You are an analyst studying Beranek Technologies, which was founded 10 years ago. It has been profitable for the last 5 years, but it has needed all of its earnings to support growth and thus has never paid a dividend. Management has indicated that it plans to pay a $0.50 dividend 3 years from today, then to increase it at a r
Gary Wells Inc. plans to issue perpetual preferred stock with an annual dividend of $6.50 per share. If the required return on this preferred stock is 6.5%, at what price should the stock sell? A. $90.37 B. $92.69 C. $95.06 D. $97.50 E. $100.00
11. Default risk premium: A company's 5 year bonds are yielding 7.75% per year. Treasury bonds with the same maturity are yielding 5.2% pre year, and the real risk free rate (r*) is 2.3 %. The average inflation premium is 2.5% and the maturity risk premium is estimated to be 0.1 x (t-1)%, where t=number of years to maturity. If
4. Pierre Imports will be liquidated. Its current balance sheet is shown below. Fixed assets are sold for $900,000 and current assets are sold for $700,000. All fixed assets are pledged as collateral for mortgage bonds. Subordinated debentures are subordinate only to notes payable. Trustee costs are $70,000. Sale of cu
1)Contribution margin may be express as: A) A percentage of revenue (B) A total dollar amount for the period (C) A contribution margin per unit (D) All of the above 2) Operating income can be calculated by: A) Fixed cost divided by contribution margin ratio (B) Fixed costs multiplied by contribution margin ratio (C) Margin
1) A process cost system is highly desirable when a company is producing custom made goods. A) True (B) False 2)All of the following are characteristics of the product of process costing except: A) High volume (B) Different amount of direct material (C) Identical amount of direct material (D) Repetitive operation 3) If 8
On January 30, Tensing Company purchased supplies of $2,000. The supplies were all consumed in February. Which of the following statements is true regarding the accounting for these supplies. A) The supplies should be recorded as an asset in January and no adjusting entry is needed until the supplies are used in Febr
1. The MBI Company does not want to grow. The company's financial management believes it has no positive NPV projects. The company's operating financial characteristics are Profit margin = 10% Assets-sales ratio = 150% Debt-equity ratio = 100% Dividend-payout ratio = 50% Calculate the sustainable growth rate for the MBI
Describes a process in broad terms of dynamically matching capacity to demand. But a viable alternative is a constant production rate to maximize production efficiency. What are the trade-offs between the two approaches?
1. Indicate how each of the following international transactions is entered into the U.S. balance of payments with double-entry bookkeeping: (a) A U.S. resident imports $500 worth of merchandise from a U.K. resident and agrees to pay in three months. (b) After the three months, the U.S. resident pays for his imports by drawi
Looking at PepsiC 2006 annual report answer the question using the following initiatives. PepsiCo will position its products as the favorites in the Asian market. To achieve this, the company will: Description of strategic planning initiatives Build 2 production plants in China. Build a network of distribution centers.
I need to compare Pepsi and Coca-Cola's two most recent fiscal years based upon operating profitability, asset utilization and risk management. I have already completed asset utilization and risk management. What I need help with is operating profitability and a brief introduction.
The factoring department of Inter American Bank (IAB) is processing 100,000 invoices per year with an average invoice value of $1,500. IAB buys the account receivables at 3.5 percent off the invoice value. Currently, 2.5 percent of the accounts receivable turns out to be bad debt. The annual operating expense of this departme
1. Romeo & Juliette are competitors in selling college finance textbooks. The separate capital structures of each company are as follows: Romeo Juliette Debt @ 10% (interest) $500,000 Debt @ 10% (interest) $1,000,000 Common Stock 1,000,000 Common Stock 500,000 Total Capital $1,500,000 Total Capital $1,500,000 Shares O
1. Will you explain to me the relationship between inventory turnover and purchasing needs. 2. How can I elaborate (or explain) this statement "rapid corporate growth in sales and profits can cause financing problems" 3. What are the advantage and disadvantage of level production schedules in firms with cyclical sales? 4. H
Delta manufacturing - Balance Sheet Cash & Marketable Securities $225,000 Account Receivables $890,000 Inventories (lower of cost or market $930,000 Prepaid Expenses $10,150 Accumulated Tax Prepayment $12,000 Current Assets $2,067,150 Fixed Assets at cost $2,500,000 Less: Accumulated Depreciati
True or False a. Financing for public corporations must flow through financial markets. b. Financing for private corporations must flow through financial intermediaries. c. The sale of policies is a source of financing for insurance companies. d. Almost all foreign-exchange trading occurs on the floors of the FOREX exchanges
Using the following data, compute cash flow from operating activities. Cash Inflow (Outflow) a. Cash received from sale of a building . . . . . . . . . . . . . . . . . . $ 5,600 b. Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (450) c. Cash paid to repay a loan . . . . . . . . . .
Susan Young is an attorney for a small law firm in Arizona. She is also a part-time inventor and an avid golfer. One day Susan's golf foursome included a man named Henry Jones, a manufacturer of Christmas ornaments. Henry explained to Susan that he manufactures an ornament everyone loves, but stores will not carry the ornaments
Computations: The following financial statements apply to the next six problems? Robert Manufacturing Balance Sheet December 31, XXXX Cash $ 200 Receivables 245 Inventory 625 Total Current Assets
Two companies are rivals in the buggy whip industry. Their manufacturing profiles are as follows: Co. A Co. B Unit Selling Price $ 300.00 $ 300.00 Manufacturing Cost/unit 50.0% 66.7% Staff Salaries & Benefits 150,000 75,000 Advertising 50,000 25,000 De
Please help with the following finance-related problem. Provide step by step calculations. The Ectoplasto Drug Company's common stock is considered highly speculative. Security analysts believe that over the next year four possible outcomes are possible for the company's research program. There is a 60% chance that their new
Canyon Recreational Products (CRP) has earnings of $1.60 per share and plans to pay a $0.64 dividend. In the past CRP has earned a return of 25% on its investments, and the firm believes this will continue in the future. At what rate do you expect Canyon's earnings to grow?
Sharon Shay estimates that a college education has a $28,000 equivalent cost at graduation. She believes the benefits of her education will occur throughout forty years of employment. She thinks she will have a $3000-per-year higher income during the first ten years out of college, compared to a non-college graduate. During the
What is the expected inflation rate in the U.S. and Japan if the real rate rate of interest in the U.S. is 5% and in Japan 2%, while the nominal interest rate in the U.S. is 7% and in Japan 5%?
Financial Management Short Construction offers its customer's credit terms of 2/10, net 30 days, while Fryman Construction offers its customer's credit terms of 2/10, net 45 days. The aging schedules for each of the two companies' accounts receivable are reported below: Short Construction Fryman Construction
HJ Turner Corporation produces a single product. Data concerning the company's operations last year appear below: Units in beginning inventory......................... 0 Units produced.............................................. 10,000 Units sold.....................................
Strident Marks, Inc. Income Statement For the Year Ended December 31, 2006 Revenue Net Sales 8,994,000 Cost of Goods Sold 3,759,600 Gross Margin 5,234,400 Expenses Selling General & Administrative 1,245,900 Depreciation Expense 350,000 1,595,900 Income Before Interest and Taxes 3,638,500 Interest
Baker Company has a product that sells for $20 per unit. The variable expenses are $12 per unit, and fixed expenses total $30,000 per year. Required: a. What is the total contribution margin at the break-even point? b. What is the contribution margin ratio for the product? c. If t
Describe with substantiation, the sources of short term financing.