Category: Finance

In the problems below show your work clearly. If you use a formula show the formula written with the values substituted into it before giving the final value. If you use the Finance menu on the calculator to do the calculations you must show values that you substitute into it. Also, write your answers to the question in sentence form.
Round your answers to the nearest cent or hundredth where appropriate and include units of measure. Show all work for full credit (except for multiple choice questions). Although it is preferred, you do not have to write your work/answers on a copy of the actual Test. Test questions do not have to be rewritten: you only have to show your work/answers. However, sometimes you have to copy a picture if you are required to show your work on it.
Make sure that your responses are clearly numbered and your name is on all submitted pages.
see attached for formulation and questions

*** Assignment MUST BE plagiarism-free and without using AI tools ***
Preparation Materials
01) Reading:
E-book: Fundamentals of Corporate Finance 
Chapter 3: “Working with Financial Statements” 
02) Video:
How to Read Company Financial Statements (Basics Explained) – https://www.youtube.com/watch?v=__5ZscqYQiw 
Assignment Description
Search Yahoo Finance and/or any other credible source(s) to find the most recent income statement and balance sheet of a major corporation, then perform a vertical financial analysis incorporating: 
Debt ratio  
Debt to equity ratio  
Return on assets  
Return on equity  
Current ratio  
Quick ratio  
Inventory turnover  
Days in inventory  
Accounts receivable turnover  
Accounts receivable cycle (in number of days)  
Accounts payable turnover  
Accounts payable cycle (in number of days)  
Earnings per share (EPS) 
Price to earnings ratio (P/E)
Cash conversion cycle (CCC)
Working capital 
Explain Dupont identity. Apply it to your selected company. Interpret the components in Dupont identity.  
Provide detailed and precise explanations and definitions. Be sure to submit the financial statements along with the vertical financial analysis.

In this assignment, you will examine the path of two interest rate series and identify any trends, changes, or correlations between the two economic data series. Using the same range of years you selected for your discussion  (DISCUSSION ATTACED) in Module Two (i.e., a 10- to 15-year span over the last 50 years), you will plot and compare the federal funds rate with either the prime bank loan rate or the 30-year conventional mortgage rate using the Federal Reserve Economic Database (FRED).
To understand the relationship between the federal funds rate and the prime bank loan rate or the 30-year conventional mortgage rate, read the following analogy to a car’s brakes:
Suppose you take your car to an auto repair shop because it does not stop in a safe manner when the brakes are applied. The mechanic explains that the car’s rotors are rusted out, and the brake pads are gone, and that is why the car is not stopping as needed. In this analogy, the rotors and brake pads are the federal funds rate, and the braking performance of the car is the prime bank loan rate or the 30-year conventional mortgage rate.
Directions
First, graph the monthly federal funds effective rates over your selected 10- to 15-year span. Follow the steps below to graph the data:
Visit the FRB Rates – Discount, Fed Funds, Primary Credit webpage in the FRED. This resource can be found in the Supporting Materials section below.
Under the Federal Funds Effective Rate heading, check the box next to Monthly.
Click on the Add to Graph button.
Once on the screen with the graph, adjust the dates in the two boxes in the upper right-hand corner found to the left of the red Edit Graph button. Select the same time period (i.e., 10- to 15-year span over the last 50 years) you chose for your discussion in Module Two. Selecting just the 10- to 15-year period you are examining is very important! If you do not restrict the time period, your graph will have far too much data and will show data points outside of the period you are examining.
After you have adjusted the year span, click on the blue Download button in the upper right-hand side of the screen and choose Image (graph).
Next, graph either the monthly prime bank loan rates or monthly 30-year conventional mortgage rate of your selected 10- to 15-year span, using the same instructions above. These resources can be found in the Supporting Materials section below.
For prime bank loan rates, check the box next to Monthly under the “Bank Prime Loan Rate” heading and follow steps 3–5 above.
For 30-year conventional mortgage rate, check the box next to Monthly under the 30-Year, Fixed-Rate Conventional Home Mortgage Commitments heading and follow steps 3–5 above.
After downloading the two graphs as images, insert them into a Word document along with a brief written analysis (described in the critical elements below).
Specifically, you must address the following rubric criteria:
Interest Rate Graphs
Graph 1: Graph, download, and insert an image of the graph of the federal funds effective rates from the FRED into a Word document. Use the same time period (i.e., 10- to 15-year span over the last 50 years) you chose for the Module Two discussion response.
Graph 2: Graph, download, and insert an image of the graph of the prime bank loan rates or the 30-year conventional mortgage rate from FRED into a Word document. Use the same time period (i.e., 10- to 15-year span over the last 50 years) you chose for the Module Two discussion response.
Analysis
Comparison: Analyze the two interest rates and explain how they have changed over your chosen time period, citing specific examples.
Causal Relationship: Briefly hypothesize the causal relationship between the two interest rates based on knowledge gained in the course. Cite your sources.
What to Submit
Your paper must be submitted as a 2- to 3-page Microsoft Word document with two inserted graphs, double spacing, 12-point Times New Roman font, one-inch margins, and at least three sources cited in APA format.
Supporting Materials
The following resources support your work on this assignment:
Reading: FRB Rates – Discount, Fed Funds, Primary Credit
Use this webpage to find the Federal Reserve Board (FRB) rates, including the federal funds effective rate.
https://fred.stlouisfed.org/categories/118
Reading: Prime Bank Loan Rate
Use this webpage to look up the bank prime loan rate and bank prime loan rate changes.
https://fred.stlouisfed.org/categories/117
Reading: Mortgage Rates
Use this webpage to look up mortgage rates, including the contract rates on 30-year, fixed-rate conventional home mortgage commitments.
https://fred.stlouisfed.org/categories/114

Comment on the postings of two of your classmates. Do you agree with their position? Why or why not?
STUDENT 1:
The Capital Asset Pricing Model (CAPM) and Arbitrage Pricing Theory (APT) are both crucial tools for evaluating the link between risk and return in investments. However, they differ in their methodology and underlying assumptions. Both models take into account the systematic risk linked to an investment, but they vary in how they handle unsystematic risk. The Capital Asset Pricing Model (CAPM) utilizes only one systematic risk element, which is the market return, to calculate the expected return of an investment (Kenton, 2023). On the other hand, the Arbitrage Pricing Theory (APT) takes into account several factors that have the potential to impact returns, such as economic indicators or variables particular to the industry. In contrast to APT, CAPM relies on the assumptions of investor rationality and market efficiency.
The suitability of the model used to assess a portfolio of assets relies on the presence and significance of factors that impact returns. If the market element is the most influential and there is little data on other pertinent factors, the Capital Asset Pricing Model (CAPM) may be more suitable due to its straightforwardness. Nevertheless, if there are numerous factors influencing returns and there is accessible data to evaluate them, the Arbitrage Pricing Theory (APT) could offer a more thorough analysis (Kenton, 2023).
The selection between CAPM and APT for a solitary investment project would rely on the project’s distinct risk variables. If the project is affected by only one systematic risk factor, the Capital Asset Pricing Model (CAPM) may be sufficient (Ross, S. A., et. al, 2021). On the other hand, if the project’s returns are affected by various circumstances, the Arbitrage Pricing Theory (APT) would provide a more detailed and comprehensive insight. For example, while investing in a technology startup, APT would take into account aspects such as technological innovation, market demand, and regulatory environment. In contrast, CAPM would solely evaluate market swings (Tuovila, 2024).
Both operating and financial leverage have an impact on a firm’s beta, which is a metric used to evaluate systematic risk. Operating leverage is derived from fixed costs, whereas financial leverage is the outcome of using debt to finance operations. Both factors contribute to an increase in a firm’s beta, as they magnify the influence of market swings on the firm’s results. Nevertheless, the impact of leverage on beta varies. Operating leverage amplifies the effect of sales fluctuations on earnings, hence increasing beta. On the other hand, financial leverage magnifies the influence of earnings movements on equity returns, leading to an increase in beta (Ross, S. A., et. al, 2021).
For a newly established company, it is advisable to exercise caution when considering the inclusion of debt in the company’s capital structure. High leverage has the potential to magnify both profits and losses, hence raising the level of risk for the company and its investors. Thus, it is recommended to first use caution in utilizing loans in order to minimize danger. Implementing this prudent strategy would probably decrease the firm’s beta and hence decrease the investors’ necessary rate of return, as it would reflect the diminished risk connected with the firm.
Conversely, for a well-established business, the utilization of debt may be more tactically advantageous. Given its demonstrated history of success and consistent cash inflows, the company is likely to be more capable of managing increased debt levels. Nevertheless, an abundance of debt has the ability to heighten risk and volatility, which in turn may result in an increase in the investors’ demanded rate of return. Hence, it is crucial for a well-established company to employ debt judiciously in order to properly manage the trade-off between risk and return.
References:
Kenton, W. (2023). What is the Capital Asset Pricing Model (CAPM)? Investopedia.       https://www.investopedia.com/terms/c/capm.asp
Ross, S. A., Westerfield, R. W., Jaffe, J., & Jordan, B. (2021). Corporate finance (13th ed.). McGraw-Hill. ISBN: 9781260772388
Tuovila, A., (2024). Capital structure definition, types, importance, and examples. Information retrieved May 14, 2024 from https://www.investopedia.com/terms/c/capitalstructure.asp
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STUDENT 2:
Capital asset pricing model (CAPM) and arbitrage pricing theory
Capital asset pricing model (CAPM) and arbitrage pricing theory are used to minimize risk and receive high return rates by investors. CAPM was developed with the intent to identify appropriate asset return rates theoretically based on assumptions of risk levels. CAPM allows investors to quantify investment and market return expectations based on risk, return rates, and asset beta. Alternatively, the arbitrage pricing theory (APT) uses multiple factors to explain asset return rates theoretically regarding asset risk based on systemic risk capturing using multiple factors (Nickolas, 2021).
Similarities of CAPM and arbitrage pricing theory include the intent to increase asset return rates and minimize risk. Differences between CAPM and APT include number of assumptions and the quantifying factors of each model. CAPM has more assumptions while APT has less assumptions. APT however can be more difficult to implement in contrast to CAPM implementation.  CAPM is an investor preferred model due to the model uses one factor while APT uses multiple quantifying factors. CAPM would be beneficial with multiple investment portfolio. APT would be better for single investment project due to multiple quantifying factors (Nickolas, 2021).
Capital Structure Financial Leverage
Capital structure is a combination of equity and debt that companies use to finance overall growth and operations. Equity capital consists from company shares giving shareholders some claim to future profit and cash flow. Debt arises from companies issuing loans, or issues bonds, preferred stock, common stock (Tuovila,2024). Beta measures systemic risk of portfolio or security in comparison to market. Stock beta greater than 1.0 aligns with greater volatility. Beta is used in CAPM describing systematic risk and the relationship with assets expected return. CAPM is used for risky security pricing and estimates or predicts expected returns of assets. CAPM considers cost of capital and asset risk (Kenton, 2024).  The recommended debt financing for new businesses would be debt if there is little or no equity in the company. For long-established operations, equity financing would be the better option due to the amount of equity within the company.
Kenton, W. (2021). Beta: definition, calculation, and explanation for investors. Information retrieved May 14, 2024 from https://www.investopedia.com/terms/b/beta.asp
Nickolas, S., (2021).  CAPM vs. arbitrage pricing theory: what’s the difference? Information retrieved May 14, 2024 from https://www.investopedia.com/articles/markets/080916/capm-vs-arbitrage-pricing-theory-how-they-differ.asp
Tuovila, A., (2024). Capital structure definition, types, importance, and examples. Information retrieved May 14, 2024 from https://www.investopedia.com/terms/c/capitalstructure.asp

To answer the questions under (Case Study) inside the excel (Input data).
Adding also Excel Sample 1 and 2 to give an idea of approximate required format and background calculations.

A company is considering purchasing a machine for $100,000. Shipping costs would be another $5,000. The project would require an initial investment in net working capital of $4,000 which would be recouped at the end of the project. What is the project’s initial outlay?
Also upload your excel files showing your work.
Operating Cash Flows
A project will generate sales of $18 million. The operating costs (not including depreciation) are $9 million. The depreciation expense is $4 million. If the tax rate is 40%, what is the operating cash flow?
A project will generate sales of $150,000. The variable costs are $35,000 and the fixed costs are $40,000. The project will use an equipment worth $250,000 that will be depreciated on a straight-line basis to a zero book value over a 10-year life of the project.The interest expense is estimated to be $10,000. If the tax rate is 25%, what is the operating cash flow?
A project will generate sales of $250,000. The total cash expenses are $80,000. The project will use an equipment worth $350,000 that will be depreciated on a straight-line basis to a zero book value over a 10-year life of the project. The project will require an initial investment in net working capital is $5,000 which will be recouped at the end of the project. If the tax rate is 25%, what is the operating cash flow?
A project will generate sales of 100 units annually at a selling price of $140 each. The variable costs per unit are $35 and the fixed costs are $10,000. The project will use an equipment worth $100,000 that will be depreciated on a straight-line basis to a zero book value over a 10-year life of the project. If the tax rate is 25%, what is the operating cash flow?
Also upload your excel files showing your work.
MACRS Depreciation
An equipment worth $250,000 is classified as a 7-year MACRS property. Assume a tax rate of 20%.
What is the book value of this asset at the end of years 1-8?
What is the depreciation expense in each of the years 1-8?
If the equipment can be sold for $5,000 at then end of Year 5, what is the after-tax salvage value?
If the equipment can be sold for $80,000 at then end of Year 5, what is the after-tax salvage value?
The MACRS allowance percentages for the 7-year asset class are as follows, commencing with year one: 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, 8.92%, 8.93%, and 4.46%.
Also upload your excel files showing your work.
Straight-line Depreciation
A company purchased an equipment worth $250,000. It will be depreciated using the straight-line depreciation over 8 years. Assume a tax rate of 20%.
What is the book value of this asset at the end of years 1-8?
What is the depreciation expense in each of the years 1-8?
If the equipment can be sold for $5,000 at then end of Year 5, what is the after-tax salvage value?
If the equipment can be sold for $80,000 at then end of Year 5, what is the after-tax salvage value?
Also upload your excel files showing your work.
After-tax Salvage Value
Suppose that ABC Company purchased $10000 of machinery 3 years ago. The machinery is 5-year MACRS property. The firm is selling this equipment today for $5000. What is the After-tax Salvage Value if the tax rate is 30%?
Suppose that ABC Company purchased $10000 of machinery 4 years ago. The machinery is 5-year MACRS property. The firm is selling this equipment today for $5000. What is the After-tax Salvage Value if the tax rate is 30%?
Suppose that ABC Company purchased $10000 of machinery 5 years ago. The machinery is 5-year MACRS property. The firm is selling this equipment today for $5000. What is the After-tax Salvage Value if the tax rate is 30%?
The MACRS allowance percentages are as follows, commencing with year one: 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, 5.76%.
Also upload your excel files showing your work.
Terminal Cash Flows
Three years ago, Alton, Inc. purchased an machine for $50,000 for a project that would last for 3 years. The investment in net working capital was $1,000 which would be recovered at the end of the project. Today, the company is selling the machine for $5,000. If the book value of the machine is $10,000 today and the tax rate is 15%. What are the terminal cash flows?
NPV
A project has an initial outlay of $100,000. The project will generate annual cash flows of $18,000 over the 8-year life of the project and terminal cash flows of $7,500 in the last year of the project. If the required rate of return on the project is 10%, what is the net present value (NPV) of the project?
NPV and IRR – Comprehensive Problems
Straight-line: A new project will require an equipment worth $100,000. The installation expenses are $10,000. The project will run for five years. The depreciation is straight-line basis. The equipment will be depreciated to a zero book value at the end of the project. The project will require an initial investment in net working capital is $5,000 which will be recouped at the end of the project. The annual operating cash flow is $50,000. The equipment is expected to have a salvage value of $4,000 at the end of the project. Assume a tax rate of 25% and a cost of capital is 10%. What are the NPV and IRR of the project? Should the equipment be purchased?
MACRS: The equipment cost is $50,000 and it would cost another $10,000 to modify it. Assume that the equipment falls into the MACRS 3-year class. The equipment will be sold after 3 years for $20,000. It would require an increase in net working capital of $2,000 at the start of the project. This working capital would be recovered at the end of the project. The new project will not have an effect on revenues but it is expected to save the firm $20,000 per year in before-tax operating costs, mainly labor. Assume a tax rate of 40% and a cost of capital is 10%. What are the NPV and IRR of the project? Should the equipment be purchased? The MACRS allowance percentages for the 3-year asset class are as follows, commencing with year one: 33.33%, 44.45%, 14.81%, 7.41%.
Also upload your excel files showing your work.

Five securities were randomly selected . The quality and the prospect of each of these securities should be assessed based on its financial ratios, balance sheets, financial statements, other statistical data, and the information and future horizon of each. Construct a table of the financial ratios available for each company, and write down an analytical report on the strength or fragility of each company as a financial analyst. Based on that, determine your recommendation on whether the security is worth a buy, hold, or sell. Your report will be evaluated on the strength and adequacy of your analysis and the prudence of your conclusions, clarity, and structure. The companies symbols are (F, FAT, GE, GT, GTE) . Each company has its own analysis about 2 pages

I require a financial research paper about The Boeing Compay. The paper must be in APA 7th edition format, use level 1 and level 2 headings, and be Times New Roman font 12. I also want an original report on the paper with 10% or less being the goal upon completion of the essay paper. The paper must answer the prompt listed below.
Prompt to be answered:
Section 1. Introduction: In this section, introduce The Boeing Company(NYSE: BA) and include basic background information about the size and type of company, locations, products, market share, stock price, etc. for the year 2024.

Instructions:
Analysis of Financial Statements:
Research any company’s financial statement online and study its balance sheet, income statement, and cash flow statement.
Write a comprehensive analysis of the company’s financial health.
Include at least two examples of each type of financial statement ratio: liquidity, asset management, debt management, profitability, and market value.
Cash Flow Interpretation:
Create a summary that interprets the company’s cash flow statement. Focus on identifying the sources and uses of cash.
Explain how the cash flow relates to the company’s income statement and balance sheet.
Tax Implications on Business Decisions:
Research how different taxation policies affect business decisions in real-world scenarios.
Provide examples of how tax considerations can influence corporate financial planning.
Reflection on the Importance of Financial Management:
Write a reflective essay on the importance of financial management in creating shareholder value.
Discuss how the knowledge gained in this module can be applied to real-world financial decision-making.
Submission Guidelines:
Paper should be 5-7 pages in length excluding the cover page and the reference page.
Format: Structured essays with headings and subheadings for clarity.
References: Use at least 3 credible sources for your analysis.
Paper should follow APA guidelines.
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In the problems below show your work clearly. If you use a formula show the formula written with the values substituted into it before giving the final value. If you use the Finance menu on the calculator to do the calculations you must show values that you substitute into it. Also, write your answers to the question in sentence form. Round your answers to the nearest cent or hundredth where appropriate and include units of measure. Show all work for full credit (except for multiple choice questions).
Although it is preferred, you do not have to write your work/answers on a copy of the actual Test. Test questions do not have to be rewritten: you only have to show your work/answers. However, sometimes you have to copy a picture if you are required to show your work on it. Make sure that your responses are clearly numbered and your name is on all submitted pages.