Please see attachments on word with questions please remember CH 26 problem 2 is on separate template

• Ch. 18: Questions 3 & 11 (Questions and Problems section)
• Ch. 20: Questions 8 & 14 (Questions and Problems section)
• Ch. 21: Questions 4 & 7 (Questions and Problems section)
• Ch. 26: Questions 1 & 2 (Questions and Problems section): MicrosoftExceltemplate provided for Problem 2

Chapter 26 Problems 2, 4, 5, 10 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green NOTE: Some functions used in these spreadsheets may require that the "Analysis ToolPak" or "Solver Add-in" be installed in Excel. To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak" and "Solver Add-In." sis ToolPak" Chapter 26 Question 2 Input Area: Firm X Firm Y Total earnings Shares outstanding Per-share values Market Book Merger premium Output Area: Asset from X (book value) Asset from Y (market value) Purchase price of Y Goodwill Total assets XY = Total equity XY $ $ $ $ $ - Ch. 18: Questions 3 & 11 (Questions and Problems section) 3. Changes in the Operating Cycle [LO1] Indicate the effect that the following will have on the operating cycle. Use the letter I to indicate an increase, the letter D for a decrease, and the letter N for no change: a. Average receivables goes up. b. Credit repayment times for customers are increased. c. Inventory turnover goes from 3 times to 6 times. d. Payables turnover goes from 6 times to 11 times. e. Receivables turnover goes from 7 times to 9 times. f. Payments to suppliers are accelerated. 11. Calculating the Cash Budget [LO3] Here are some important figures from the budget of Nashville Nougats, Inc., for the second quarter of 2015: Ch. 20: Questions 8 & 14 (Questions and Problems section) 8. Size of Accounts Receivable [LO1] The Arizona Bay Corporation sells on credit terms of net 30. Its accounts are, on average, four days past due. If annual credit sales are $9.75 million, what is the company's balance sheet amount in accounts receivable? 14. Credit Policy Evaluation [LO2] The Snedecker Corporation is considering a change in its cashonly policy. The new terms would be net one period. Based on the following information, determine if the company should proceed or not. Therequired return is 2.5 percent per period. Ch. 21: Questions 4 & 7 (Questions and Problems section) 4. Using Spot and Forward Exchange Rates [LO1] Suppose the spot exchange rate for the Canadian dollar is Can$1.09 and the six-month forward rate is Can$1.11. a. Which is worth more, a U.S. dollar or a Canadian dollar? b. Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.50? Why might the beer actually sell at a different price in the United States? c. Is the U.S. dollar selling at a premium or a discount relative to the Canadian dollar? d. Which currency is expected to appreciate in value? e. Which country do you think has higher interest ratesthe United States or Canada? Explain. 7. Interest Rates and Arbitrage [LO2] The treasurer of a major U.S. firm has $30 million to invest for three months. The interest rate in the United States is .31 percent per month. The interest rate in Great Britain is .34 percent per month. The spot exchange rate is .573, and the three-month forward rate is .575. Ignoring transaction costs, in which country would the treasurer want to invest the company's funds? Why? Ch. 26: Questions 1 & 2 (Questions and Problems section): Microsoft Excel template provided for Problem 2 1. Calculating Synergy [LO3] Pearl, Inc., has offered $357 million cash for all of the common stock in Jam Corporation. Based on recent market information, Jam is worth $319 million as an independent operation. If the merger makes economic sense for Pearl, what is the minimum estimated value of the synergistic benefits from the merger? 2. Please see attached template Chapter 18 question #11 11. Calculating the Cash Budget [LO3] Here are some important figures from the budget of Nashville Nougats, Inc., for the second quarter of 2015: The company predicts that 5 percent of its credit sales will never be collected, 35 percent of its sales will be collected in the month of the sale, and the remaining 60 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase. In March 2015, credit sales were $235,000 and credit purchases were $161,300. Using this information, complete the following cash budget: CH 26 question 2(must be done on the separate template provided earlier) 2. Balance Sheets for Mergers [LO2] Consider the following premerger information about Firm X and Firm Y: Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share. Assuming that neither firm has any debt before or after the merger, construct the postmerger balance sheet for Firm X assuming the use of purchase accounting. Chapter 26 Problems 2, 4, 5, 10 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green NOTE: Some functions used in these spreadsheets may require that the "Analysis ToolPak" or "Solver Add-in" be installed in Excel. To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak" and "Solver Add-In." sis ToolPak" Chapter 26 Question 2 Input Area: Total earnings Shares outstanding Per-share values Market Book $ Firm X 87,000 $ 35,000 $ $ 57 $ 7 $ Merger premium $ Firm Y 11,000 12,000 19 3 6 Output Area: Asset from X (book value) Asset from Y (market value) Purchase price of Y Goodwill Total assets XY = Total equity XY $ $ $ $ $ 245,000 228,000 300,000 72,000 545,000 a. Average receivables goes up. b. Credit repayment times for customers are increased. c. Inventory turnover goes from 3 times to 6 times. d. Payables turnover goes from 6 times to 11 times. e. Receivables turnover goes from 7 times to 9 times. f. Payments to suppliers are accelerated I D I I I D Credit sales - Previous months Credit sales - Same month Total collection April 141000 131040 272040 Beginning cash balance Cash receipts: Cash collectoon from credit sales Total cash available Cash disbursements Purchases Wagesm taxes and expesnes Interest Equipment purchases Total cash disbursement Ending cash balance 8 Credit term Days Total days of collection Credit sales Average collection period Receivable turnover Credit sales = Accounts receivable April 135000 272040 407040 161300 54340 12580 88800 317020 90020 30 4 34 9.75 34 10.735294 9750000 908219.18 14 Price per unit Cost per unit Unit sales per month Required return 73 38 3280 2.50% Number of extra units Extra cash flow PV = Cost of switching NPV = 110 4070 162800 243620 -80820 As NPV is negative, we should not switch Chapter 21 a Us dollar is worth more as 1USD = 1.09 Can b Value of 2.5 can Value = = c USD is selling at premium d US dollar is expected to appreciate e Interest rates In US are probably lower than Canada 7 Earnings in US = Earnings in UK So, US earns additional 2.5/1.09 2.293578 279865.79 201625.78 Chapter 26 Minimum synergy gain = = = Minimum estimated value of synergy will be Purchase price - market valy 357 - 319 million 38000000 38000000 May June 224640 209700 122325 147175 346965 356875 May June 90020 70205 346965 436985 356875 427080 148900 70300 12580 135000 366780 70205 169300 75170 12580 75 38 3390 257050 170030 Purchase price - market valye 357 - 319 million Ch. 18: Questions 3 & 11 (Questions and Problems section) 3. Changes in the Operating Cycle [LO1] Indicate the effect that the following will have on the operating cycle. Use the letter I to indicate an increase, the letter D for a decrease, and the letter N for no change: a. Average receivables goes up. b. Credit repayment times for customers are increased. c. Inventory turnover goes from 3 times to 6 times. d. Payables turnover goes from 6 times to 11 times. e. Receivables turnover goes from 7 times to 9 times. f. Payments to suppliers are accelerated. Answer: a. Average receivables goes up. b. Credit repayment times for customers are increased. c. Inventory turnover goes from 3 times to 6 times. d. Payables turnover goes from 6 times to 11 times. e. Receivables turnover goes from 7 times to 9 times. f. Payments to suppliers are accelerated I D I I I D 11. Calculating the Cash Budget [LO3] Here are some important figures from the budget of Nashville Nougats, Inc., for the second quarter of 2015: Answer: Cash budget April May June Beginning cash balance Cash receipts: Cash collection from credit sales Total cash available Cash disbursements Purchases Wages taxes and expesnes Interest Equipment purchases Total cash disbursement Ending cash balance 135000 90020 70205 272040 407040 346965 436985 356875 427080 161300 54340 12580 88800 317020 90020 148900 70300 12580 135000 366780 70205 169300 75170 12580 257050 170030 Working: Credit sales - Previous months (60%oflast month sales) Credit sales - Same month (35% of current month sales) Total collection April May June 141000 224640 209700 131040 122325 147175 272040 346965 356875 Ch. 20: Questions 8 & 14 (Questions and Problems section) 8. Size of Accounts Receivable [LO1] The Arizona Bay Corporation sells on credit terms of net 30. Its accounts are, on average, four days past due. If annual credit sales are $9.75 million, what is the company's balance sheet amount in accounts receivable? Answer: Average collection period (30+4) Receivable turnover (365/34) Credit sales (given) Accounts receivable (9750000/10.73529) 34 10.7352 9 9750000 908219. 2 14. Credit Policy Evaluation [LO2] The Snedecker Corporation is considering a change in its cashonly policy. The new terms would be net one period. Based on the following information, determine if the company should proceed or not. Therequired return is 2.5 percent per period. Answer: Number of extra units (3390-3280) = Extra cash flow PV = Cost of switching NPV = As NPV is negative, we should not switch 110 4070 162800 243620 -80820 Ch. 21: Questions 4 & 7 (Questions and Problems section) 4. Using Spot and Forward Exchange Rates [LO1] Suppose the spot exchange rate for the Canadian dollar is Can$1.09 and the six-month forward rate is Can$1.11. a. Which is worth more, a U.S. dollar or a Canadian dollar? b. Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.50? Why might the beer actually sell at a different price in the United States? c. Is the U.S. dollar selling at a premium or a discount relative to the Canadian dollar? d. Which currency is expected to appreciate in value? e. Which country do you think has higher interest ratesthe United States or Canada? Explain. Answer: a b c d Us dollar is worth more as 1USD = 1.09 Can Value of 2.5 can Value = = USD is selling at premium US dollar is expected to appreciate 2.5/1.09 2.29357 8 e Interest rates In US are probably lower than Canada 7. Interest Rates and Arbitrage [LO2] The treasurer of a major U.S. firm has $30 million to invest for three months. The interest rate in the United States is .31 percent per month. The interest rate in Great Britain is .34 percent per month. The spot exchange rate is .573, and the three-month forward rate is .575. Ignoring transaction costs, in which country would the treasurer want to invest the company's funds? Why? Answer: Earnings in US ((30000000*(1.0031)^3)-30000000) = Earnings in UK ((30000000*(0.573/1)*(1.0034)^3 *(1/0.575))-30000000) = So, US earns additional 279865. 8 201625. 8 Ch. 26: Questions 1 & 2 (Questions and Problems section): Microsoft Excel template provided for Problem 2 1. Calculating Synergy [LO3] Pearl, Inc., has offered $357 million cash for all of the common stock in Jam Corporation. Based on recent market information, Jam is worth $319 million as an independent operation. If the merger makes economic sense for Pearl, what is the minimum estimated value of the synergistic benefits from the merger? 2. Please see attached template Chapter 18 question #11 11. Calculating the Cash Budget [LO3] Here are some important figures from the budget of Nashville Nougats, Inc., for the second quarter of 2015: The company predicts that 5 percent of its credit sales will never be collected, 35 percent of its sales will be collected in the month of the sale, and the remaining 60 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase. In March 2015, credit sales were $235,000 and credit purchases were $161,300. Using this information, complete the following cash budget: CH 26 question 2(must be done on the separate template provided earlier) 2. Balance Sheets for Mergers [LO2] Consider the following premerger information about Firm X and Firm Y: Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share. Assuming that neither firm has any debt before or after the merger, construct the postmerger balance sheet for Firm X assuming the use of purchase accounting. Chapter 26 Problems 2, 4, 5, 10 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green NOTE: Some functions used in these spreadsheets may require that the "Analysis ToolPak" or "Solver Add-in" be installed in Excel. To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak" and "Solver Add-In." sis ToolPak" Chapter 26 Question 2 Input Area: Total earnings Shares outstanding Per-share values Market Book $ Firm X 87,000 $ 35,000 $ $ 57 $ 7 $ Merger premium $ Firm Y 11,000 12,000 19 3 6 Output Area: Asset from X (book value) Asset from Y (market value) Purchase price of Y Goodwill Total assets XY = Total equity XY $ $ $ $ $ 245,000 228,000 300,000 72,000 545,000 a. Average receivables goes up. b. Credit repayment times for customers are increased. c. Inventory turnover goes from 3 times to 6 times. d. Payables turnover goes from 6 times to 11 times. e. Receivables turnover goes from 7 times to 9 times. f. Payments to suppliers are accelerated I D I I I D Credit sales - Previous months Credit sales - Same month Total collection April 141000 131040 272040 Beginning cash balance Cash receipts: Cash collectoon from credit sales Total cash available Cash disbursements Purchases Wagesm taxes and expesnes Interest Equipment purchases Total cash disbursement Ending cash balance 8 Credit term Days Total days of collection Credit sales Average collection period Receivable turnover Credit sales = Accounts receivable April 135000 272040 407040 161300 54340 12580 88800 317020 90020 30 4 34 9.75 34 10.735294 9750000 908219.18 14 Price per unit Cost per unit Unit sales per month Required return 73 38 3280 2.50% Number of extra units Extra cash flow PV = Cost of switching NPV = 110 4070 162800 243620 -80820 As NPV is negative, we should not switch Chapter 21 a Us dollar is worth more as 1USD = 1.09 Can b Value of 2.5 can Value = = c USD is selling at premium d US dollar is expected to appreciate e Interest rates In US are probably lower than Canada 7 Earnings in US = Earnings in UK So, US earns additional 2.5/1.09 2.293578 279865.79 201625.78 Chapter 26 Minimum synergy gain = = = Minimum estimated value of synergy will be Purchase price - market valy 357 - 319 million 38000000 38000000 May June 224640 209700 122325 147175 346965 356875 May June 90020 70205 346965 436985 356875 427080 148900 70300 12580 135000 366780 70205 169300 75170 12580 75 38 3390 257050 170030 Purchase price - market valye 357 - 319 million Ch. 18: Questions 3 & 11 (Questions and Problems section) 3. Changes in the Operating Cycle [LO1] Indicate the effect that the following will have on the operating cycle. Use the letter I to indicate an increase, the letter D for a decrease, and the letter N for no change: a. Average receivables goes up. b. Credit repayment times for customers are increased. c. Inventory turnover goes from 3 times to 6 times. d. Payables turnover goes from 6 times to 11 times. e. Receivables turnover goes from 7 times to 9 times. f. Payments to suppliers are accelerated. Answer: a. Average receivables goes up. b. Credit repayment times for customers are increased. c. Inventory turnover goes from 3 times to 6 times. d. Payables turnover goes from 6 times to 11 times. e. Receivables turnover goes from 7 times to 9 times. f. Payments to suppliers are accelerated I D I I I D 11. Calculating the Cash Budget [LO3] Here are some important figures from the budget of Nashville Nougats, Inc., for the second quarter of 2015: Answer: Cash budget April May June Beginning cash balance Cash receipts: Cash collection from credit sales Total cash available Cash disbursements Purchases Wages taxes and expesnes Interest Equipment purchases Total cash disbursement Ending cash balance 135000 90020 70205 272040 407040 346965 436985 356875 427080 161300 54340 12580 88800 317020 90020 148900 70300 12580 135000 366780 70205 169300 75170 12580 257050 170030 Working: Credit sales - Previous months (60%oflast month sales) Credit sales - Same month (35% of current month sales) Total collection April May June 141000 224640 209700 131040 122325 147175 272040 346965 356875 Ch. 20: Questions 8 & 14 (Questions and Problems section) 8. Size of Accounts Receivable [LO1] The Arizona Bay Corporation sells on credit terms of net 30. Its accounts are, on average, four days past due. If annual credit sales are $9.75 million, what is the company's balance sheet amount in accounts receivable? Answer: Average collection period (30+4) Receivable turnover (365/34) Credit sales (given) Accounts receivable (9750000/10.73529) 34 10.7352 9 9750000 908219. 2 14. Credit Policy Evaluation [LO2] The Snedecker Corporation is considering a change in its cashonly policy. The new terms would be net one period. Based on the following information, determine if the company should proceed or not. Therequired return is 2.5 percent per period. Answer: Number of extra units (3390-3280) = Extra cash flow PV = Cost of switching NPV = As NPV is negative, we should not switch 110 4070 162800 243620 -80820 Ch. 21: Questions 4 & 7 (Questions and Problems section) 4. Using Spot and Forward Exchange Rates [LO1] Suppose the spot exchange rate for the Canadian dollar is Can$1.09 and the six-month forward rate is Can$1.11. a. Which is worth more, a U.S. dollar or a Canadian dollar? b. Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.50? Why might the beer actually sell at a different price in the United States? c. Is the U.S. dollar selling at a premium or a discount relative to the Canadian dollar? d. Which currency is expected to appreciate in value? e. Which country do you think has higher interest ratesthe United States or Canada? Explain. Answer: a b c d Us dollar is worth more as 1USD = 1.09 Can Value of 2.5 can Value = = USD is selling at premium US dollar is expected to appreciate 2.5/1.09 2.29357 8 e Interest rates In US are probably lower than Canada 7. Interest Rates and Arbitrage [LO2] The treasurer of a major U.S. firm has $30 million to invest for three months. The interest rate in the United States is .31 percent per month. The interest rate in Great Britain is .34 percent per month. The spot exchange rate is .573, and the three-month forward rate is .575. Ignoring transaction costs, in which country would the treasurer want to invest the company's funds? Why? Answer: Earnings in US ((30000000*(1.0031)^3)-30000000) = Earnings in UK ((30000000*(0.573/1)*(1.0034)^3 *(1/0.575))-30000000) = So, US earns additional 279865. 8 201625. 8 Ch. 26: Questions 1 & 2 (Questions and Problems section): Microsoft Excel template provided for Problem 2 1. Calculating Synergy [LO3] Pearl, Inc., has offered $357 million cash for all of the common stock in Jam Corporation. Based on recent market information, Jam is worth $319 million as an independent operation. If the merger makes economic sense for Pearl, what is the minimum estimated value of the synergistic benefits from the merger? 2. Please see attached template