0 to 3, respectively. Project A has a required return of 9 percent while Project B’s required return is 11 percent. Should you accept or reject these mutually exclusive projects based on IRR analysis?

What is the expected return on this portfolio? Stock Expected Return Number of Shares Price per Share A −.02 1,400 $15.57 B .11 2,800 $57.08 C .05 3,600 $27.75

Keedis Products has projected the following sales for the coming year: Q1 Q2 Q3 Q4 Sales $ 17,750 $ 14,450 $ 15,275 $ 15,975 The company places orders each quarter that are 30 percent of the followingquarter’s sales and has a 60-day payables period. What is the payment of accounts for the second quarter?

Dillingham, Incorporated, has a 60-day collection period. The projected sales for each quarter next year are shown below. What are collections for the third quarter? Q1 Q2 Q3 Q4 Sales $ 3,680 $ 4,260 $ 4,685 $ 5,160

Underground Funeral Services has annual sales of $885,500. The cost of goods sold is equal to 90 percent of sales. The firm has an average accounts receivable balance of $87,600 and an average accounts payable balance of $72,900. How many days, on average, does it take the firm to pay its suppliers?