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# Finance

### Stock question

Which of the following statements is most correct? a. The before-tax cost of preferred stock may be lower than the before-tax cost of debt, even though preferred stock is riskier than debt. b. If a company's stock price increases, this increases its cost of common stock. c. If the cost of equity capital increases, it must b

### Calculating Maximum Growth Rate

Please show calculations. The Tapley Company is trying to determine an acceptable growth rate in sales. While the firm wants to expand, it does not want to use any external funds to support such expansion due to the particularly high interest rates in the market now. Having gathered the following data for the firm, what is

### Lone Star's Plastics EBIT

Please show calculations. Lone Star Plastics has the following data: Assets: \$100,000; Profit margin: 6.0%; Tax rate: 40%; Debt ratio: 40.0%; Interest rate: 8.0%: Total assets turnover: 3.0. What is Lone Star's EBIT? a. \$ 3,200 b. \$12,000 c. \$18,000 d. \$30,000 e. \$33,200

### Company's cost of debt

A company has just been taken over by new management which believes that it can raise earnings before taxes (EBT) from \$600 to \$1,000, merely by cutting overtime pay and thus reducing the cost of goods sold. Prior to the change, the following data applied: Total assets: \$8,000 Debt ratio: 45% Tax rate:

### You are meeting with the CEO and other officers of an investment company to obtain a loan

You are meeting with the CEO and other officers of an investment company to obtain a loan for your idea or project from Unit 1 Individual Project (a hobby you enjoy, a business you own or would like to start, or an idea for a new product). Your meeting will last 35 minutes. You must get them to loan you the money for your idea o

### Charitable contribution problem

Kelly has AGI of \$100,000 in 2006. She contributes stock in Tulip Corp. (a publicly traded corp.) to a State University (a qualified charitable org.) The stock is worth \$59000 & she acquired it as an investment 2 years ago at a cost of \$44,000. 1. What is the total amount that kelly can deduct as a charitable contribution, as

### Economic benefit

Investors may receive an economic benefit from the ownership of stock by: Receiving interest. Receiving dividends. Receiving capital gains. Both b and c, but not a

### Mr Blochirt investment

Mr. Blochirt is creating a college investment fund for his daughter. He will put in \$850 per year for the next 15 years and expects to earn a 8% annual rate of return. How much money will his daughter have when she starts college? A) \$11,250 B) \$12,263 C) \$24,003 D) \$23,079

### Finance Problems: HR Pickett, Liability, and AFN

Problem #1 The HR Pickett corporation has \$500,000 of debt outstanding, and pays an interest rate of 10% annually, Pickett's annual sales are \$2 millions, it's average tax rate is 30% , and it's net profit margin on sales 5%. If the company does not maintain a TIE ratio of at least 5 times, it's Bank's will refuse to renew the

### Ratios and Organizations

How can you compare an organization to its competitors? How can organizations with increasing sales run into financial difficulties? Which ratios might help find this situation?

### Fixed Costs

How do fixed costs create operating leverage? Why is this significant? How does operating leverage impact the overall risk level of the company?

### Various Finance Questions

1- What should you consider when comparing fixed assets turnover of one firm to others? In other words, can you simply compare the ratios and explore the differences or should we strive to learn more before conducting such an analysis? 2 - Class, do you think it is easier to manipulate ratios that come from the balance sheet

### Balance Sheets and Income Statements

I need some assistance in trying to analyze and answer the balance sheet and income statements for the attachment. The following are balance sheets for Scott Company as of the end of the Years 1 and 2: Balance Sheet Year 2 Year 1 Cash 189 50 Accounts Receivable 950 750 Inventory 500

### Economic Unit Concept

When Jolt Co. acquired 75% of the common stock of Yelts Corp., Yelts owned land with a book value of \$70,000 and a fair market value of \$100,000. 11. What amount should have been reported for the land on a consolidated balance sheet, assuming the economic unit concept was used? A) \$ 70,000 B) \$ 75,000 C) \$ 85,000

### Can systematic risk be mitigated?

Can systematic risk be mitigated?

### How can diversification help reduce unsystematic risk?

How can diversification help reduce unsystematic risk?

### Predatory Home Lending

As a homeowner, you often receive solicitations to open a home equity line of credit. They are enticing, but you know that a growing number of Americans have lost their homes in recent years due to becoming victim to predatory lenders. Some of these victims are consumers who try to free themselves from credit card debt through a

### Fixed Cost & Variable Cost & Demand Problem

How to calculate demand requirements for Alternative B. See attached file for full problem description.

### Bank Loan - Analysis of Small Businesses

SCENARIO 1 Mrs. Kumal Mubarek is the CEO of a small business in Bangladesh that produces mattresses. To keep up with increasing demand, she needed a bank loan to help build her company's capacity. But the bank she approached denied her loan application for whatever reason and she does not know where to turn. What would you do?

### Finance net income and receivables turnover

If a company can expect an extra \$2 million in sales if it enters a new market and it knows that 15% of its sales will be uncollectible, collection costs will be 2% on all new sales, and the company's production and selling costs are 80% of sales and it also has a tax rate of 30%, what will the company's net income be. Also

### Additional Funds Needed with Excess Capacity

Sales for the year just ended were \$400, and fixed assets were used at 80 percent of capacity, but its current assets were at optimal levels. Sales are expected to grow by 5 percent next year, and the dividend payout ratio is 60 percent. How much additional funds (APN) will be needed? A firm has the following balance sheet (s

### Finance Problems: Repurchase of stock, equity statement, market value of debt and equity, convertible bonds

1) Green Manufacturing, Inc, plans to announce that it will issue \$2 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will have a 6-percent annual coupon rate. Green is currently an all-equity firm worth \$10 million with 500,000 shares of common stock outstanding. After the sale of the bond

### Amortization of long lived assets -Straight line method.

Comprehensive problem on amortization: 1st January 2006, Maple Leaf Corporation reported the following property, plant, equipments. Assets Cost Estimated life Salvage value Accumulated amortization Land 4500000 N.A. Nil Building 6000000 40 years Nil 3300000 Equipment 2000000 10 years Nil 1250000 During 2006 followi

### Management of a Firm

The factors that are listed below raise some interesting thoughts. If you were calling the shots for any organization where would you focus your attention? Management Attitudes: There is room for managerial judgment (i.e., tastes and preferences) in determining a firm's optimal capital structure. Where do you stand on this is

### Question about functions of financial markets

What are the functions of the major financial markets? What is the difference between the primary and secondary markets? What is the difference between the capital markets and the money markets?

### Identify different types of insurance and evaluate the appropriateness of the insurance for different situations.

Bob Brown was recently involved in a minor auto accident. His car was hit from behind, and he, in turn, slammed into the car in front of him. He would like someone to explain his coverage and show him where, in his auto policy, each of his losses might be covered. The explanantion of coverage and the location of coverage should

### Corporate finance

Every company has capital projects. IBM must need something! Be it a new wing to the building, a new product line to be funded, a new piece of equipment, find one new acquisition your company needs. Identify a capital project for IBM and Once you have identified the new budgeted item, what problems are you going to have getti

### Calculating Financial Ratios in Excel

Use the information contained in your selected organization's balance sheet and income statement to calculate the following ratios: 1) Liquidity ratios a) Current ratio b) Acid-test (quick) ratio c) Receivables turnover d) Inventory turnover 2) Profitability ratios a) Asset t

### Begining Finance - Financial Statements

See attached file for full problem description. Study Guide- ch 2 Practice 2-7 Income Statement Preparation Precision Corporation has been a leading supplier of magnetic storage disks for three years. Followingare the results of Precision's operations for 2006. Sales revenue . . . . . . . . . . . . \$68,000 Advertising

### Upstream/Downstream Transfers

What is the impact on consolidated financial statements of upstream and downstream transfers? a. No difference exists in consolidated financial statements between upstream and downstream transfers. b. Downstream transfers affect the computation of the noncontrolling interest's share of the subsidiary's income but upst