Blog

Assume you are the financial manager for a large electronics retailer. You are going to prepare a cashforecast. What key cash inflows and outflows do you anticipate will be in your forecast? Identify at least 5 cash inflows and at least 5 cash outflows, respectively. Your answer should be no more than 300 words.

Complete the following statements by adding the missing words or selecting the correct option between the 2 (or 3) alternatives presented as (X/X or X/X/X):The ___________ analysis is a type of financial statement analysis which is most commonly used to create a baseline estimate for financial forecasts.The ___________ on the income statement is a key element which is used to estimate several other key income statement lines.In the context of a firm’s financial statements, pro forma means historical/forward looking/audited.The most common length of a forecast if the goal is to forecast cash and assess possible short-term growth, is ________.When completing a first pass at a forecasted income statement, variable/fixed costs are assumed to be tied directly to sales.In the cash forecast, if cash inflows exceed cash outflows, this creates a cash deficit/surplus.

Using the same data as in question 2, assume that ABC Company expects a 10% increase in sales in the coming year (10% more than the $575,000 it had in the past year). Prepare its sales forecast, assuming the company breaks down its sales down by month using the same percentages as the actual sales from the past year, which you calculated in the first problem.

After viewing the video which discusses the optimal capital structure for real estate with link below answer the following questions:Optimal Capital Structure Commercial Real Estate Explain in no more than 350 words, why the optimal capital structure for commercial real estate cannot be uniform (i.e. a “one-size fits all”) for all commercial real estate entities. Present a scenario where you would recommend a highly levered capital structure and a scenario when you would recommend an unlevered capital structure in the commercial real-estate market and explain why.  

Westland Manufacturing spends $20,000 to update the lighting in its factory to more energy-efficient LED fixtures. This will save the company $4,000 per year in electricity costs. The company estimates that these fixtures will last for 10 years. If the company’s cost of funds is 8%, what is the NPV of this project?

What is the payback of an investment that requires a 10 percent minimum rate of return and has the following projected cash flows: Yr0 = -100 , Yr1 = 25, Yr2 = 35, Yr3 = 45, Yr4 = 35, and Yr5 = 30?

If Westland Manufacturing finds that its cost of funds is 11%, what will happen to the NPV of the project in problem 3?

ABC Company can sell common shares at $30 per share and can obtain debt funding at 8 percent. It has a marginal income tax rate of 25 percent. The yield on US Treasury securities is 3 percent. The market risk premium is 6.0 percent, and the firm’s beta is 0.9. It has a targeted debt-to-equity ratio of 1:1. What is its weighted average cost of capital?

Explain in your own words what is the efficient market hypothesis (EMH) and what are its different forms? Describe each form and its characteristics. Your answer should be no more than 300 words.

The following video is needed for Question 10.What is preferred stock – https://www.youtube.com/embed/MEMMVBJuJ7sComplete the following table which compares the 3 financial instruments bonds, preferred stock and common stock: