Company has annual sales of $5 million, maintains a net after tax profit margin of 5% and has a sales to assets ratio of 4. What is the return on assets? If its debt/equity ratio is 0.5, what is the return on equity?
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a 10-year, 9 percent loan, with gross proceeds of $4,250,000. Kendrick's pretax cost of debt is 9 percent. Flotation costs are estimated to be 1.25 percent of gross proceeds and will be amortized using a straight-line schedule over the 10-year life of the loan. Kendrick is
4. Your firm has an average collection period of 48 days. Current practice is to factor all receivables immediately at a 2 percent discount. What is the effective cost of borrowing in this case? Assume that default is extremely unlikely. 5. Firm Z has net working capital of $900, current liabilities of $4,320, and inventory o
You believe that the required return on Dynegy stock is 16% and that the expected dividend growth rate is 12%, which is expected to remain constant for the foreseeable future. Is the stock currently overvalued, undervalued, or fairly priced? a. Overvalued b. Undervalued c. Fairly priced d. Cannot tell without more info
Your uncle has given you three alternatives for your inheritance. You can have $12,000 now; $2,000 per year for the next eight years; or $18,000 at the end of eight years. You assume your opportunity cost or discount rate is 12% annually. Which inheritance alternative would be best? Why? (see details in attached file) Con
True False 1. The discount rate is related to the capitalization rate by the relationship discount rate = capitalization rate + long term sustainable growth rate. T or F? 2. The concept of present value is the inverse of future value compounding. T or F? 3. The IRR is the discount rate that will cause the net present val
A) Firm A is an all equity financed firm. Its current equity price is £1.06 cum dividend. Also, its current earnings per share (eps) and current dividend payment are 20p and 12p, respectively. The market expects the ratio of eps to dividend to stay the same in the future. Firm A's rate of return on reinvested funds is equal to
I would like help on identify the relative advantages and disadvantages of each of the three primary cost allocation methods (Direct Allocation, Step-Down Allocation, and Reciprocal Allocation).
Company A has additions to retained earnings for the year end of $300,000. The firm paid out $220,000 in cash dividends, and it has ending total equity of $5 million. If Comapany A currently has 300,000 shares of common stock outstanding, what are earnings per share? Dividends per share? What is book value per share? If the stoc
Use the Internet or other resources to locate an article regarding ethics considerations in financial management. Prepare an analysis of your article. Discuss how ethics impacts the financial decision-making process and explain the ethics considerations involved in the financial decision making outlined in your article. Identify
1. Explain why financial ratios are more meaningful for financial analysis than individual entries? Financial ratios are calculated from one or more pieces of information from a company's financial statements. For example, the "gross margin" is the gross profit from operations divided by the total sales or revenues of a compa
Having heard about IPO underpricing, I put in an order to my broker for 1,000 shares of every IPO he can get for me. After 3 months, my investment record is as follows: IPO Shares allocated to me Price per share Initial Return A 500 $10
NPV/IRR. Growth Enterprises believes its latest project, which will cost $80,000 to install, will generate a perpetual growing stream of cash flows. Cash flow at the end of this year will be $5,000, and cash flows in future years are expected to grow indefinitely at an annual rate of 5 percent. a. If the discount rate for th
Suppose the expected returns and standard deviations of stocks A and B are E(R^A)=0.15, E(r^B)=0.25, s^a=0.1, and s^b=0.2, respectively. a.Calculate the expested return and standard deviation portfolio that is composed of 40 percent A and 60 percent B when the correlation between returns on A and B is 0.5. b. Calculate the
Employee Stock Options/Short Essay How do you understand this statement: "By granting employee stock options?" Can we say that employee stock options act like an investment? That is why, as any investment, it incurs a risk. Right?
1) Given the following component reliabilities of a simple system consisting of 3 components,Find the reliability of the system (an electrical Current will travel from pt A to B successfully C1 C2 C3 A---.996----.990----.860----B (Series system) 2) Given the parallel arrangement of the some compo
Describe the difference between Penetration and Prestige pricing. Give an example of each as well as the benefits and disadvantages of the two types of pricing.
Application: In a conventional employee stock-options plan, key employees are granted the right to buy a fixed number of shares for a predetermined period. The number of shares granted depends on the employee's level of responsibility. Usually, the number of shares granted under an employee stock-option plan is commensur
Financial management is based on three disciplines: financial accounting, managerial accounting, and managerial finance. Explain how the three disciplines fit into the overall financial management function. Using examples if possible, show how they are similar and how they differ? The key difference between financial and man
From your knowledge of the relationships among the various cost functions, complete the following table: Q TC FC VC ATC AFC AVC MC 0 125 ___ ___ ___ ___ ___ ___ 10 ___ ___ ___ ___ ___ ___ 5 20 ___ ___ ___ 10.50 ___ ___ ___ 30 ___ ___ 110 ___ ___ ___ ___ 40 255 ___ ___ ___ ___ ___ ___ 50 ___ ___ ___ ___ ___ 3 ___ 60
What type of inflation accounting do you favor under high inflationary periods? Do you think tax allocation can improve the prediction of future tax payments in the short run? What are the economic consequences of SFAS No.87?
The Tampa bay (Florida) Area Chamber of Commerce wanted to know whether the mean weekly salary of nurses was larger than that of school teachers. To investigate, they collected the following information on the amounts earned last week by a sample of school teachers and nurses.
The Tampa bay (Florida) Area Chamber of Commerce wanted to know whether the mean weekly salary of nurses was larger than that of school teachers. To investigate, they collected the following information on the amounts earned last week by a sample of school teachers and nurses. Pease show work with formulas in Excel Sprea
Bob Nale is the owner of Nale's Texaco GasTown. Bob would like to estimate the mean number of gallons of gasoline sold to his customers. From his records, he selects a random sample of 60 sales and finds the mean number of gallons sold is 8.60 and the standard deviation is 2.30 gallons.
Bob Nale is the owner of Nale's Texaco GasTown. Bob would like to estimate the mean number of gallons of gasoline sold to his customers. From his records, he selects a random sample of 60 sales and finds the mean number of gallons sold is 8.60 and the standard deviation is 2.30 gallons. PLease Show all work in excel
A normal distribution has a mean of 50 and a standard deviation of 4. Please use Excel Spreadsheets. Show all work and formulas a) Compute the probability of a value between 44.0 and 55.0 b) Compute the probability of a value greater than 55.0 c) Compute the probability of a value between 52.0 and 55.0
According to an IRS study, it takes an average of 330 minutes for taxpayers to prepare, copy, and electronically file a 1040 tax form. A consumer watchdog agency selects a random sample of 40 taxpayers and finds the standard deviation of the time to prepare, copy, and electronically file form 1040 is 80 minutes. a) What
Income = $500 PX = $20 PY = $5 Market rate of substitution between Goods X and Y would be ? ( 100, -4, -20, 25)
Why if farmers make zero economic profit, are they still able to be farmers?
A web-based company stocks and ships after-market auto parts. The company employs several workers to put together packages for shipment based on customers' online orders, and each worker assembles on average 4 packages per hour. Workers are unsupervised and earn $4.00 for each order they assemble. An inspector checks each ord
1. For each of the following events, consider how you might react. What things might you consume more or less of? Would you work more or less? Would you increase or decrease your saving? Are your responses consistent with the discussion of household behavior in this chapter? a. The price of unleaded gasoline rises to over $4.00
(See attached file for full problem description and complete chart). --- Johnson Manufacturing and Aaron Brothers Inc. are both involved in the production of brick for the homebuilding industry. Their financial information is as follows: Johnson Aaron Capital Structure Debt @ 12% $ 600