1. Information for Stone Company for a recent year is given below: Sales= $30,000,000 Interest Expense=4,000,000 Net Income= 5,000,000 Total Assets= 80,000,000 Noninterest Bearing current Liablities= 20,000,000 Cost of Capital= 10% Tax Rate= 30% Calculate for Stone: A. NOPAT B. Invested Capital C. Return on inve
Lucy Shafer wants to borrow $100,000 to expand her dog-breeding business. She is preparing a set of financial statements to take to the local bank with her loan application. She currently has an outstanding loan from her uncle for $50,000. Lucy's uncle is allowing her to borrow the money at a very low interest rate, and she does
Milton Industries expects free cash flow of $5 million each year. Milton'scorporate tax rate is 35%, and its unlevered cost of capital is 15%. The firm also has outstanding debt of $19.05 million, and it expects to maintain this level of debt permanently. a. What is the value of Milton Industries without leverage? b. What
Break-Even EBIT and Leverage IBM Corp. is comparing two different capital structures. Plan I would result in 1,100 shares of stock and $16,500 in debt. Plan II would result in 900 shares of stock and $27,500 in debt. The interest rate on the debt is 10 percent. a. Ignoring taxes, compare both of these plans to an all-equit
The stockholders' meeting for Harris Corporation has been in progress for some time. The chief financial officer for Harris is presently reviewing the company's financial statements and is explaining the items that comprise the stockholders' equity section of the balance sheet for the current year. The stockholders' equity secti
An investment advisor forecasts annual dividends for Safe Energy Corp. (SEC) as shown below. If the stock can be presently purchased for $50.00, what would the stock price need to be at the end of year 5 to earn an 10% annual return over the 5 years. Assume the investor will invest the dividends at 8%. Year 1 2 3 4 5
The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given below
Milton Industries expects free cash flow of $5 million each year. Milton's corporate tax rate is 35%, and its unlevered cost of capital is 15%. The firm also has outstanding debt of $19.05 million, and it expects to maintain this level of debt permanently. a. What is the value of Milton Industries without leverage? b. Wh
Marpor Industries has no debt and expects to generate free cash flows of $16 million each year. Marpor believes that if it permanently increases its level of debt to $40 million, the risk of finical distress may cause it to loose some customers and receive less favorable terms from its suppliers. As a result, Marpor's expected f
Please see the attached file.
Do you think it is a good idea for a company to have liabilities (debt) when running their business? Why or why not? Because the economy is slowed, the pizza shop business is down by 20%. You are thinking about taking out a further loan - should you? Qs you need think about and ask? · Do we have enough assets to se
Year Stock A Stock B 1998 .3 .1 1999 .0 .0 2000 .5 .1 2001 .2 .3 2002 .3 .3 2003 -.2 -.1 2004 .5 .0 2005 .1 .2 2006 -.1 .2 2007 .4 .3 E(R) .20 .14 Sigma .232 .136 a. Prepare a plot showing in the portfolio variance for various combinations of Stocks A and B b. Find the minimum variance portfolio c. Find the pro
Security expected returns and betas Security E(R) Beta 1 10% 1.00 2 12% 1.20 3 13% 1.10 Suppose there are three well-diversified portfolios, as shown above. An arbitrage opportunity is implied in these numbers. Show mathematically how to take advantage of it.
1 A company has $27 per unit in variable costs and $1,000,000 per year in fixed costs. Demand is estimated to be 100,000 units annually. What is the price if a markup of 40% on total cost is used to determine the price? A) $51.80 B) $37 C) $27 D) $37.80 2 True or False: Firms that have high levels of fixed costs have lo
Chapter 14 Problem 5: What is the implied growth duration of Kayleigh Industries given following: S&P Industrials Kayleigh Industries P/E Ratios 16 24 Expected Growth 0.06 0.14 Dividend yield 0.04 0.02 Problem 7: You are given the following information about two computer software firms and the S&P In
Planning is essential to an organization's success in the market. There are many different types of planning processes to help a corporation determine what focus or initiative a business wants to take with their customer. Strategic planning is the process that an organization uses to determine the main goals of the company and t
5-35 (Developing responses to assessed risks) Your client, General Television, Inc. manufactures televisions and during the current year acquired Micro Engineering, Inc., which manufactured flat panel plasma screens for computers so that it could compete in the market for flat panel televisions. Following is a list of several ri
1. Suppose the risk free return is 4% and the market portfolio has an expected return of 10% and a volatility of 16%. Johnson and Johnson Corporation (Ticker JNJ) stock has a 20% volatility and a correlation with the market of 0.06. a) What is Johnson and Johnson's beta with respect to the market? b) Under the CAPM assumptions
Assume the following information over a five year period: Average risk free rate = 6% Average return for crane stock = 11% Average return for load stock = 14% Standard deviation of crane stock returns = 2% Standard deviation of load stock returns = 4% Beta of crane stock = 0.8 Beta of load stock = 1.1 Determine which
1. What is the distinction, as drawn by the GASB, between a fiduciary fund and a permanent fund?
See the attached files.
Do you believe that U.S., Asian, and European stock prices will tend to move more in the same direction or less? Support your answer.
What is the implied growth duration of kayleigh industries given the following: S&P industrials Kayleigh industries P/E ratios 16 24 Expected growth 0.06 0.14 Dividend yield 0.04 0.02
WEEK 4 ACC 422 1. Jenks Co. takes a full year's depreciation expense in the year of an asset's acquisition and no depreciation expense in the year of disposition. Data relating to one of Jenks' depreciable assets at December 31, 2007 are as follows: Acquisition year 2005 Cost $350,000 Residual value 50,000 Accum
Barrett Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Barrett does not pay any dividends and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Barrett's stock. The pension fund manager has estimated Ba
EBITDA $120 million Depreciation expensive $20 million Net Income $7 million Capital Investment $300 million Book value of equity capital $200 million No. of shares of common stock outstanding $5 million Tax rate $40 percent Cost of Capital $10 percent Market price per share of common stock
How can financial ratios be used to determine the organization's financial health? What are some examples? 250 words minimum with references.
Below - please state which are Fixed and variable costs: President's salary User's guides Property tax on general offices Wages of telephone order assistants Shipping expenses Advertising Sales commissions Straight-line depre
While sitting in your office one evening, you begin to think about some of the key microeconomic messages you want to communicate to the Board. (Key concepts include, but are not limited to, supply and demand, pricing, competition, costs & production, and economic value added.) Pick two key concepts and discuss what you will pre
Does a company receive money when its stock is traded in the secondary market? How does the company affect the price of its stock? Why is a company concerned about its stock price in the secondary market?