[u06a1] Financial Concepts 6 Assessment Description
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment objectives: Competency 1: Apply the theories, models, and practices of finance to the financial management of an organization.
Calculate the value of a foreign currency using the spot exchange rate and forward rate.
Calculate the cross-rate of a foreign currency.
Competency 3: Evaluate alternative methods of financing for an organization in diverse economic environments.
Calculate the net working capital and current assets of a firm.
Calculate the value of a company after a rights offering and the value of a right.
Demonstrate your understanding of financial concepts by completing the following problems. Where appropriate, show or explain your work. You may use Excel to work the problems. Problem 1. Cash Equation: Bettendorf Corporation has a book net worth of $17,800. The company’s long-term debt is $6,900. Its net working capital, excluding cash, is $1,600. Its fixed assets are $21,300. How much cash does the company have? If the current liabilities are $2,575, what are the current assets? Problem 2. Rights Offerings: Borkin, Incorporated is proposing a rights offering. Currently, there are 560,000 shares outstanding at $85 each. There will be 65,000 new shares offered at $84 each. Calculate each of the following: The new market value of the company.
The number of rights that are associated with one of the new shares.
The ex-rights price.
The value of a right.
Problem 3. Using Spot and Forward Exchange Rates: The spot exchange rate for the Canadian dollar is Can $1.14 and the six-month forward rate is Can $1.17. Calculate whether a U.S. dollar or a Canadian dollar is worth more. Problem 4. Cross-Rates and Arbitrage: The Japanese yen exchange rate is ?96=$1, and the British pound exchange rate is ?1=$1.72. Calculate the cross-rate in terms of yen per pound. You are required to submit your assessment to the Turnitin source matching tool. Refer to the FlexPath instructions on the Turnitin iGuide page, linked in the Assessment Resources. Refer to the Financial Concepts 6 Assessment Scoring Guide to ensure that you meet the grading criteria for this assessment. Submit your assessment for faculty evaluation by clicking the linked assessment title in the assessment link below. Be sure to include the corresponding Turnitin report with your assessment.
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