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Using the Method of Multiples

Problem #1 Free Travel, Inc., a company that organizes virtual travel tours, is planning an IPO. Its current investors hold 300,000 shares, which at IPO will be converted into common shares at 1:1 ratio. The company competes with the following publicly traded companies: CoachTraveler, VirtualExplorer, Home World, and Stay-at-

Blackmon Manufacturing: Break-Even Point

Blackmon Manufacturing Company makes a product that it sells for $50 per unit. The company incurs variable manufacturing costs of $14 per unit. Variable selling expenses are $6 per unit, annual fixed manufacturing costs are $189,000, and fixed selling and administrative costs are $141,000 per year. Determine the break even p

Sell common stock, sell bonds with warrants for stock

A firm plans to raise $2 million to pay off its existing short-term bank loan of $600,000 and to increase total assets by $1,400,000. The bank loan bears an interest rate of 10 percent. The company's president owns 57.5% percent of the 1,000,000 shares of common stock and wishes to maintain control of the company. The company'

Harley Davidson Stock Beta compared to the S&P 500 index; intrinsic value

# Using Microsoft Excel and historical daily data from http://finance.yahoo.com, calculate the beta for Harley-Davidson in comparison to the S&P 500 Index over the past year. # Then utilizing the dividend discount model from your text, calculate the intrinsic value for Harley-Davidson. # From that analysis, comprise an

Toyota Stock Valuation of Nonmaturing Preferred Stock

Use Excel for solution. Stock Valuation Suppose Toyota has nonmaturing (perpetual) preferred stock outstanding that pays a $1.00 quarterly dividend and has a required return of 12% APR (3% per quarter). What is the stock worth? If you use the spreadsheet method shown in the workshop,

External Equity Financing Northern Pacific Heating & Cooling Inc

External Equity Financing Northern Pacific Heating and Cooling Inc. has a 6-month backlog of orders for its patented solar heating system. To meet this demand, management plans to expand production capacity by 30% with a $15 million investment in plant and machinery. The firm wants to maintain a 40% debt-to-total-assets ratio in

Effect of an installment loan on financial statements

On January 1, 2006, Miller Co. borrowed cash from First City bank by issuing a $60,000 face value, three-year installment note that had a 7 percent annual interest rate. The note is to be repaid by making annual payments of $22,863 that include both interest and principal on December 31 each year. Miller invested the proceeds

Financial forecasting-percent of sales

What are Sambonoza's financing needs for the coming year? 4-4A. (Financial forecasting-percent of sales) Tulley Appliances, Inc., projects next year's sales to be $20 million. Current sales are at $15 million based on current assets of $5 million and fixed assets of $5 million. The firm's net profit is 5 percent after taxes

Stock - Risk and Return

A. Common stock A has an expected return of 10%, a standard deviation of future returns of 25%, and a beta of 1.25. Common stock B has an expected return of 12%, a standard deviation of future returns of 15%, and a beta of 1.50. Which stock is riskier? Explain. b. Suppose rf is 5% and rM is 10%. According to the SML and t

Project's Net Cash Flow for the First Year

Company X is trying to estimate the first-year net cash flow (at year 1) for a proposed project. The financial staff has collected the following information on the project: Sales revenue: $10 million Operating costs (excluding depreciation): 7 million Depreciation: 2 million Interest expense: 2 million The company h

Finance problem

It is a finance problem. Could you please show me the steps of solving this problem? I attached the excel file with this request. The balance sheets of Roop Industries are shown below. The 12/13/2001 value of operation is $ 651 million and there are 10 million shares of common equity. What is the price per share ? Assets

Use of QUICS to restructure debt, risk to common stock

See attached file. AMR, the parent firm of American Airlines, found its profitability had improved a few years ago. Several years prior, AMR had issued privately about 1.1 billion of convertible preferred stock. As you know, interest is tax deductible whereas dividends are not. AMR decided to offer the preferred stockholders

Managerial Finance - Silla Soft Drinks

The coursework is attached. Can I please have the references as well as the spreadsheet with calculation. ---------------- Silla Soft Drinks is an independent soft drinks company with a tradition of producing premium soft drinks and giving dependable quality and service, having been manufacturing soft drinks for over 100 yea

Financial Problems

Amax Manufacturing Corp. collects $225,000 per day. The cash manager has just been told of a new collection system using lockboxes that could reduce collection float from seven days to six days by reducing mail and processing float a total of one day. Given the company's opportunity cost of funds of 14 percent and using simple i

Finance (Hinder, Inc., Storico Cleaning, and Crash Davis Driving School)

If Hinder, Inc., has a 15 percent ROA and a 25 percent payout ratio, its internal growth rate is......percent Storico Cleaning, Inc., had additions to retained earnings for the year just ended of $510,000. The firm paid out $130,000 in cash dividends, and it has ending total equity of $6.8 million. If Storico currently has 65

Reeds Ratios compared with industry standards

Calculate a few ratios and compare Reed's results with industry averages. What do these ratios indicate? Liquidity Ratios Industry Current ration 2.7 Quick ratio 1.6 Receivables turnover 7.7 Average collection period 47.4 Efficiency Ratios Total asset turnover 1.9 Inventory turnover 7.0 Pa

Verybest Hospital: Identify sources of funding and explain role of grant writing

Verybest Hospital is a sub-acute facility outside of Santa Rosa, New Mexico. The hospital operates an emergency room and has 75 beds that are generally at full capacity. Up until two years ago, the hospital was consistently profitable. Since then, profit margins have declined. Verybest's Board of Directors' future vision is

Company's largest division

You are concerned about the company's largest division--luxury--because cost has been increasing much faster than revenue for the last 3 years. However, the head of the division, who reports directly to the CEO, believes that increased cost is simply a result of internal charge backs for what he terms as "overhead." On many occa

Can the numbers lie? A management accountant discussion of fad-like innovations.

Question: "As managers we need to be wary of the fad-like innovations proposed by management accountants. We know if our company is in control if we earn at least the required rate of return on our investments. At the end of the day the numbers don't lie." Discuss the above statement and explain whether you think managemen

After Tax Cost of Debt in a Company

Company x's currently outstanding bonds have a 10% coupon and a 12% yield to maturity. company x believes it could issue new bonds at par that would provide a similar yield to maturity. if its marginal tax rate is 35%, what is company x's cost of preferred stock, rp?

Stock Analysis: Stock's Value Per Share

Company x is expected to generate $150 million in free cash flow next year, and FCF is expected to grow at a constant rate of 5% per year indefinitely. Company x also has no debt or preferred stock, and its WACC is 10%. If company x has 50 million shares of stock outstanding, what is the stock's value per share?

Conducting Finance Based Calculations

1. You are given the following information: Stockholders' equity $3.75 billion, price/ earnings ratio 3.5, common shares outstanding 50 million, and market/ book ratio 1.9. Calculate the price of a share of the company's common stock. 2. Raser Trucking has $12 billion in assets, and its tax rate is 40%. Its basic earning powe

Expected Portfolio Return for Musumeci Capital Management

A6. (Expected portfolio return) Musumeci Capital Management has invested its portfolio as shown here. What is Musumeci's expected portfolio return? ASSET PORTFOLIO WEIGHT EXPECTED RETURN Money market securities 10% 4% Corporate bonds 20

Expected return and standard deviation..

A3. (Expected return and standard deviation) An investment has four possible returns, each with its own probability given here. a. What is the expected return? b. What are the variance and the standard deviation of returns? Return −12% −2% 8% 30% Probability 0.20 0.25 0.3 0.20