I need help with these 10 questions. Please make sure you are familiar with these types of problems.

Thank you

1) Toni's Typesetters is analyzing a possible merger with Pete's Print Shop. Toni's has a tax loss carry forward of $ 350,000, which it could apply to Pete's expected earnings before taxes of $175,000 per year for the next 5 years. Using a 40% tax rate, compare the earnings after taxes for Pete's over the next 5 years both without and with the merger. Without the merger, Pete's Print Shop's earnings after taxes in years 1 through 5 is $________(round to nearest dollar) With the merger, Pete's Print Shop's earnings after taxes in years 1 through 5 is $________ (round to nearest dollar) 2) Cautionary Tales, Inc., is considering the acquisition of Danger Corp. at its asking price of $160,000. Cautionary would immediately sell some of Danger's assets for $16,000 if it makes the acquisition. Danger has a cash balance of $1,600 at the time of the acquisition. If Cautionary believes it can generate after-tax cash inflows of $22,000 per year for the next 10 years from the Danger acquisition, should the firm make the acquisition? Base your recommendation on the net present value of the outlay using Cautionary's 8% cost of capital. The net present value of the acquisition is $_________________(round to nearest dollar) 3) Ratio of exchange and EPS------Marla's Cafe is attempting to acquire the Victory Club. Certain financial data on these corporations are summarized in the following table. Item Marla's Caf Earnings available for common stock $25,000 Number of shares available of common stock outstanding 60,000 Market Price per share $12 Victory Club $5,000 4,000 $32 The EPS for Marla's original shareholders after the merger is $ . (Round to three decimal places.) 4) All-Stores, Inc., is a holding company that has voting control over both General Stores and Star Stores. All-Stores owns General Stores and Star Stores common stock valued at $15,000 and $12,000, respectively. General's balance sheet lists $ 130,000 of total assets; Star has total assets of $110,000. All-Stores has total common stock equity of $20,000. a. What percentage of the total assets controlled by All-Stores does its common stock equity represent? (round to two decimal places) b. If a stockholder holds $5,000 worth of All-Stores common stock equity, and this amount gives this stockholder voting control, what percentage of the total assets controlled does this stockholder's equity investment represent 5) Bankruptcy legislation------wage-earner plan>Personal Finance Problem-----Jon Morgan is in a financial position where he owes more than he earns each month. Due to his lack of financial planning and a heavy debt load, Jon started missing payments and saw his credit rating plunge. Unless corrective action is taken, personal bankruptcy will follow. Jon recently contacted his lawyer in order to set up a wage earner plan with his creditors and establish a debt repayment schedule that is workable in light of his personal income. His creditors have all agreed to a plan under which interest payments and late fees will be waived during the repayment period. The process would have Jon make payments to the court, which then will pay off his creditors. Jon has outstanding debt of $ 27,700. His creditors have set a repayment period of 4 years during which monthly principal payments are required. They have waived all interest charges and late fees. Jon's yearly take-home income is $ 30,900. a.Calculate the monthly debt repayment amount. b.Determine how much excess income Jon will have each month after making these payments. 6) Tax credits---A U.S.-based MNC has a foreign subsidiary that earns $ 248,000 before local taxes, with all the after-tax funds to be available to the parent in the form of dividends. The applicable taxes consist of a 35 % foreign income tax rate, a foreign dividend withholding tax rate of 9.9 %, and a U.S. tax rate of 30 %. Calculate the net funds available to the parent MNC if: a.Foreign taxes can be applied as a credit against the MNC's U.S. tax liability. (round to nearest dollar) b.No tax credits are allowed. (round to nearest dollar) 7) Assume that the Mexican peso currently trades at 14 pesos to the U.S. dollar. During the year U.S. inflation is expected to average 3%, while Mexican inflation is expected to average 4%. What is the current value of one peso in terms of U.S. dollars? Given the relative inflation rates, what will the exchange rates be 1 year from now? Which currency is expected to appreciate and which currency is expected to depreciate over the next year? The current value of one Mexican peso in terms of U.S. dollars, US$, is US$ /MP. (Round to six decimal places.) 8) International investment diversification---Personal Finance Problem>The economies of the world tend to rise and fall in cycles that offset each other. International stocks can provide possible diversification for a portfolio heavy on U.S. equities. Because research on foreign companies is usually difficult for individual investors to track on their own, a foreign equity mutual fund offers the investor the expertise of a global fund manager. Foreign-stock funds provide exposure to overseas markets at varying levels of risk. Economic and currency risk can swing in a positive or negative direction. Hence, diversification is the key to managing risk. Funds that invest overseas fall into four basic categories: global, international, emerging-market, and country-specific. The wider the reach of the fund, the less risky it is likely to be. Brief explain the differences between the four funds. Which of the following funds has enormous growth potential, but also poses significant risks?(Select the best answer below.) A. Global fund B. International fund C. Emerging-market fund D. Country-specific fund 9) If Like A Lot Corp. borrows yen at a nominal annual interest rate of 3.32% and during the year the yen appreciates by 9.09 %, what will the effective annual interest rate be for the loan? The effective annual interest rate, E, is_____% (round to two decimal places) 10) Denim Industries can borrow its needed financing for expansion using one of two foreign lending facilities. It can borrow at a nominal annual interest rate of 11% in Mexican pesos or it can borrow at 5% in Canadian dollars. If the peso is expected to depreciate by 11.97% and the Canadian dollar is expected to appreciate by 5%, which loan has the lower effective annual interest rate? The effective annual interest rate of the loan in Mexican pesos is______% (round to two decimal places) 1) ANSWER In merger, the merging companies absorb one another's profits and losses to form one Profit and loss account. Year PETE PETE Cumulativ Toni Mergers earnings after Earnings Earnings e earnings Typesetter tax before tax($) after tax of after tax Tax loss($) (40%) b/forward Before merging with Toni 0 (350,000) (350,000) 1 175,000 105,000 105,000 (245,000) 2 175,000 105,000 210,000 (140,000) 3 175,000 105,000 315,000 ( 35,000) 4 175,000 105,000 420,000 70,000 5 175,000 105,000 525,000 175,000 i) Without themerger, Pete's Print Shop's earnings after taxes in years 1 through 5 is $525,000 Answer ii) Pete's cash flows are annuity i.e. equal amount is received constantly at end of each year With themerger, Pete's PrintShop's earnings after taxes in years 1 through 5 is $175,000 NB. You never provided discounting rate so used the given figures only 2) Cost of acquisition=$160,000 Cost of capital=8% Present value of constant annuity, Year 1-10=A*[1-(1+k)-10 PV=$22,000*[1-(1+0.08)-10]/0.08=$147,621.7908 RECEIPTS=PV +cash balance+ sale of assets =$(147,621.79+16,000+1,600)=$165,221.79 PVCOF=$160,000 NPV=PVCIF-PVCOF =$(165,221.79-160,000)=$+5,221.79, thus Cautionary Tales should make acquisition of Danger Cop cause it has a positive NPV The net present value of the acquisition to nearest dollar= $5,222 3) Ratio of exchange and EPS-----After merger Earning available$(25000+5000) =$30,000 Number of shares (60,000+4000) = 64,000 EPS= ($25,000/60,000*$12) + ($5000/4000*$32) =45.000 The EPS for Marla's original shareholders after the merger is $ . (Round to three decimalplaces.) 45.000 4) a. Percentage of the total assets controlled byAll-Stores at its common stock equity rounded to two decimal places is: Total common stock withheld=$15000+12,000=$27,000, Total assets of both General and Star stores=$(110,000+130,000)=$240,000 $20,000/$240,000*100=8.33% is controlled by All-stores b. If a stockholder holds $5,000worth of All-Stores common stock equity, and it gives this stockholder voting control, the percentage of the total assets controlled by this stockholder's equity investment is: By giving $5,000 to stock holder, All stores common stock reduces to $15,000 $5000/$240,000*100=2.08% asset control by stockholders 5) a. The monthly debt repayment amount. Amount taken home monthly=$30,900/12=$2,575 Monthly payment=$27,700/4/12=$577.08 b. Amount in excess income that Jon will have each month after making these payments. Excess income=$2575-$577.08=$1,997.92 6) a. Net fund to parent MNC if foreign taxes can be applied as a credit against theMNC's U.S. tax liability: Foreign taxes are income tax and divided withholding tax=$86,800+$24,552=$111,352 Tax liability will be=30%*248000=$74,400 Net funds=$248,000-$74,400+$111,352=$284,952, to nearest dollar=$285,000 b. Net funds to parent MVC if No tax credits are allowed: Foreign income tax rate=35%*$248,000=$86,800 Foreign dividend withholding tax=9.9%*$248,000=$24,552, U.S.tax rate=30%*248,000=$74,400 Total tax=$(74,400+24,552+86,800) =$185,752 Net funds=$(248,000-185,752) =$62,248, to nearest dollar=$62,200 7) The current value of one peso in terms of U.S.dollars? 1/14=0.071429 Given the relative inflationrates, the exchange rates 1 year from now will be: After inflation, value of Mexican pesos becomes 14.56 and that of US dollar is 1.03, exchange rate will be 14.56/1.03= 1U.S dollar will trade for 14.14 pesos The currency expected to appreciate is U.S dollar and Pesos currency is expected to depreciate over the next year The current value of one Mexican peso in terms of U.S. Dollars, US$, is US$ /MP. 0.071429 8) Global fund is a financing institution that provides support to countries in response to AIDS, tuberculosis and malaria as epidemics and accelerate its end, to help save millions of lives by providing, preventing, treating and through care services, International fund i.e. IMF is an international organization working to create a global monetary cooperation, secure financial stability to facilitate international trade by promoting high employment and sustainable economic growth that will reduce poverty all around the world, Emerging market fund is a exchange traded fund that invests majority of its assets in financial markets of a single or multiple developing countries such as in Africa. It was adopted to identify developing countries with high growth prospects and potential of reward of this investment comes with high risk Country-specific fund is an international mutual fund with a portfolio that entirely consists of securities, mostly of stocks located specifically in a particular country like South Africa. B.)International fund has enormous growth potential but at the same time poses significant risks. 9) Formula=(1+if)(1+ef)-1,,if is market interest rate, ef is change in foreign currency against home currency =(1+3.32%)(1+9.09%)-1=12.71% The best effective annual interest rate for loan after appreciation=12.71% I.E if the currency appreciates, cost of borrowing increases from 3.32% to 12.71% 10) Formula of EAIR=(1+if)(1+ef)-1 i)Denim on Mexican pesos=i=11%, depreciation=11.97% =(1+11%)(1+-11.97%)-1=(1.11*0.8803)-1=(2.29)% effective annual interest rate if Mexican pesos is used In this, the rate is negative due to higher depreciation than nominal rate ii) Canadian dollar, i=5%, appreciation=5% EAIR= (1+5%)(1+5%)-1=10.25% is the effective annual interest rate if Canadian dollar is used Loan from Mexican pesos has a lower effective interest rate of (2.29%), in real sense it means Denim industries will not incur any cost of borrowing due to depreciated nature of Mexican Pesos. i.e. as the currency depreciates cost of borrowing decreases thus it would be preferable for Denim Industries to borrow in Mexican pesos which are experiencing depreciation on its currency, you will pay lesser in term of real money