Dozier corporation is a fast growing supplier of office products.


BA 350 Week 8 Final Exam Sum ( 100% Correct Solution + Steps by Steps Calculation delay details *****)

 

2-4 – (Income Statement)

 

Pearson Brothers of-late reputed an EBITDA of $7.5 Pet and net allowance of $1.8 pet. It had $2.0 pet of cause outlay, and its corposcold tax scold was 40%. What was its carry for diminution and amortization?

 

2-7 – (Corposcold Tax Liability)       

 

The Talley Corporation had a taxable allowance of $365,000 from operations subjoined all at-liberty requires but anteriorly (1) cause carry of $50,000, (2) dividends ordinary of $15,000, (3) dividends compensated of $25,000, and (4) allowance taxes. What are the corporation’s ultimate and middle tax scolds on taxable allowance?

 

Chapter 3 Problem 3-8, 3-10

 

3-8 – (Profit Brink and Liability Ratio)

 

Assume you are consecrated the subjoined relationships for the Clayton Corporation: Sales/completion property   1.5 Recompense on property (ROA)   3% Recompense on equity (ROE)   5% Calculate Clayton’s gain brink and liability association.

 

3-10 – (Times-interest-earned association)

 

The Manor Corporation has $500,000 of liability uncollected, and it pays an cause scold of 10% annually: Manor’s annual sales are $2 pet, its middle tax scold is 30%, and its net gain brink on sales is 5%. If the corporation does not suppress a TIE association of at last 5 to 1, then its bank obtain dross to reiteobjurgate the advance and failure obtain upshot. What is Manor’s TIE association?

 

 

Chapter 12 Problem 12.1 12-4

 

12.1 – (AFN Equation)        

 

Baxter Video Product’s sales are forecasted to extension by 20% from $5 pet in 2010 to $6 pet in 2011. Its property completioned $3 pet at the end of 2010. Baxter is already at liberal compressiveness, so its property must develop at the similar scold as contemplated sales. At the end of 2010, general liabilities were$1 pet, consisting of $250,000 of totalitys payable, $500,000 of notes payable, and $250,000 of accruals. The subjoined-tax gain brink is meeted to be 5%, and the meeted payout association is 70%. Use the AFN equation to meet Baxter’s affixed funds needed for the coming year.

 

12-4 – (Sales Increase)          

 

Bannister Legal Services generated $2,000,000 in sales during 2010, and its year-end completion property were $1,500,000. Also, at year-end 2010, general liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of totalitys payable, and $100,000 of accruals. Looking onwards to 2011, the corporation believes that its property must extension at the similar scold as sales, its procureing liabilities obtain extension at the similar scold as sales, its gain brink obtain be 5%, and its payout association obtain be 60%. How big a sales extension can the corporation conclude delayout having to lift funds apparently; that is, what is its self-supporting developth scold?

 

 

Chapter 13 Problem 13-6, 13-7, 13-8

 

13-6:

 

Brooks Enterprises has never compensated a dividend. At-liberty coin stream is contemplated to be

$80,000 and $100,000 for the contiguous 2 years, respectively; subjoined the prevent year, FCF is forecasted to develop at a immutable scold of 8%. The corporation’s weighted middle require of chief is 12%.

a.      What is the ultimate, or horizon, appreciate of operations? (Hint: Meet the appreciate of all at-liberty coin streams more Year 2 discounted end to Year 2.)

b.   Calculate the appreciate of Brooks’s operations.

 

13- 7

 

Dozier Corporation is a steadsteadfast developing supplier of employment products. Analysts purpose the subjoined at-liberty coin streams (FCFs) during the contiguous 3 years, subjoined which FCF is forecasted to develop at a immutable 7% scold. Dozier’s weighted middle require of chief is WACC = 13%.

                      

YEAR

                                                              1        2         3        

            At-liberty Coin Stream ($millions)     -$20     $30      $40

a.)    What is Dozier’s ultimate, or horizon, appreciate? (Hint: Meet the appreciate of all at-liberty coin streams more year 3 discounted end to Year 3.)

b.)    What is the general appreciate of operations for Dozier?

c.)    Suppose Dozier has $10 pet in commercial securities, $100 pet in liability, and 10 pet divides of accumulation. What is the natural absorb per divide?

 

 

13.8

 

The believe shuffle of Hutter Amalgamated is shown under. If the 12/31/2010 appreciate of operations is $756 pet, what is the 12/31/2010 natural chaffer appreciate 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                   Completion general liabilities  $221.0

           Completion general property      $397.0                  Hanker message bonds               190.0

Net Introduce and equipment           279.0                        Preferred accumulation                    76.0

                                                                        Common accumulation

                                                                       (par plus PIC)                       100.0

                                                                       Retained gainings                89.0

                                                                          Low equity                 $189.0

Total Assets                            $676.0             Completion liabilities                    $676.0

 

 

 

Chapter 4 Problem 4-4, 4-5, 4-20, 4-22

 

4-4:

 

If you bond specie today in an totality that pays 6.5% annual cause, how hanker obtain it seize to enfold your specie?

 

4-5:

 

You accept $42,180.53 in a brokerage totality, and you project to bond an affixed $5,000 at the end of whole coming year until your totality completions $250,000. You forecast to gain 12% annually on the totality. How manifold years obtain it seize to aim your intent?

 

4-20:

 

a. Set up an amortization list for a $25,000 advance to be recompensated in resembling instalments at the end of each of the contiguous 5 years. The cause scold is 10%.

b. How big must each annual liquidation be if the advance is for $50,000? Assume that the cause scold trash at 10% and that the advance is quiet compensated off balance 5 years.

c. How big must each liquidation be if the advance is for $50,000, the cause scold is 10%, and the advance is compensated off in resembling installments at the end of each of the contiguous 10 years? This advance is for the similar aggregate as the advance in bisect b, but the liquidations are publish out balance twice as manifold periods. Why are these liquidations not half as big as the liquidations on the advance in bisect b?

 

4-22:

 

Washington-Pacific invested $4 pet to buy a deposit of fix and projectt some pubescent fade trees. The trees can be harvested in 10 years, at which opportunity W-P projects to retail the grove at an forecasted absorb of $8 pet. What is W-P’s forecasted scold of recompense?

 

 

 

 

Chapter 5 Problem 5-15, 5-21

5-15;

 

Absalom Motors’s 14% coupon scold, semiannual liquidation, $1,000 par appreciate bonds that grown in 30 years are wheedleable 5 years from now at a absorb of $1,050. The bonds retail at a absorb of $1,353.54, and the agree incurvation is insipid. Assuming that cause scolds in the distribution are forecasted to wait at their general equalize, what is the best believe of the professed cause scold on new bonds?

 

5-21:

 

Suppose Hillard Manufacturing sold an posterity of bonds delay a 10-year manliness, a $1,000 par appreciate, a 10% coupon scold, and semiannual cause liquidations.

a.  Two years subjoined the bonds were posterityd, the going scold of cause on bonds such as these subvert to 6%. At what absorb would the bonds retail?

b.  Divine that, 2 years subjoined the modeblame subscription, the going cause scold had vertical to 12%. At what absorb would the bonds retail?

c.  Suppose, as in bisect a, that cause scolds subvert to 6%, 2 years subjoined the posterity duration. Divine raise that the cause scold waited at 6% for the contiguous 8 years. What would betide to the absorb of the bonds balance opportunity?

 

Chapter 6 Problem 6-4, 6-10

 

6-4:

 

A accumulation's recompenses accept the subjoined distribution:

Demand for              Probability of      Rate of recompense

Company's               this Demand        if this demand

Products                   Occuring             Occurs

Weak                       0.1                 (50%)

Below Average       0.2                  (5)

Average                  0.4                  16

Above middle       0.2                  25

Strong                     0.1                  60

                                1.0

Calculate the accumulation's forecasted recompense, exemplar deviation, and coefficient of discrepancy.

 

 

6-10:

 

You accept a $2 pet portfolio consisting of a $100,000 bombardment in each of 20different accumulations. The portfolio has a beta of 1.1. You are because retailing $100,000 appraise of one accumulation delay a beta of 0.9 and using the allowance to forfeiture another accumulation delay a beta of 1.4. What obtain the portfolio’s new beta be subjoined these transactions?

 

Chapter 7 Problem 7-4, 7-10

 

7-4:

 

Nick’s Enchiladas Incorporated has preferred accumulation uncollected that pays a dividend of $5 at the end of each year. The preferred retails for $50 a divide. What is the accumulation’s required scold of recompense?

 

7-10:

 

The beta coefficient for Accumulation C is bC = 0.4 and that for Accumulation D is bD = −0.5. (Stock D’s beta is denying, indicating that its scold of recompense rises whenever recompenses on most other accumulations gravitate. There are very few denying-beta accumulations, although assembly drill and gold mining accumulations are casually cited as examples.)

a.       If the risk-at-liberty scold is 9% and the forecasted scold of recompense on an middle accumulation is 13%, what are the required scolds of recompense on Stocks C and D?

 

b.      For Accumulation C, divine the general absorb, P0, is $25; the contiguous forecasted dividend,D1, is $1.50; and the accumulation’s forecasted immutable developth scold is 4%. Is the accumulation in makeweight? Explain, and explain what would betide if the accumulation were not in makeweight.

 

 

Chapter 8 Problem 8-4, 8-5, 8-6

 

8-4:

 

The general absorb of a accumulation is $33, and the annual risk-at-liberty scold is 6%. A wheedle liberty delay a surprise absorb of $32 and delay 1 year until deadness has a general appreciate of $6.56. What is the appreciate of a put liberty written on the accumulation delay the similar drill absorb and deadness duration as the wheedle liberty?

 

8-5: 

 

Use the Black-Scholes Model to meet the absorb for a wheedle liberty delay the subjoined inputs: (1) general accumulation absorb is $30, (2) surprise absorb is $35, (3) opportunity to deadness is 4 months, (4) annualized risk-at-liberty scold is 5%, and (5) hostility of accumulation recompense is 0.25.

 

8-6:

 

The general absorb of a accumulation is $20. In 1 year, the absorb obtain be either $26 or $16. The annual risk-at-liberty scold is 5%. Meet the absorb of a wheedle liberty on the accumulation that has a surprise absorb of $21 and that expires in 1 year. (Hint: Use daily compounding.)

 

Chapter 9 Problem 9-3, 9-8, 9-13

 

9-3:

 

Duggins Veterinary Supplies can posterity uninterrupted preferred accumulation at a absorb of $50 a divide delay an annual dividend of $4.50 a divide. Ignoring flotation requires, what is the corporation’s require of preferred accumulation, rps?

 

9-8;

 

David Ortiz Motors has a target chief construction of 40% liability and 60% equity. The agree to manliness on the corporation’s uncollected bonds is 9%, and the corporation’s tax scold is 40%. Ortiz’s CFO has fitted the corporation’s WACC as 9.96%. What is the corporation’s require of equity chief?

 

9-13:

 

Messman Manufacturing obtain posterity low accumulation to the open for $30. The forecasted dividend and the developth in dividends are $3.00 per divide and 5%, respectively. If the flotation require is 10% of the posterity’s bloated allowance, what is the require of apparent equity, re?

 

 

 

 

BA/350 Week 8 Final

BA350 Week 8 Final Exam

BA 350 Week 8 Final Exam Sum

 

 

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