Question: The cumulative frequency and the cumulative

> Provide a description of the financing cost implications associated with a venture’s need for additional funds.

> What is meant by a cash budget? Describe how a cash budget is prepared.

> Briefly explain how changes in the conversion times of the components of the C3 can be interpreted.

> Describe the types of financial ratios and other financial performance measures that are used during a venture’s successful life cycle. Who are the users of financial performance measures?

> What does short-term financial planning involve?

> Kareem Construction Company has the following amounts of interest-bearing debt and common equity capital: FINANCING DOLLAR INTEREST COST OF  SOURCE AMOUNT RATE CAPITAL  Short-term loan $200,000 12%   Long-term loan $200,000

> Assume the operation of your business resulted in sales of $730,000 last year. Year-end receivables are $100,000. You are considering factoring the receivables to raise cash to help finance your venture’s growth. The factor imposes a 7 percent discount a

> Artero Corporation, discussed in Problem 7, is a retailer of toy products. The firm’s management team recently extended the monthly sales forecasts that were prepared for the last three months of 2017 for an additional 6 months in 2018. These forecasts

> Short-term financial planning for the PDC Company was described during the early part of this chapter. Refer to the PDC Company’s projected monthly operating schedules in Table 6.2. PDC’s monthly sales for the remainder of 2017 are expected to be: Sep

> The firm’s management team recently extended the monthly sales forecasts through the last six months of 2018. Artero expects to spend $100,000 on fixed assets in July 2018 and depreciation charges will increase to $12,000 per month beginning in August 2

> The VirtualStream Company has developed proprietary server and control software for providing communication and media-on-demand services via the Internet. The company is in the process of collecting prerecorded video and audio content from clients and t

> Suppose you become an intern at a local VC firm and are asked to assist in due diligence on a proposed investment in a telecommunication company. Explain how you would approach such a task and where and how you would structure your investigation. What

> Determine the three largest venture capital firms in the U.S. How much money do they have under management? In what areas, if any, do they specialize? Where are they located? Where are their branch offices?

> Describe the cash conversion cycle (C3).

> List three venture capital firms active in your region and describe their investing style and restrictions.

> In 2016, Jennifer (Jen) Liu and Larry Mestas founded Jen and Larry’s Frozen Yogurt Company, which was based on the idea of applying the microbrew or microbatch strategy to the production and sale of frozen yogurt. Jen and Larry began producing small quan

> Wok Yow Imports, Inc., is a rapidly growing, closely held corporation that imports and sells oriental style furniture and accessories at several retail outlets. The equity owners are considering selling the venture and want to estimate the enterprise or

> RxDelivery Systems is an R&D venture specializing in the development and testing of new drug delivery technologies. The market for alternative drug delivery systems grew rapidly during the past several years. Driving factors behind this growth include

> The Minoso Corporation anticipates a 20 percent increase in sales for 2017, 2018, and 2019. Minoso is currently operating at full capacity and thus expects to increase its investment in both current and fixed assets in order to support the increase in f

> RxDelivery Systems is an R&D venture specializing in the development and testing of new drug delivery technologies. The market for alternative drug delivery systems grew rapidly during the 1990s. Driving factors behind this growth include efforts to re

> What is the meaning of leverage ratios? What are typical ratios used for relating total debt to a venture’s assets and/or its equity?

> Following is rate of return component information for FirstVenture investors. Rate Return Component Component Liquidity premium 5.5% Risk-free rate 6 Advisory premium 9 Investment risk premium 11.5 Target rate of return 40 A. Calculate

> Refer to Problem 7. Show how your answer to Part A of Problem 7 would change if Jerry were willing to pay 16 percent annual interest and a principal payment of $100,000 at the end of three years. Problem 7 with Part A: Jerry’s Tree Services is trying t

> Jerry’s Tree Services is trying to raise debt funds from a prospective venture investors, SureWay LLC. SureWay indicated to Jerry Lau that the annual interest rate on risky venture loans is currently 15 percent. Jerry is seeking a 3-year loan with annu

> What is meant by a venture’s operating cycle?

> Draw the payoff for a portfolio of a share of venture equity and a short call option to buy that share at $5.

> Draw the payoff diagram for the following options: A. Call option to buy a venture’s stock at $3 B. Put option to sell a venture’s stock back to the venture at $15

> Following is interest rate information currently being observed by the Electronic Publishing Corporation. One-year U.S. government securities 4.5% One-year bank loans 6.0 Five-year U.S. government securities 7.0 Five-year bank loans

> For Voice River, Inc. A. Estimate the WACC if the cost of common equity capital is 20 percent. B. Estimate the WACC if the cost of common equity capital is at the representative target rate of 25 percent for typical ventures in their late rapid-growth l

> Sometimes the combination of a share and a warrant is called a “stock unit.” What does the payoff diagram look like for such an investment?

> List ten web sites or hardcopy magazines that contain venture capital investing information that might be of use to entrepreneur’s seeking venture capital.

> Locate a recent study covering venture capital fundraising (not investing) for the previous year. Determine what the current sources of funds tend to be.

> Describe what is meant by (a) a leveraged buyout (LBO), and (b) a management buyout (MBO).

> Describe an outright sale of a venture. What are the four categories of possible buyers?

> What are the steps or stages in a “typical” execution and time line schedule used in planning and executing an IPO?

> Besides the cash budget, what additional financial statements are projected monthly in conjunction with short-term financial planning?

> What evidence exists as to whether entrepreneurs think about and/or develop exit strategies?

> What is meant by initial public offering (IPO) underpricing?

> Describe the two following terms that may be involved in underwriting a new securities issue: (a) green shoe and (b) lockup provision.

> When an investment banking firm decides whether to underwrite or market a securities issue, what is meant by a firm commitment and best efforts?

> What is meant by due diligence? How does a traditional registration differ from a shelf registration?

> What is the meaning of harvesting a venture?

> What is meant by a (a) full ratchet clause, and (b) down (reset) round?

> Why is the conversion feature in convertible preferred important for venture investors?

> How do debt investors get paid in the enterprise method?

> What is meant by (a) NOPAT, and (b) EBIAT? How do they compare with each other?

> The Biometrix Corporation has been in operation for one full year (2016). Financial statements follow. Biometrix’s management is interested in determining the value of the venture as of the end of 2016. Sales are expected to grow at a 20 percent annual r

> Assume you started a new business last year with $50,000 of your own money that was used to purchase equipment. Now you are seeking a $25,000 loan to finance the inventory needed to reach this year’s sales target. You have agreed to pledge your venture

> Suppose you know σ and you want an 85% confidence level. What value would you use as z in formula (9–1)?

> Two of the teams competing in the America’s Cup race are Team Oracle U.S.A. and Land Rover BAR. They race their boats over a part of the course several times. Below are a sample of times in minutes for each boat. Assume the population s

> Grand Strand Family Medical Center treats minor medical emergencies for visitors to the Myrtle Beach area. There are two facilities, one in the Little River Area and the other in Murrells Inlet. The Quality Assurance Department wishes to compare the mean

> A coffee manufacturer is interested in whether the mean daily consumption of regular-coffee drinkers is less than that of decaffeinated-coffee drinkers. Assume the population standard deviation for those drinking regular coffee is 1.20 cups per day and 1

> A sample of 65 observations is selected from one population with a population standard deviation of 0.75. The sample mean is 2.67. A sample of 50 observations is selected from a second population with a population standard deviation of 0.66. The sample m

> The null and alternate hypotheses are: H0: μ1 ≤ μ2 H1: μ1 > μ2 A random sample of 20 items from the first population showed a mean of 100 and a standard deviation of 15. A sample of 16 items for the second population showed a mean of 94 and a standard de

> Dr. Patton is a professor of English. Recently she counted the number of misspelled words in a group of student essays. She noted the distribution of misspelled words per essay followed the normal distribution with a population standard deviation of 2.44

> The Tennessee Tourism Institute (TTI) plans to sample information center visitors entering the state to learn the fraction of visitors who plan to camp in the state. Current estimates are that 35% of visitors are campers. How many visitors would you samp

> As part of an annual review of its accounts, a discount brokerage selected a random sample of 36 customers and reviewed the value of their accounts. The mean was $32,000 with a sample standard deviation of $8,200. What is a 90% confidence interval for th

> You plan to conduct a survey to find what proportion of the workforce has two or more jobs. You decide on the 95% confidence level and a margin of error of 2%. A pilot survey reveals that 5 of the 50 sampled hold two or more jobs. How many in the workfor

> Dylan Jones kept careful records of the fuel efficiency of his new car. After the first nine times he filled up the tank, he found the mean was 23.4 miles per gallon (mpg) with a sample standard deviation of 0.9 mpg. a. Compute the 95% confidence interva

> In a binomial situation, n = 5 and π = .40. Determine the probabilities of the following events using the binomial formula. a. x = 1 b. x = 2

> A survey of 25 randomly sampled judges employed by the state of Florida found that they earned an average wage (including benefits) of $65.00 per hour. The sample standard deviation was $6.25 per hour. a. What is the population mean? What is the best est

> Families USA, a monthly magazine that discusses issues related to health and health costs, surveyed 20 of its subscribers. It found that the annual health insurance premiums for a family with coverage through an employer averaged $10,979. The standard de

> The First National Bank of Wilson has 650 checking account customers. A recent sample of 50 of these customers showed 26 have a Visa card with the bank. Construct the 99% confidence interval for the proportion of checking account customers who have a Vis

> In a poll to estimate presidential popularity, each person in a random sample of 1,000 voters was asked to agree with one of the following statements: 1. The president is doing a good job. 2. The president is doing a poor job. 3. I have no opinion. A tot

> During a national debate on changes to health care, a cable news service performs an opinion poll of 500 small-business owners. It shows that 65% of small-business owners do not approve of the changes. Develop a 95% confidence interval for the proportion

> Pharmaceutical companies promote their prescription drugs using television advertising. In a survey of 80 randomly sampled television viewers, 10 indicated that they asked their physician about using a prescription drug they saw advertised on TV. Develop

> PrintTech, Inc. is introducing a new line of ink-jet printers and would like to promote the number of pages a user can expect from a print cartridge. A sample of 10 cartridges revealed the following number of pages printed. a. What is the point estimat

> An important factor in selling a residential property is the number of times real estate agents show a home. A sample of 15 homes recently sold in the Buffalo, New York, area revealed the mean number of times a home was shown was 24 and the standard devi

> A case of 24 cans contains 1 can that is contaminated. Three cans are to be chosen randomly for testing. a. How many different combinations of three cans could be selected? b. What is the probability that the contaminated can is selected for testing?

> The Human Relations Department of Electronics Inc. would like to include a dental plan as part of the benefits package. The question is: How much does a typical employee and his or her family spend per year on dental expenses? A sample of 45 employees re

> A set of data contains 53 observations. The minimum value is 42 and the maximum value is 129. The data are to be organized into a frequency distribution. a. How many classes would you suggest? b. What would you suggest as the lower limit of the first cla

> Tim Bleckie is the owner of Bleckie Investment and Real Estate Company. The company recently purchased four tracts of land in Holly Farms Estates and six tracts in Newburg Woods. The tracts are all equally desirable and sell for about the same amount. a.

> A recent survey of 50 executives who were laid off during a recent recession revealed it took a mean of 26 weeks for them to find another position. The standard deviation of the sample was 6.2 weeks. Construct a 95% confidence interval for the population

> A state meat inspector in Iowa has been given the assignment of estimating the mean net weight of packages of ground chuck labeled “3 pounds.” Of course, he realizes that the weights cannot always be precisely 3 pounds. A sample of 36 packages reveals th

> There are 300 welders employed at Maine Shipyards Corporation. A sample of 30 welders revealed that 18 graduated from a registered welding course. Construct the 95% confidence interval for the proportion of all welders who graduated from a registered wel

> Forty-nine items are randomly selected from a population of 500 items. The sample mean is 40 and the sample standard deviation 9. Develop a 99% confidence interval for the population mean.

> Past surveys reveal that 30% of tourists going to Las Vegas to gamble spend more than $1,000. The Visitor’s Bureau of Las Vegas wants to update this percentage. a. How many tourists should be randomly selected to estimate the population proportion with a

> Recent surveys indicate 60% of tourists to China visited the Forbidden City, the Temple of Heaven, the Great Wall, and other historical sites in or near Beijing. Forty percent visited Xi’an with its magnificent terra-cotta soldiers, horses, and chariots,

> A processor of carrots cuts the green top off each carrot, washes the carrots, and inserts six to a package. Twenty packages are inserted in a box for shipment. Each box of carrots should weigh 20.4 pounds. The processor knows that the standard deviation

> For the daily lottery game in Illinois, participants select three numbers between 0 and 9. A number cannot be selected more than once, so a winning ticket could be, say, 307 but not 337. Purchasing one ticket allows you to select one set of numbers. The

> The estimate of the population proportion should be within plus or minus .10, with a 99% level of confidence. The best estimate of the population proportion is .45. How large a sample is required?

> A sample of 2,000 licensed drivers revealed the following number of speeding violations. Number of Violations _______ Number of Drivers 0 …………………………………………………………….. 1,910 1 ………………………………….…………………………….. 46 2 ……………………………………..………………………….. 18 3 ……………………………………

> Two boxes of men’s Old Navy shirts were received from the factory. Box 1 contained 25 mesh polo shirts and 15 Super-T shirts. Box 2 contained 30 mesh polo shirts and 10 Super-T shirts. One of the boxes was selected at random, and a shirt was chosen at ra

> A carbon monoxide detector in the Wheelock household activates once every 200 days on average. Assume this activation follows the exponential distribution. What is the probability that: a. There will be an alarm within the next 60 days? b. At least 400 d

> An investor purchased 100 shares of Fifth Third Bank stock and 100 shares of Santee Electric Cooperative stock. The probability the bank stock will appreciate over a year is .70. The probability the electric utility will increase over the same period is

> We want to estimate the population mean within 5, with a 99% level of confidence. The population standard deviation is estimated to be 15. How large a sample is required?

> According to sales information in the first quarter of 2016, 2.7% of new vehicles sold in the United States were hybrids. This is down from 3.3% for the same period a year earlier. An analyst’s review of the data indicates that the reasons for the sales

> A recent Gallup study (http://www.gallup.com/poll/175286/hour-workweek-actually-longerseven-hours.aspx) found the typical American works an average of 46.7 hour per week. The study did not report the shape of the distribution of hours worked or the stand

> A recent survey reported in BloombergBusinessweek dealt with the salaries of CEOs at large corporations and whether company shareholders made money or lost money. If a company is randomly selected from the list of 20 studied, what is the probability: a

> The funds dispensed at the ATM machine located near the checkout line at the Kroger’s in Union, Kentucky, follows a normal probability distribution with a mean of $4,200 per day and a standard deviation of $720 per day. The machine is programmed to notif

> There are 20 families living in the Willbrook Farms Development. Of these families, 10 prepared their own federal income taxes for last year, 7 had their taxes prepared by a local professional, and the remaining 3 by H&R Block. a. What is the probability

> An internal study by the Technology Services department at Lahey Electronics revealed company employees receive an average of two non-work-related e-mails per hour. Assume the arrival of these e-mails is approximated by the Poisson distribution. a. What

> A set of data consists of 45 observations between $0 and $29. What size would you recommend for the class interval?

> Forty percent of the homes constructed in the Quail Creek area include a security system. Three homes are selected at random: a. What is the probability all three of the selected homes have a security system? b. What is the probability none of the three

> Schadek Silkscreen Printing Inc. purchases plastic cups and imprints them with logos for sporting events, proms, birthdays, and other special occasions. Zack Schadek, the owner, received a large shipment this morning. To ensure the quality of the shipmen

> There are three clues labeled “daily double” on the game show Jeopardy. If three equally matched contenders play, what is the probability that: a. A single contestant finds all three “daily doubles”? b. The returning champion gets all three of the “daily

> Ms. Maria Wilson is considering running for mayor of Bear Gulch, Montana. Before completing the petitions, she decides to conduct a survey of voters in Bear Gulch. A sample of 400 voters reveals that 300 would support her in the November election. 1. Est

> It is estimated that 10% of those taking the quantitative methods portion of the CPA examination fail that section. Sixty students are taking the exam this Saturday. a. How many would you expect to fail? What is the standard deviation? b. What is the pro

> Fast Service Truck Lines uses the Ford Super Duty F-750 exclusively. Management made a study of the maintenance costs and determined the number of miles traveled during the year followed the normal distribution. The mean of the distribution was 60,000 mi

> Assume the likelihood that any flight on Delta Airlines arrives within 15 minutes of the scheduled time is .90. We randomly selected a Delta flight on four different days. a. What is the likelihood all four of the selected flights arrived within 15 minut