1. Towson University Finance Corporation is examining several options for its capital structure, to determine which is optimal. Calculate: a) the corporate cost of capital for each of the following structures, then b) identify which is the best ideal structure? (20 points) Percent Debt After Tax Cost of Debt Cost of Equity Tax Rate A. 25% 8% 11% 0% B. 53% 12% 23% 8.5% C. 70% 7% 17% 7.1% D. 22% 10% 12% 6.7% 2. Perform the revenue, cost and profit variance analyses for both the simple and flexible budgets. (Represented in millions) (10 points) Simple Flexible Actual Budget Budget Results Revenue 6.5 7.2 6.2 Cast 5.9 6.3 5.9 Profit 0.7 1.0 0.4 3. Henson Research Institute (HRI) is examining several treatment options for Chronic Fatigue, a condition acquired by all Academics in higher education. While the Professors enjoy their work, HRI suggests they explore numerous relaxation options for longevity of career. The institute invited a cohort of 500 Academics (assigned to different treatments) to participate in a study, which involved basic bedrest and several additional treatment options. Decision makers are now depending on you to determine if future cohorts will be invited, and if all of the treatment options are still feasible (clearly Spa Therapy is the most popular but is it feasible?). Using the information below, calculate: (a) total cost for each treatment option, (b) total cases cured for each treatment option, and (c) ICER for each treatment option. Then determine: d) if the budget for the project is $2.5M, which options are truly feasible for this study? (20 points) Description Number of Cost Per Person Cost Per Person Total Cost # Cases Card KER Eff (% Cuod) (Registration) (Treinen) Bal Re 75 S S 29% S S Pham Tre 25 S 15.00 $ 2.000.00 S Holistie: Trestment 100 S 25.00 $ 5.000.00 9% S Spa Theriy 2:50 S 50.00 $ 2.500.00 70% $ ficTharipty 50 S $0.00 $ 15,000.00 7.9% S 4. HRI would like to increase the services offered and needs to hire additional staff (for multiple departments) to do so. The organization needs additional clinical as well as administrative staff to make things work and to ensure the highest quality of care for the patients. The newest Surgeon has been with the company for just 9 months (with incurred salary expenses of $250,000) and the Finance Manager for 7 months (with incurred salary expenses of $75,000). To add an additional surgeon and an additional finance manager, leadership would like to estimate a few expenses. Calculate the following to help with the decision-making: 1) the estimated annual salary of a new surgeon, 2) the estimated annual salary of a new finance manager, 3) fringe benefits for each position, at a rate of 30%, and 4) onboarding and training sessions for each position, for a total of 40 hours each. Assume that the annual hours worked is 2,080 hours. (20 points) S $ FOR PROBLEMS # 5, and #6: Henson Cancer Research Center (HCRC) is an established research and treatment facility, located in the Blue Ridge Mountains. HCRC is considering an expansion opportunity but must first fully analyze the organization's financial health before moving forward with the expansion. The organization operates 365 days per year, generates $69,000,000 in annual revenues and currently utilizes an all-equity approach to financing. Earnings before interest and taxes is $13,000,000 and the organization holds $17,000,000 in assets. As a newly hired financial analyst, it is now your responsibility to perform the necessary calculations and provide a final report to the executive team 5. Calculate the: a) Average Collection Period, b) Average Daily Sales and c) Current Receivables Balance if claims are paid on the following schedule: 10% in 30 days, 30% in 60 days, 35% in 90 days and 25% in 120 days. (10 points) 6. Prepare HCRC's financial statements, comparing its current all-equity financing approach to a possible 65% debt financing approach. Assume an interest rate of 9% and a tax rate of 33% for your calculations. Create: a) the balance sheet, b) the income statement and c) calculate Return to Investors and Return on Equity. d) Which financing option has the best ROE? (20 points)