Hi. I need help with my finance work. including rationing and NPV.

1. In January 2015, Teresa Leal was named treasurer of Casa de Diseo. She decided that she could best orient herself by systematically examining each area of the company's financial operations. She began by studying the firm's short-term financial activities. Casa de Diseo, located in southern California, specializes in a furniture line called \"Ligne Moderna.\" Of high quality and contemporary design, the furniture appeals to the customer who wants something unique for his or her home or apartment. Most Ligne Moderna furniture is built by special order because a wide variety of upholstery, accent trimming, and colors is available. The product line is distributed through exclusive dealership arrangements with well-established retail stores. Casa de Diseo's manufacturing process virtually eliminates the use of wood. Plastic and metal provide the basic framework, and wood is used only for decorative purposes. Casa de Diseo entered the plastic-furniture market in late 2007. The company markets its plastic-furniture products as indoor-outdoor items under the brand name \"Futuro.\" Futuro plastic furniture emphasizes comfort, durability, and practicality and is distributed through wholesalers. The Futuro line has been very successful, accounting for nearly 40 percent of the firm's sales and profits in 2014. Casa de Diseo anticipates some additions to the Futuro line and also some limited change of direction in its promotion in an effort to expand the applications of the plastic furniture. Leal has decided to study the firm's cash management practices. To determine the effects of these practices, she must first determine the current operating and cash conversion cycles. In her investigations, she found that Casa de Diseo purchases all its raw materials and production supplies on open account. The company is operating at production levels that preclude volume discounts. Most suppliers do not offer cash discounts, and Casa de Diseo usually receives credit terms of net 30. An analysis of Casa de Diseo's accounts payable showed that its average payment period is 30 days. Leal consulted industry data and found that the industry average payment period was 39 days. Investigation of six California furniture manufacturers revealed that their average payment period was also 39 days. Next, Leal studied the production cycle and inventory policies. Casa de Diseo tries not to hold any more inventory than necessary in either raw materials or finished goods. The average inventory age was 110 days. Leal determined that the industry standard, as reported in a survey done by Furniture Age, the trade association journal, was 83 days. Casa de Diseo sells to all its customers on a net-60 basis, in line with the industry trend to grant such credit terms on specialty furniture. Leal discovered, by aging the accounts receivable, that the average collection period for the firm was 75 days. Investigation of the trade association's and California manufacturers' averages showed that the same collection period existed where net-60 credit terms were given. Where cash discounts were offered, the collection period was significantly shortened. Leal believed that if Casa de Diseo were to offer credit terms of 3/10 net 60, the average collection period could be reduced by 40 percent. Casa de Diseo was spending an estimated $26,500,000 per year on operating-cycle investments. Leal considered this expenditure level to be the minimum she could expect the firm to disburse during 2015. Her concern was whether the firm's cash management was as efficient as it could be. She knew that the company paid 15 percent annual interest for its resource investment. For this reason, she was concerned about the financing cost resulting from any inefficiencies in the management of Casa de Diseo's cash conversion cycle. (Note: Assume a 365-day year, and assume that the operating-cycle investment per dollar of payables, inventory, and receivables is the same.) TO DO: a. Assuming a constant rate for purchases, production, and sales throughout the year, what are Casa de Diseo's existing operating cycle (OC), cash conversion cycle (CCC), and resource investment need? b. If Leal can optimize Casa de Diseo's operations according to industry standards, what will Casa de Diseo's operating cycle (OC), cash conversion cycle (CCC), and resource investment need to be under these more efficient conditions? 2. P12-1 Recognizing risk Caradine Corp., a media services firm with net earnings of $3,200,000 in the last year, is considering the following projects. Project A Initial investment Details $ 35,000 Replace existing office furnishings. B use with 500,000 Purchase digital video editing equipment for several existing accounts. C 450,000 Develop proposal to bid for a $2,000,000 per year 10-year contract with the U.S. Navy, not now an account. D 685,000 Purchase the exclusive rights to market a quality educational television program in syndication to local markets in the European Union, a part of the firm's existing business activities. The media services business is cyclical and highly competitive. The board of directors has asked you, as chief financial officer, to do the following: a. Evaluate the risk of each proposed project and rank it \"low,\" \"medium,\" or \"high.\" b. Comment on why you chose each ranking. 3. P12-3 Breakeven cash inflows and risk Blair Gasses and Chemicals is a supplier of highly purified gases to semiconductor manufacturers. A large chip producer has asked Blair to build a new gas production facility close to an existing semiconductor plant. Once the new gas plant is in place, Blair will be the exclusive supplier for that semiconductor fabrication plant for the subsequent 5 years. Blair is considering one of two plant designs. The first is Blair's \"standard\" plant, which will cost $30 million to build. The second is for a \"custom\" plant, which will cost $40 million to build. The custom plant will allow Blair to produce the highly specialized gases that are required for an emerging semiconductor manufacturing process. Blair estimates that its client will order $10 million of product per year if the traditional plant is constructed, but if the customized design is put in place, Blair expects to sell $15 million worth of product annually to its client. Blair has enough money to build either type of plant, and, in the absence of risk differences, accepts the project with the highest NPV. The cost of capital is 12%. a. Find the NPV for each project. Are the projects acceptable? b. Find the breakeven cash inflow for each project. c. The firm has estimated the probabilities of achieving various ranges of cash inflows for the two projects as shown in the following table. What is the probability that each project will achieve at least the breakeven cash inflow found in part b? Probability of achieving cash inflow in given range Range of cash inflow ($ millions) Standard Plant Custom Plant $0 to $5 $5 to $8 $8 to $11 $11 to $14 $14 to $17 $17 to $20 Above $20 0% 10 60 25 5 0 0 5% 10 15 25 20 15 10 d. Which project is more risky? Which project has the potentially higher NPV? Discuss the risk-return trade-offs of the two projects. e. If the firm wished to minimize losses (that is, NPV