SuperMed has been running a R&D project on a disease and finally found the medicine for the disease. To conduct the R&D, it borrowed money from a bank in the form of corporate debt. It is due next year and the amount is 150 million. However, to actually produce the medicine for sale, it needs to establish a medicine manufacturing factory and it costs 100 million. If this factory is built, it will generate one-time cash flow next year at t=1 (there is no more cash flow from t=2 and onward). The cash flow will be 350 million with probability 0.5 and 80 million with probability 0.5. Discount rate is 5%. There is no bankruptcy cost. There are no corporate taxes. Manager of SuperMed makes investment decisions to maximize equityholder value. SuperMed doesn’t have cash. Assume that current debtholders are not willing to provide any more money to SuperMed. (a) What is NPV of this project (project means building a factory and producing medicine)?
(b) Suppose SuperMed's equityholders have enough money to fund the 100 million cost of building the factory. Would they be willing to fund this project?
(c) Suppose that manager is trying to find the building cost of factory by issuing junior debt which is subordinated to existing debt. Since this is junior debt, original debtholders who are promised 150 million will be paid first, then junior debtholders will be paid and lastly, equityholders will be paid. Would the manager be able to fund the factory building cost by issuing junior debt?
(d) Suppose that manager is trying to find the factory building cost by issuing senior debt. Owners of this senior debtholders will be paid first, then original (existing) debtholders will be paid and lastly, equityholders will be paid.
a. Would existing debtholders agree to issuing senior debt?
b. With the agreement of existing debtholders on issuing senior debt, would the manager be able to fund the factory building cost of 100 million through issuing senior debt?
c. If answer to part b is yes, how much face value of senior debt (amount that SuperMed will pay to senior debtholders at t=1) does the manager need to issue to cover the 100 million cost of building a factory?
d. If senior debt was issued to cover 100 million cost of building a factory, what is PV of existing debt?
e. If senior debt was issued to cover 100 million cost of building a factory, what is PV of equity?

Andrea cujoli is a currency speculator who enjoys "betting" on changes in the foreign currency exchange market. currently the spot price for the japanese yen is ¥129.87/$ and the 6-month forward rate is ¥128.53/$. andrea would earn a higher rate of return by buying yen and a forward contract than if she had invested her money in 6-month us treasury securities at an annual rate of 2.50%. true/false?

Adamson company manufactures four lines of garden tools. as a result of an activity analysis, the accounting department has identified eight activity cost pools. each of the product lines is produced in large batches, with the whole plant devoted to one product at a time. classify each of the following activities or costs as either unit-level, batch-level, product-level, or facility-level. activities (a) machining parts. (b) product design. (c) plant maintenance. (d) machine setup. (e) assembling parts. (f) purchasing raw materials. (g) property taxes. (h) painting.

The following transactions and events that occurred in the village of kowitt gorge during the calendar year 2019: 1. the village commissioners adopted the following budget: estimated revenues: property taxes $1,850,000 all other revenues 300,000 total revenues $2,150,000 appropriations: all departments other than police $1,000,000 police—salaries 600,000 police—fringe benefits 450,000 police—supplies 80,000 total appropriations $2,130,000 2. the village received, in cash, property taxes of $1,840,000 and all other revenues of $295,000. 3. the village made cash payments, charging the following appropriations: all departments other than police $1,000,000 police—salaries 595,000 police—fringe benefits 390,000 4. the administrator of fringe benefits received an invoice for police employee health insurance in the amount of $95,000, together with a letter from the insurance provider, explaining that the large increase was caused by a change in federal laws. the invoice could not be paid because the police—fringe benefits appropriation had a balance of only $60,000 (appropriation of $450,000 minus expenditures in item 3 of $390,000). as a result, the village commissioners amended the budget as follows: increase: appropriation for police—fringe benefits $35,000 decrease: appropriation for police—salaries 5,000 decrease: appropriation for police—supplies 25,000 use of fund balance 5,000 5. the village paid the invoice for $95,000, referred to in item 4 above, charging the appropriation for police—fringe benefits. 6. the police department placed po 2019a for firearms in the amount of $30,000 and po 2019b for uniforms in the amount of $20,000, all charged to the appropriation for police—supplies. (enter these pos as one transaction.) 7. after receiving po 2019a, the supplier notified the police department that a change in the design of the weapons would increase the cost to $32,000. the department sent the supplier an amended po, increasing it by $2,000. 8. the police department received the uniforms ordered on po 2019b, together with an invoice for $20,000. the department approved the invoice for payment. record the transactions and events applicable to the appropriations for police—fringe benefits and police—supplies in the following appropriations ledger. notes: use a negative sign with your answers if: 1. the amount entered in the appropriation column is a debit (dr.) rather than a credit (cr.); or 2. the amount entered in the expenditures column is a credit (cr.) rather than a debit ( in the available appropriation column, enter the appropriate balance after every transaction/event, even if a transaction isn't recorded in a particular ledger for that transaction. for transaction 6, enter both purchase orders (pos) as one combined transaction. appropriations ledger appropriation: police - fringe benefits appropriation encumbrances expenditures available transaction cr. dr. cr. dr. appropriation 1 answer 0 answer 0 answer 0 answer 0 answer 0 2 answer 0 answer 0 answer 0 answer 0 answer 0 3 answer 0 answer 0 answer 0 answer 0 answer 0 4 answer 0 answer 0 answer 0 answer 0 answer 0 5 answer 0 answer 0 answer 0 answer 0 answer 0 6 answer 0 answer 0 answer 0 answer 0 answer 0 7 answer 0 answer 0 answer 0 answer 0 answer 0 8 answer 0 answer 0 answer 0 answer 0 answer 0 appropriations ledger appropriation: police - supplies appropriation encumbrances expenditures available transaction cr. dr. cr. dr. appropriation 1 answer 0 answer 0 answer 0 answer 0 answer 0 2 answer 0 answer 0 answer 0 answer 0 answer 0 3 answer 0 answer 0 answer 0 answer 0 answer 0 4 answer 0 answer 0 answer 0 answer 0 answer 0 5 answer 0 answer 0 answer 0 answer 0 answer 0 6 answer 0 answer 0 answer 0 answer 0 answer 0 7 answer 0 answer 0 answer 0 answer 0 answer 0 8 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0 answer 0