Dozier corporation is a fast growing supplier of office products.
BA 350 Week 8 Final Exam Sum ( 100% Correct Solution + Steps by Steps Calculation subjoined a while details *****)
2-4 – (Income Statement)
Pearson Brothers recently reported an EBITDA of $7.5 Pet and net pay of $1.8 pet. It had $2.0 pet of use expenditure, and its oppidan tax rebuke was 40%. What was its admonish for diminution and amortization?
2-7 – (Corporebuke Tax Liability)
The Talley Corporation had a taxable pay of $365,000 from operations subjoined all liberal requires but antecedently (1) use admonish of $50,000, (2) dividends dishonorable of $15,000, (3) dividends hired of $25,000, and (4) pay taxes. What are the union’s final and mediocre tax rebukes on taxable pay?
Chapter 3 Problem 3-8, 3-10
3-8 – (Profit Brink and Debit Ratio)
Assume you are given the subjoined relationships for the Clayton Corporation: Sales/sum possessions 1.5 Restore on possessions (ROA) 3% Restore on equity (ROE) 5% Calculate Clayton’s use brink and debit relative.
3-10 – (Times-interest-earned relative)
The Manor Corporation has $500,000 of debit uncollected, and it pays an use rebuke of 10% per-annum: Manor’s annual sales are $2 pet, its mediocre tax rebuke is 30%, and its net use brink on sales is 5%. If the union does not detain a TIE relative of at last 5 to 1, then its bank succeed trash to restore the hypothecation and bankruptcy succeed upshot. What is Manor’s TIE relative?
Chapter 12 Problem 12.1 12-4
12.1 – (AFN Equation)
Baxter Video Product’s sales are forecasted to enlargeth by 20% from $5 pet in 2010 to $6 pet in 2011. Its possessions sumed $3 pet at the end of 2010. Baxter is already at ample compatability, so its possessions must enabundant at the similar rebuke as incomplete sales. At the end of 2010, popular liabilities were$1 pet, consisting of $250,000 of representations payable, $500,000 of notes payable, and $250,000 of accruals. The subjoined-tax use brink is prepareed to be 5%, and the prepareed payout relative is 70%. Use the AFN equation to prepare Baxter’s affixed funds needed for the advenient year.
12-4 – (Sales Increase)
Bannister Legal Services generated $2,000,000 in sales during 2010, and its year-end sum possessions were $1,500,000. Also, at year-end 2010, popular liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of representations payable, and $100,000 of accruals. Looking forward to 2011, the union honors that its possessions must enlargeth at the similar rebuke as sales, its gratuitous liabilities succeed enlargeth at the similar rebuke as sales, its use brink succeed be 5%, and its payout relative succeed be 60%. How abundant a sales enlargeth can the union close subjoined a whileout having to elevate funds visiblely; that is, what is its self-supporting enlargeth rebuke?
Chapter 13 Problem 13-6, 13-7, 13-8
Brooks Enterprises has never hired a dividend. Exempt coin glide is incomplete to be
$80,000 and $100,000 for the direct 2 years, respectively; subjoined the avoid year, FCF is forecasted to enabundant at a trustworthy rebuke of 8%. The union’s weighted mediocre require of cardinal is 12%.
a. What is the ultimate, or horizon, reprimand of operations? (Hint: Ascertain the reprimand of all exempt coin glides past Year 2 discounted end to Year 2.)
b. Calculate the reprimand of Brooks’s operations.
Dozier Corporation is a rapid enlargeing supplier of duty products. Analysts contrivance the subjoined exempt coin glides (FCFs) during the direct 3 years, subjoined which FCF is forecasted to enabundant at a trustworthy 7% rebuke. Dozier’s weighted mediocre require of cardinal is WACC = 13%.
1 2 3
Exempt Coin Glide ($millions) -$20 $30 $40
a.) What is Dozier’s ultimate, or horizon, reprimand? (Hint: Ascertain the reprimand of all exempt coin glides past year 3 discounted end to Year 3.)
b.) What is the popular reprimand of operations for Dozier?
c.) Suppose Dozier has $10 pet in commercial securities, $100 pet in debit, and 10 pet portion-outs of supply. What is the genuine figure per portion-out?
The poise equivocation of Hutter Amalgamated is shown adown. If the 12/31/2010 reprimand of operations is $756 pet, what is the 12/31/2010 genuine communicate reprimand of equity?
Assets Liabilities and Equity
Cash $20.0 Accounts Payable $19.0
Marketable securities 77.0 Notes Payable 151.0
Accounts receivable 100.0 Accruals 51.0
Inventories 200.0 Sum popular liabilities $221.0
Sum popular possessions $397.0 Desire engagement bonds 190.0
Net Establish and equipment 279.0 Preferred supply 76.0
(par plus PIC) 100.0
Retained gainings 89.0
Dishonorable equity $189.0
Total Assets $676.0 Sum liabilities $676.0
Chapter 4 Problem 4-4, 4-5, 4-20, 4-22
If you pawn coin today in an representation that pays 6.5% annual use, how desire succeed it grasp to double your coin?
You entertain $42,180.53 in a brokerage representation, and you project to pawn an affixed $5,000 at the end of total advenient year until your representation sums $250,000. You forecast to gain 12% per-annum on the representation. How divers years succeed it grasp to attain your appearance?
a. Set up an amortization catalogue for a $25,000 hypothecation to be rehired in resembling instalments at the end of each of the direct 5 years. The use rebuke is 10%.
b. How abundant must each annual reimbursement be if the hypothecation is for $50,000? Assume that the use rebuke trash at 10% and that the hypothecation is stationary hired off balance 5 years.
c. How abundant must each reimbursement be if the hypothecation is for $50,000, the use rebuke is 10%, and the hypothecation is hired off in resembling installments at the end of each of the direct 10 years? This hypothecation is for the similar sum as the hypothecation in disunite b, but the reimbursements are unfurl out balance twice as divers periods. Why are these reimbursements not half as abundant as the reimbursements on the hypothecation in disunite b?
Washington-Pacific invested $4 pet to buy a repose of fix and projectt some adolescent droop trees. The trees can be harvested in 10 years, at which space W-P projects to hawk the jungle at an forecasted figure of $8 pet. What is W-P’s forecasted rebuke of restore?
Chapter 5 Problem 5-15, 5-21
Absalom Motors’s 14% coupon rebuke, semiannual reimbursement, $1,000 par reprimand bonds that grown in 30 years are oleable 5 years from now at a figure of $1,050. The bonds hawk at a figure of $1,353.54, and the concede deflexion is mawkish. Assuming that use rebukes in the arrangement are forecasted to continue at their popular roll, what is the best honor of the pretended use rebuke on new bonds?
Suppose Hillard Manufacturing sold an conclusion of bonds subjoined a while a 10-year manliness, a $1,000 par reprimand, a 10% coupon rebuke, and semiannual use reimbursements.
a. Two years subjoined the bonds were conclusiond, the going rebuke of use on bonds such as these prostscold to 6%. At what figure would the bonds hawk?
b. Fancy that, 2 years subjoined the modescold donation, the going use rebuke had erect to 12%. At what figure would the bonds hawk?
c. Suppose, as in disunite a, that use rebukes prostscold to 6%, 2 years subjoined the conclusion limit. Fancy further that the use rebuke continueed at 6% for the direct 8 years. What would bechance to the figure of the bonds balance space?
Chapter 6 Problem 6-4, 6-10
Demand for Probability of Rate of restore
Company's this Demand if this demand
Products Occuring Occurs
Weak 0.1 (50%)
Below Average 0.2 (5)
Average 0.4 16
Above mediocre 0.2 25
Strong 0.1 60
Calculate the supply's forecasted restore, gauge rupture, and coefficient of abnormity.
You entertain a $2 pet portfolio consisting of a $100,000 cannonade in each of 20different supplys. The portfolio has a beta of 1.1. You are regarding hawking $100,000 reprimand of one supply subjoined a while a beta of 0.9 and using the pay to forfeiture another supply subjoined a while a beta of 1.4. What succeed the portfolio’s new beta be subjoined these transactions?
Chapter 7 Problem 7-4, 7-10
Nick’s Enchiladas Incorporated has preferred supply uncollected that pays a dividend of $5 at the end of each year. The preferred hawks for $50 a portion-out. What is the supply’s required rebuke of restore?
The beta coefficient for Supply C is bC = 0.4 and that for Supply D is bD = −0.5. (Stock D’s beta is denying, indicating that its rebuke of restore rises whenever restores on most other supplys decline. There are very few denying-beta supplys, although assembly production and gold mining supplys are sometimes cited as examples.)
a. If the risk-exempt rebuke is 9% and the forecasted rebuke of restore on an mediocre supply is 13%, what are the required rebukes of restore on Stocks C and D?
b. For Supply C, fancy the popular figure, P0, is $25; the direct forecasted dividend,D1, is $1.50; and the supply’s forecasted trustworthy enlargeth rebuke is 4%. Is the supply in makeweight? Explain, and relate what would bechance if the supply were not in makeweight.
Chapter 8 Problem 8-4, 8-5, 8-6
The popular figure of a supply is $33, and the annual risk-exempt rebuke is 6%. A ole liberty subjoined a while a insert figure of $32 and subjoined a while 1 year until stolidity has a popular reprimand of $6.56. What is the reprimand of a put liberty written on the supply subjoined a while the similar training figure and stolidity limit as the ole liberty?
Use the Black-Scholes Model to ascertain the figure for a ole liberty subjoined a while the subjoined inputs: (1) popular supply figure is $30, (2) insert figure is $35, (3) space to stolidity is 4 months, (4) annualized risk-exempt rebuke is 5%, and (5) hostility of supply restore is 0.25.
The popular figure of a supply is $20. In 1 year, the figure succeed be either $26 or $16. The annual risk-exempt rebuke is 5%. Ascertain the figure of a ole liberty on the supply that has a insert figure of $21 and that expires in 1 year. (Hint: Use daily compounding.)
Chapter 9 Problem 9-3, 9-8, 9-13
Duggins Veterinary Supplies can conclusion enduring preferred supply at a figure of $50 a portion-out subjoined a while an annual dividend of $4.50 a portion-out. Ignoring flotation requires, what is the union’s require of preferred supply, rps?
David Ortiz Motors has a target cardinal make of 40% debit and 60% equity. The concede to manliness on the union’s uncollected bonds is 9%, and the union’s tax rebuke is 40%. Ortiz’s CFO has conducive the union’s WACC as 9.96%. What is the union’s require of equity cardinal?
Messman Manufacturing succeed conclusion dishonorable supply to the generally-known for $30. The forecasted dividend and the enlargeth in dividends are $3.00 per portion-out and 5%, respectively. If the flotation require is 10% of the conclusion’s impure pay, what is the require of visible equity, re?
BA/350 Week 8 Final
BA350 Week 8 Final Exam
BA 350 Week 8 Final Exam Sum
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