Hi,

Can anyone help me with the attached assignment, its top urgent,

your quick response will be highly appreciated

Answer all the questions: Question 1 Stocks K and M have the following probability distributions of expected future returns: Probability J M 0.1 -10% -15% 0.25 4 0 0.3 12 10 0.25 20 15 0.1 16 25 A Calculate the expectedrate of return, k, for Stocks J & M, respectively. B Calculate the risk, cs, for Stocks J & M, respectively. Question 2 The Ferri Furniture Company: Balance Sheet as of December 31I 2016 [In Thousands! Cash 3% 277,000 Receivables 220,000 Inventories 145,000 Total current assets $ 642,000 Net xed assets 305,000 Total assets $ 947,500 Accounts Payable Notes Payable Other current liabilities Total current liabilities Longterm debt Common equity Total liabilities & equity $ 169,000 74,000 57,000 $ 300,000 66,500 581,000 $ 947,500 The Ferri Furniture Company: Income Statement for Year Ended December 31, 2016 jIn Thousands! Sales 55 3,231,000 Cost of Goods Sold Material $ 717,000 Labour 453,000 Heat, light and power 68,000 Indirect labour 113,000 Depreciation 41,500 1,838,500 Gross Prot $ 1,392,500 Selling Expenses 1 15,000 General and Administrative expenses 30,000 Earnings before interest and taxes (EBIT) $ 1,247,500 Interest expense 22,500 Earnings before taxes (EBT) 1,225,000 Corporate taxes (40%) 490,000 Net income 735,000 A alculate and interpret the nancial ratios for 2016 corresponding to the industry norms provided as follows: INDUSTRY NORMS Current ratio 15 Inventory turnover 3 Total asset turnover 1 Operating profit margin 18% Operating income return on investment 18% Debt ratio 60% Average collection period 100 days Fixed asset turnover 1.5 Return on equity 15% B omment on Ferri Company's nancial position in terms of liquidity, protability and solvency as well as its overall performance, by using the ratios that you have found and comparing them with the industry averages. Question 3 Adriana Company is considering two alternative projects, X and Y. Both projects will have the same investment cost but different cash ows for the next 5 years: PROJECT X PROJECT Y Cash Flow (35) Cash Flow ($) (100,000) ( 100,000) 5 10,000 70,000 For these two independent projects X and Y, use the following capital budgeting techniques: 1. Payback Period 2. Accounting rate of return 3. Net Present Value 4. Protability index and recommend acceptance / rejection and which project should be chosenby the company. A rate of 12% has been selected for the NPV analysis. Question 4 Below are the probability distributions of two stocks, A & B (the curves are identical). Elobarate on the risk & the return situation of the two investments. Which one should we prefer? Why? 0 Rate of Return (%) Question 5 Explain and elaborate on the following axioms of finance: 1. Risk - return trade-off 2. Time value of money 3. Cash is king 4. Incremental cash ows 5. The agency problem 6. Taxes bias business decisions 7. All risk is not equal 8. Ethical dilemmas are everywhere in nance What is meant by the phrase: \"Although it is not necessary to understand finance in order to understand these axioms, it is necessary to understand these axioms in order to understand finance\"? FORMULAE > FINANCIAL RATIOS lt 1. Firm Liquidity current assets current ratio = ... cmenthatulities Accounts Receivable Average Collection Period = m 2. Operating Protability operating income o rat income return on irorestment= Fe ing total assets operating income operating:I prot margin = sales sales total asset turnover = total assets iriventorjrtummrer = , ini-\"entorgr sales fixed assets turnover = net fixed assets 3. Financing Decisions total debt debt ratio = total assets 4. Return on common equity net income return on common equity 8 , common eqmtgr cost of' goods sold ' > RISK > Payback Period Base Year + jInitial Investment - Cumulative of Base Year! Cash Inow of Next Year Accounting Rate of Return Average Prot x100 Average Investment Net Present Value = Cumulative Present Value of Cash Inow Initial Investment Protability Index 2 PV of future cash ows Initial Investment Present value interest factor of $1 per period at i% for n periods, PVIF(i,n). Period 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20 % 0.990 0.980 0.971 0.961 0.951 0.980 0.961 0.942 0.924 0.906 0.971 0.943 0.915 0.888 0.863 0.962 0.925 0.889 0.855 0.822 0.952 0.907 0.864 0.823 0.784 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.870 0.756 0.658 0.572 0.497 0.862 0.743 0.641 0.552 0.476 0.855 0.731 0.624 0.534 0.456 0.847 0.718 0.609 0.516 0.437 0.840 0.706 0.593 0.499 0.419 0.833 0.694 0.579 0.482 0.402 \\GNQOKUI-BWNil pn O 0.942 0.933 0.923 0.914 0.905 0.888 0.871 0.853 0.837 0.820 0.837 0.813 0.789 0.766 0.744 0.790 0.760 0.731 0.703 0.676 0.746 0.711 0.677 0.645 0.614 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.432 0.376 0.327 0.284 0.247 0.410 0.354 0.305 0.263 0.227 0.390 0.333 0.285 0.243 0.208 0.370 0.314 0.266 0.225 0.191 0.352 0.296 0.249 0.209 0.176 0.335 0.279 0.233 0.194 0.162 r-tt-Ir-Ir-Ir-I UI-linr-I 0.896 0.887 0.879 0.870 0.861 0.804 0.788 0.773 0.758 0.743 0.722 0.701 0.681 0.661 0.642 0.650 0.625 0.601 0.577 0.555 0.585 0.557 0.530 0.505 0.481 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.497 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.181 0.160 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.215 0.187 0.163 0.141 0.123 0.195 0.168 0.145 0.125 0.108 0.178 0.152 0.130 0.111 0.095 0.162 0.137 0.116 0.099 0.084 0.148 0.124 0.104 0.088 0.074 0.135 0.112 0.093 0.078 0.065 NHDlilb-l cemqa 0.853 0.844 0.836 0.828 0.820 0.728 0.714 0.700 0.686 0.673 0.623 0.605 0.587 0.570 0.554 0.534 0.513 0.494 0.475 0.456 0.458 0.436 0.416 0.396 0.377 0.394 0.339 0.292 0.252 0.218 0.188 0.163 0.141 0.123 0.371 0.317 0.270 0.231 0.198 0.170 0.146 0.125 0.108 0.350 0.296 0.250 0.212 0.180 0.153 0.130 0.11 1 0.095 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.083 0.312 0.258 0.215 0.178 0.149 0.124 0.104 0.087 0.073 0.107 0.093 0.081 0.070 0.061 0.093 0.080 0.069 0.060 0.051 0.081 0.069 0.059 0.051 0.043 0.071 0.060 0.051 0.043 0.037 0.062 0.052 0.044 0.037 0.031 0.054 0.045 0.038 0.031 0.026 UIALBUBN OOUIOUI 0.780 0.742 0.706 0.672 0.608 0.610 0.552 0.500 0.453 0.372 0.478 0.412 0.355 0.307 0.228 0.375 0.308 0.253 0.208 0.141 0.295 0.231 0.181 0.142 0.087 0.233 0.184 0.146 0.116 0.092 0.074 0.05 9 0.047 0.038 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.020 0.130 0.094 0.068 0.049 0.036 0.026 0.019 0.014 0.010 0.097 0.067 0.046 0.032 0.022 0.015 0.01 1 0.008 0.005 0.054 0.034 0.021 0.013 0.009 0.005 0.003 0.002 0.001 0.030 0.015 0.008 0.004 0.001 0.024 0.012 0.006 0.003 0.001 0.020 0.009 0.004 0.002 0.000 0.016 0.007 0.003 0.001 0.000 0.013 0.005 0.002 0.001 0.000 0.010 0.004 0.002 0.001 0.000