Questions:
Task 1: Assessing loan options for AirJet Best Parts, Inc. The company needs to finance $8,000,000 for a new factory in Mexico. The funds will be obtained through a commercial loan and by issuing corporate bonds. Here is some of the information regarding the APRs offered by two well-known commercial banks. BankAPRNumber of Times Compounded

National First Prime Rate + 6.75%Semiannually
Regions Best 13.17Monthly

1.Assuming that AirJet Parts, Inc. is considering loans from National First and Regions Best, what are the EARs for these two banks? Hint for National Bank: Go to the St. Louis Federal Reserve Board’s website (http://research.stlouisfed.org/fred2/). Select “Interest Rates” and then “Prime Bank Loan Rate”. Use the latest MPRIME. Show your calculations. (15 pts)

2.Based on your calculations above, which of the two banks would you recommend and why? Explain your rationale. (15 pts)

3.AirJet Best Parts, Inc. has decided to take a $6,950,000 loan being offered by Regions Best at 8.6% APR for 5 years. What is the monthly payment amount on this loan? Do you agree with this decision? Explain your rationale. (20 pts) Task 2: Evaluating Competitor’s Stock

AirJet Best Parts, Inc. is concerned regarding recent changes in its stock prices for the company and would like to determine the stock prices for key competitors. Key competitors include Raytheon, Boeing, Lockheed Martin, and the Northrop Grumman Corporation. 1.Using the dividend growth model and assuming a dividend growth rate of 5%, what is the rate of return for one of three key competitors? Use Yahoo Finance to obtain the latest dividend amount and price for one selected company. (15 pts)

2.Using the rate of return above, what should be the current share price of AirJet Best Parts, Inc. if the company maintains a constant 1% growth rate in dividends and the most recent dividend per share paid on the stock was $1.50? Show your calculations. (10 pts)

...Task 4.
Capital Budgeting for a New Machine
A few months have now passed and AirJet Best Parts, Inc. is considering the purchase on a new machine that will increase the production of a special component significantly. The anticipated cash flows for the project are as follows:
Year 1 $1,100,000
Year 2 $1,450,000
Year 3 $1,300,000
Year 4 $950,000
You have now been tasked with providing a recommendation for the project based on the results of a Net Present Value Analysis. Assuming that the required rate of return is 15% and the initial cost of the machine is $3,000,000.
1. What is the project’s IRR? (10 pts)
Using this online IRR Calculation Tool http://finance.thinkanddone.com/online-i… we get the following IRR
Discounted Net Cash Flows at 19%
DCF1 = 1100000/(1+19%)^1 = 1100000/1.19 = 924369.75
DCF2 = 1450000/(1+19%)^2 = 1450000/1.4161 = 1023938.99
DCF3 = 1300000/(1+19%)^3 = 1300000/1.68516 = 771440.56
DCF4 = 950000/(1+19%)^4 = 950000/2.00534 = 473735.31
NPV Calculation at 19%
NPV = 924369.75 + 1023938.99 + 771440.56 + 473735.31 -3000000
NPV = 3193484.61 -3000000
NPV at 19% = 193484.61
Discounted Net Cash Flows at 24%
DCF1 = 1100000/(1+24%)1 = 1100000/1.24 = 887096.77
DCF2 = 1450000/(1+24%)2 = 1450000/1.5376 = 943028.1
DCF3 = 1300000/(1+24%)3 = 1300000/1.90662 = 681833.44
DCF4 = 950000/(1+24%)4 = 950000/2.36421 = 401824.92
NPV Calculation at 24%
NPV = 887096.77 + 943028.1 +...

...Task 2: Evaluating Competitor’s Stock
AirJet Best Parts, Inc. is concerned regarding recent changes in its stock prices for the company and would like to determine the stock prices for key competitors. Key competitors include Raytheon, Boeing, Lockheed Martin, and the Northrop Grumman Corporation.
1. Using the dividend growth model and assuming a dividend growth rate of 5%, what is the rate of return for one of three key competitors? Use Yahoo Finance to obtain the latest dividend amount and price for one selected company. (15 pts)
2. Using the rate of return above, what should be the current share price of AirJet Best Parts, Inc. if the company maintains a constant 1% growth rate in dividends and the most recent dividend per share paid on the stock was $1.50? Show your calculations. (10 pts)
3. Assume AirJet Best Parts has also a preferred stock issue. The most recent dividend per share paid on the stock was also $1.50, the same as the common stock. Which one would you think has a higher price, the preferred stock or the current stock? Explain your rationale. (5 pts)
4. What would happen with the price you computed above if AirJet Best Parts, Inc. announces that dividends at the end of the year will increase? What if the required rate of return increases? What changes in dividends will affect the stock price and how? (10 pts)
Task 3: Bond Evaluation
AirJet Best Parts, Inc. would like...

...CourseProject – Part 1
Task 1: Assessing loan options for AirJet Best Parts, Inc.
1. Assuming that AirJet Parts, Inc. is considering loans from National First and Regions Best, what are the EARs for these two banks? Hint for National Bank: Go to the St. Louis Federal Reserve Board’s website (http://research.stlouisfed.org/fred2/). Select “Interest Rates” and then “Prime Bank Loan Rate”. Use the latest MPRIME. Show your calculations.
Answer: National First Bank (Prime Rate 7,75% )
EAR = [(1+ ((7.75%)/2))^2 – 1
EAR = 7.90%
Regions Best
EAR = [(1+ ((13.42%)/12))^12- 1
EAR = 13.99% (14%)
2. Based on your calculations above, which of the two banks would you recommend and why? Explain your rationale.
Answer: Based on calculations above, I would recommend borrowing from National First Bank. This is because prime rate 3.25%, and 6.75% EAR of national first bank is only 10.25% Vs Regions best is higher 13.99%(14%). National First Bank is semiannually and although it has a prime rate low, the APR is low as well compared to Regions Best.
3. AirJet Best Parts, Inc. has decided to take a $8,100,000 loan being offered by Regions Best at 9.2% APR for 5 years. What is the monthly payment amount on this loan? Do you agree with this decision? Explain your rationale.
Answer:
Loan: $8,100,000
APR: 9.2%
Terms Of loan = 5 Years
Months = 60
FV = $0
Monthly Payment...

...CourseProject – PartI
You must show all work and calculations by typing out the longhand formula, or post a screen shot of any online calculator used, or attach an excel file showing formulas/calculations in order to earn any credit
Introduction
The CourseProject is an opportunity for you to apply concepts learned to a real-life simulation experience. Throughout the CourseProject, you will assume that you work as a financial analyst for AirJet Best Parts, Inc. The CourseProject is provided in two parts as follows:
PartI – In PartI, you work with AirJet Best Parts, Inc. staff to identify the best loan options, as well as to valuate stocks and bonds.
Part II – In Part II, you will provide the company with a recommendation for purchasing a new machine. You will base your recommendation on the Net Present Value (NPV) of the capital investment project using the cost of capital (WACC) as your discount rate.
About AirJet Best Parts, Inc.
AirJet Best Parts, Inc. is a company dedicated to the design and manufacturing of aviation and airplane technologies and parts. The company has commercial and military clients worldwide.
Task 1: Assessing...

...CourseProjectPart II
Introduction
You will assume that you still work as a financial analyst for AirJet Best Parts, Inc. The
company is considering a capital investment in a new machine and you are in charge of making a
recommendation on the purchase based on (1) a given rate of return of 15% (Task 4) and (2) the
firm’s cost of capital (Task 5).
Task 4. Capital Budgeting for a New Machine
A few months have now passed and AirJet Best Parts, Inc. is considering the purchase on a new
machine that will increase the production of a special component significantly. The anticipated
cash flows for the project are as follows:
Year 1 $1,100,000
Year 2 $1,450,000
Year 3 $1,300,000
Year 4 $950,000
You have now been tasked with providing a recommendation for the project based on the results
of a Net Present Value Analysis. Assuming that the required rate of return is 15% and the initial
cost of the machine is $3,000,000.
Required rate of return 15%
Year Cash Flow
0 $ (3,000,000)
1 $ 1,100,000
2 $ 1,450,000
3 $ 1,300,000
4 $ 950,000
1. What is the project’s IRR? (10 pts) = 22.38%
2. What is the project’s NPV? (15 pts) = $450,867.00
Computation of Net Present Value
Year Cash Flow Present Factor
@ 15%
Present
Value
1 $ 1,100,000 0.8696 $ 956,522.
2 $ 1,450,000 0.7561 $1,096,408.
3 $ 1,300,000 0.6575 $854,771.
4 $ 950,000 0.5718 $543,166.
Total =...

...credit balance for a customer that has a household size 10
Predicted Values for New Observations
New Obs Fit SE Fit 95% CI 95% PI
1 6623.66 346.508 (5926.96, 7320.36) (5195.30, 8052.01)
Values of Predictors for New Observations
New Obs Size
1 10 XX
XX denotes a point that is an extreme outlier in the predictors.
As Minitab states there is an extreme outlier point in the predictors, so using this values may lead us to an unreliable prediction.
11. Multiple Regression analysis using the variables Income, Size and Years.
12. Global test for utility (F-Test)
H0: β1 = β2 = β3 = 0 (none of x1, x2 or x3 is significantly related to y)
Ha: at least one βi ≠ 0, i = 1, 2, 3
Analysis of Variance
Source DF Seq SS Adj SS Adj MS F P
Regression 3 34255444 34255444 11418481 63.3013 0.000000
Income ($1000) 1 16703393 9936482 9936482 55.0855 0.000000
Size 1 17478430 16716632 16716632 92.6730 0.000000
Years 1 73620 73620 73620 0.4081 0.526087
Error 46 8297619 8297619 180383
Total 49 42553062
N = 50 DF = 47 α = 0.05 F0.05 = 3.15
We have strong evidence that at least one of the variables in the model is significantly related to Y. This conclusion is supported since F = 63.3013 it’s greater than F0.05 =...

...ECON 545: CourseProject- Part #1
Instructor:
Date:
Student:
Exercise #1: Everyone’s Gasoline Problem. We are familiar with fluctuating prices of gasoline at the pump. Why does this happen? Research the recent history of gasoline pricing in your area, and attempt to relate any fluctuations you observe to documented supply and demand factors outline in our book. Be sure to cite any references used.
Answer:
Below is the supply and demand curve that we review when observing gasoline prices going up in the field. Basically under normal conditions we see the equilibrium price being where supply intersects demand at EQ and EP. However, as we experience issues where manufacturers end up not supplying as much fuel as before we see supply shift to the left and this is seen in the supply graph S2. We also see equilibrium price move up because of this from EP to EP1. An example of such an incident occurred during the Katrina Hurricane back in August 2005. The hurricane damaged the 30 oil platforms and the closure of nine refineries. This reduction of oil production reduced the amount of supply of gasoline for the nation. Thus rising the price of gas nationwide.
Exercise 2:
Chapter 3 Question 14. Assume initially that the demand and supply for premium coffees (one-pound bags) are in equilibrium. Now assume Starbucks introduces the world to premium blends, and so...

...Financial Statements
Bernard J Wyant Jr.
Rasmussen College
Author Note
This research paper is being submitted on March 10, 2013, for Tiffany Krogman, A340/ACG3085 Section 03, Advanced Auditing Concepts & Standards.
Financial Statements
Financial Statements Prepared using Chinese and GAAP Standards
Kobyashi Maru prepares two sets of financial statements; one set using Chinese standards and GAAP (as meager as those standards may be) and the other for use in the US attempting to conform to U.S. GAAP. The Chinese financials contain a single footnote describing the accounting principles used in the original books of entry.
In the United States, the public capital markets are regulated primarily by the US Securities and Exchange Commission (SEC), a national government agency. The law gives the SEC the authority to prescribe the form and content of financial statements filed with the Commission. Historically, the Commission has looked to the private sector to develop financial reporting standards, though the Commission does prescribe financial statement presentation formats and disclosures and, sometimes, accounting recognition and measurement principles as well. The SEC oversees more than 30,000 registrants including 12,000 public companies, 4,600 mutual funds, 11,300 investment advisers, 600 transfer agencies, and 5,500 broker dealers. [2008 Data]
Approximately 1,150 of the 12,000 companies registered with the SEC are non-US companies. A foreign registrant may...

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