Calculate the market capitalisation, gearing ratio and the weighted average cost of capital for Darwin Brighton. Calculate the projected free cashflows, the present value of free cashflows and its cumulative values.

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Math/Physic/Economic/Statistic Problems

Calculate the market capitalisation, gearing ratio and the weighted average cost of capital for Darwin Brighton. (8 marks)
Calculate the discount rates for Hepal’s free cashflows for each year (years 1–5, 7 and 10). (8 marks)
Fill out the terminal values for Hepal in the DCF model. Remember that the depreciation expense will last
for five years. Treat it as an annuity with a constant discount rate. (10 marks)
Calculate the projected free cashflows, the present value of free cashflows and its cumulative values.

You will make projections for the first five years and then the subsequent years will be summarised using terminal value. Revenues for the first year is $410 million, increasing by 2% p.a. for the first five years and then 1.2% p.a., thereafter.

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Math/Physic/Economic/Statistic Problems


Unless instructed otherwise, please round off your values to the nearest dollar or % correct to  two decimal places and include a comma separator for your numbers.

Question 1 (20 marks)
You are a finance manager of Darwin Brighton, a building materials company (acquiring company) based in Australia. The board is reviewing an opportunity to purchase Hepal, a company that manufactures tiles  (target company).
The board has indicated that it will make an offer of $370 million to purchase Hepal. It is reviewing a number of options to finance this purchase, should it go ahead. It is your task to develop a valuation model to help determine if this is a good deal.

Your model will make the following assumptions:
You will make projections for the first five years and then the subsequent years will be summarised using terminal value.
Revenues for the first year is $410 million, increasing by 2% p.a. for the first five years and then 1.2% p.a., thereafter.

COGS for the first year is $150 million, increasing by 1.8% p.a. for the first five years and then 2% p.a.,  thereafter. Salary expense for the first year is $84 million, increasing by 2.2% p.a. for the first five years and then 2.5%  p.a., thereafter.
Office administration expense for the first year is $33 million, increasing by 3% p.a. for the first five years  and then 1.5% p.a., thereafter.

The target company owns $580 million worth of fixed assets with an average useful life of ten years, with  no salvage value. You will use straight line depreciation (note you will need to calculate the terminal value  of the depreciation expense) to estimate the expenses.

You project that the company will require $30 million of capital expenditure in the first four years, and this  will reduce to $10 million in the fifth year. There is no expected capital expenditure beyond the fifth year.  The corporate tax rate is 30% on company profits.

What are some other structures, policies or financial management practices that you can identify in addition to what I’ve provided below?

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Week 2 Discussion

Reply to the following using at least 175 words per reply. Reply to each post separately. Be professional and constructive with your reply. Be sure to use FULL APA references and in-text citations.

1. Find below a brief explanation about financial structure, financial policies, and financial management practices. This list is by no means complete. Financial Policy Guidelines and Examples (https://www.propelnonprofits.org/resources/financial-policy-guidelines-example/) provides a more in-depth review of this subject.

What are some other structures, policies or financial management practices that you can identify in addition to what I’ve provided below?

Financial Structure
Governance
Tax Status
Public ownership versus private ownership

Financial Policies
Acceptance of patients without insurance
Adherence to GAAP and/or GAGAS
What is the primary goal of profit maximization

Financial Management Practices
Profit distribution
Distribution of assets upon dissolution
Managerial control

2. Building upon the information discussed during week one, the Balance Sheet shows the organization’s assets, or things of value, and liabilities, or the amount owed against those items of value. The difference between assets and liabilities is called the net worth or owner’s equity. The simple math or Accounting Equation is Assets = Liabilities + Net Worth. What does the weekly readings say about this equation being kept in balance. Explain this “balance concept”. Is there anything that financial managers have to do to maintain this balance?

The Income Statement also called the Profit and Loss Statement or the Statement of Revenue and Expense, states revenue at the amount earned, the expenses incurred to generate those revenues, and the difference between those numbers, which is called the Net Income. Explain how the Income Statement relates to the operational budget? Are they the same thing?

What key aspects associated with the budget environment are highlighting in this budget message that helps to illustrate the fiscal health of the state of Massachusetts at that time?

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Discussion Board RESPONSES (to other students) Regarding Chapters 8,9, and 10 & Lecture for the week

Question(s):
1-What key aspects associated with the budget environment are highlighting in this budget message that helps to illustrate the fiscal health of the state of Massachusetts at that time?

2-Identify at least four areas of public policy that are highlighted in the budget message delivered by Governor Baker. Discuss how comments regarding the Governor’s preferences for spending are reflective of the political nature of public budgeting.

3-Can you identify examples in which the Governor’s budget message includes arguments that highlights the importance that government funded activities focus on achieving specific values (i.e. efficiency, effectiveness, equity, etc.). Briefly explain your selections. How does this relate to ensuring transparent and accountable government?

4- Click on the following link and review the Massachusetts governmental budget information in the table entitled “Statewide Summary” (Enacted budget for Statewide Summary | Summary FY20 Budget (mass.gov) (Links to an external site.) (Links to an external site.)).  Upon review, do the areas of public policy identified in the budget message by Governor Baker seem to match up with the actual budget expenditures enumerated for the fiscal year 2020? Briefly explain.

Calculate the expected return and volatility of portfolios containing assets A and B for each weight. Store your answers in two vectors – one for expected returns, and one for volatilities.

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Finish the Hw

1. In your Investments class, you studied or are studying the Capital Asset Pricing Model. You learned that given a set of assets, for a given return there is a portfolio that attains that return with minimum risk. The set of all such portfolios is called an efficient frontier. You also learned that an investor can maximize her return per unit of risk by holding a portfolio on the Capital Market line (CML) – the  steepest line that starts at the risk-free portfolio and makes contact with the efficient frontier. The slope of this line is called the Sharpe Ratio and the point at which it touches (is tangent to) the efficient frontier is known as the tangency portfolio.

In this exercise, you will calculate the risk and return of two assets, construct the efficient frontier, find the tangency portfolio, and plot the CML.

Consider two assets A and B. You have observed their prices at the ends of 6 consecutive months. You also know that rate of return on a risk-free investment is 2.2%.
Asset Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
A 22.00 22.97 23.01 23.46 24.88 24.65
B 116.10 123.26 131.68 126.62 131.30 132.25

a. Store these asset prices in a 2 x 6 matrix. Calculate returns for each asset and store your result in a 2 x 5 matrix.
Recall, the return on asset over a given period is its price at the end of the period, minus its price at the beginning of the period, divided by its price at the beginning of the period.

Stuart Urban Computational Finance 2021 Fall II

Compute the mean and standard deviation (volatility) of each asset’s return and store your results in two 2×1 vectors, one for means and one for volatilities. Compute the correlation between the asset returns using MATLAB’s corr() function. Use the documentation to figure out how to use it.

b. We will now construct long-only portfolios of assets A and B. Define a vector of portfolio weights of Asset A starting at 0 and going to 1 in increments of 0.0001. A’s portfolio weight is the fraction of your money that you allocate to Asset A, with the remainder going to Asset B. Calculate the expected return and volatility of portfolios containing assets A and B for each weight. Store your answers in two vectors – one for expected returns, and one for volatilities.

Hint: recall from statistics that for any two constants a and b and random variables X and Y:

𝐸𝐸[𝑎𝑎𝑎𝑎+ 𝑏𝑏𝑏𝑏] = 𝑎𝑎𝐸𝐸[𝑎𝑎] + 𝑏𝑏𝐸𝐸[𝑦𝑦]
𝑉𝑉[𝑎𝑎𝑎𝑎+ 𝑏𝑏𝑏𝑏] = 𝑎𝑎2𝑉𝑉[𝑎𝑎] + 𝑏𝑏2𝑉𝑉[𝑏𝑏] + 2𝑎𝑎𝑏𝑏𝑎𝑎[𝑎𝑎, 𝑏𝑏]𝜎𝜎[𝑎𝑎]𝜎𝜎[𝑏𝑏]
Where E[] denotes expected value, V[] denotes variance, 𝜎𝜎[] denotes standard deviation, and 𝑎𝑎[] denotes correlation.
c. Find the tangency portfolio and report its portfolio weights on Assets A and B, its expected return, and its volatility. Use MATLAB to do this. Don’t just look at the graph.

Hint: recall from calculus that a line is tangent to a curve at the point where the curve has the same slope as the line. For each point on the efficient frontier, approximate its slope using the change in E[R] over the change in sd[R], and compare it to the slope of the line connecting the risk-free portfolio to that point on the efficient frontier. The point at which the slopes are closest to each other is (approximately) the tangency portfolio.

d. Plot the efficient frontier, the capital market line, and a dot for the tangency portfolio on the same plot. Label your axes, include a legend, and give your plot a title.

Hint: If you were not able to calculate the tangency portfolio, you can plot the efficient frontier, eyeball what you think the tangency portfolio is, and use your eyeballed values to plot the CML for partial credit.

e. If an investor wanted to attain an expected return of 2.55%, would she need to buy the risk-free asset or borrow at the risk-free rate? Explain your answer using the graph from Part (d).

In a publicly traded organization, does the valuation of owners equity represent the worth of the organization to its owners? Explain your answer.

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Comparative Summary

Write a 175- to 265-word response to the following:

How does a health care provider indicate the obligation of providing care under a managed care contract that has been paid in advance?
In a publicly traded organization, does the valuation of owners equity represent the worth of the organization to its owners? Explain your answer.

How does a health care provider indicate the obligation of providing care under a managed care contract that has been paid in advance?

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Week 2 Discussion

Write a 175- to 265-word response to the following:

How does a health care provider indicate the obligation of providing care under a managed care contract that has been paid in advance?
In a publicly traded organization, does the valuation of owners equity represent the worth of the organization to its owners? Explain your answer.

What type of econometric problem might you suspect? Which assumption of the multiple regression model is violated? What test should you use to identify the problem? What will be the effect on OLS parameter estimates?

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REVISION PAPER financing model 2021


SECTION B: SHORT ANSWER QUESTIONS

You need to answer four (4) questions in this section. The mark for each question is indicated. The total mark for this part is 40 marks.

Question 21: (10 marks)

Given a scenario (information regarding the model output)

a. What type of econometric problem might you suspect?
b. Which assumption of the multiple regression model is violated?
c. What test should you use to identify the problem?
d. What will be the effect on OLS parameter estimates?
e. What might you do to solve this problem?

Question 22: (10 marks)

Use the STATA output to answer the following questions.

Questions:
a. Report the least squares estimates of the coefficients and corresponding p–values.
b. Are the signs of these estimates consistent with economic theory? Explain your answer.
c. Determine whether the estimated coefficients are statistically significant at the 5% level of significance.
d. Is the overall significance of the model at the 5% level of significance?
e. Based on part d above, will stimulating output growth or controlling for inflation have an impact on the rate of return? Explain your answer.
f. How much of the variation in the real rate of return (on common stocks) does this model explain?

Question 23:

Given the STATA output

Questions:

a. Explain to your friend the estimated coefficients and how the independent variables affect the dependent variable.
b. List the assumptions that have been violated by this model.
c. For each assumption violated, write a short explanation to your friend on how it will affect the validity of the results.
d. Write the actions that your friend should take to deal with the assumptions violated, and how this would help improve the analysis.
e. Revised Model

Below is the Stata output that their regression estimates have generated, in addition to their additional tests. Examine these results, and discuss them.

Question 24:

Given the STATA output

Questions:


a. Identify any problems with that you can detect in these results.

b. Present solutions to these problems which may enable an improvement in the estimation of this model.

Is it covered by the UCC? What are the implied warranties?  What are the express warranties? What services does the company provide and under what circumstances. Do you think the consumer is properly protected? Why or why not?

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Product Warranty

Submit Reaction Paper III.
Look at a warranty for an iPod, a cell phone, or computer.
Consider the following questions:

Identify the parties to the warranty.
Is it covered by the UCC?
What are the implied warranties?  What are the express warranties?
What services does the company provide and under what circumstances.
Do you think the consumer is properly protected? Why or why not?

REMEMBER a limited warranty IS NOT the same as a implied warranty!!!!!
Write a 2-3 page reaction paper in MLA formatting and style. Make sure to utilize both legal arguments and your opinion in your analysis. See MLA Formatting and Style Guide. (Links to an external site.)
Save your document in rich-text format (rtf).

Explain what a full time equivalent is. What is the difference of productive vs. non-productive hours and provide examples for each as it relates to your work environment. Are fixed staff different than variable staff, if so, provide an explanation for the use of both and how they differ?

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Nursing Finance

A. List the elements of a strategic plan.

B. What are the benefits for strategic management and how it affects your organization along with the trickledown effect to the unit level.
Describe 3 different budget types utilized in healthcare. What type of items fall within each type of budget chosen and how would budget type be applied in your work environment?
The budget process is a timely process that involves input from varying levels in healthcare. Once a budget is put forth by a manager, what are the next steps in the time table that will take place? Describe the process of a budget submission, negotiation, and approval. What type of justifications can be brought forth for negotiations. Provide 2 examples for justification.
Explain what a full time equivalent is. What is the difference of productive vs. non-productive hours and provide examples for each as it relates to your work environment. Are fixed staff different than variable staff, if so, provide an explanation for the use of both and how they differ?
Why are revenues often ignored in nursing budgets?
Provide 3 examples for areas of measurement for performance budgeting. How can these examples be applied for a nursing unit?
What makes up the largest part of an operating budget for a given unit? Provide examples for 2 expenses that affect the budget and how it could better be controlled.