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 reported an EBITDA of $7.5 Favorite and net pay of $1.8 favorite. It had $2.0 favorite of curiosity-behalf expenditure, and its oppidan tax trounce was 40%. What was its direct for derogation and amortization?

 

2-7 – (Corpotrounce Tax Liability)       

 

The Talley Corporation had a taxable pay of $365,000 from operations subjoined all playing requires but antecedently (1) curiosity-behalf direct of $50,000, (2) dividends vulgar of $15,000, (3) dividends remunerated of $25,000, and (4) pay taxes. What are the corporation’s ultimate and middle tax trounces on taxable pay?

 

Chapter 3 Problem 3-8, 3-10

 

3-8 – (Profit Lip and Obligation Ratio)

 

Assume you are consecrated the subjoined relationships for the Clayton Corporation: Sales/whole possessions   1.5 Produce on possessions (ROA)   3% Produce on equity (ROE)   5% Calculate Clayton’s improvement lip and obligation kinsman.

 

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

 

The Manor Corporation has $500,000 of obligation uncollected, and it pays an curiosity-behalf trounce of 10% every-year: Manor’s annual sales are $2 favorite, its middle tax trounce is 30%, and its net improvement lip on sales is 5%. If the corporation does not celebrebuke a TIE kinsman of at smallest 5 to 1, then its bank procure dross to furbish the advance and stagnation procure fruit. What is Manor’s TIE kinsman?

 

 

Chapter 12 Problem 12.1 12-4

 

12.1 – (AFN Equation)        

 

Baxter Video Product’s sales are anticipateed to extension by 20% from $5 favorite in 2010 to $6 favorite in 2011. Its possessions wholeed $3 favorite at the end of 2010. Baxter is already at unmeasured accommodation, so its possessions must accrue at the corresponding trounce as incomplete sales. At the end of 2010, ordinary liabilities were$1 favorite, consisting of $250,000 of statements payable, $500,000 of notes payable, and $250,000 of accruals. The subjoined-tax improvement lip is intercepted to be 5%, and the intercepted payout kinsman is 70%. Use the AFN equation to intercept Baxter’s joined funds needed for the forthcoming year.

 

12-4 – (Sales Increase)          

 

Bannister Legal Services generated $2,000,000 in sales during 2010, and its year-end whole possessions were $1,500,000. Also, at year-end 2010, ordinary liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of statements payable, and $100,000 of accruals. Looking onwards to 2011, the corporation deems that its possessions must extension at the corresponding trounce as sales, its self-originated liabilities procure extension at the corresponding trounce as sales, its improvement lip procure be 5%, and its payout kinsman procure be 60%. How bulky a sales extension can the corporation conclude delayout having to erect funds superficially; that is, what is its self-supporting accrueth trounce?

 

 

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

 

13-6:

 

Brooks Enterprises has never remunerated a dividend. Unobstructed excellent career is incomplete to be

$80,000 and $100,000 for the present 2 years, respectively; subjoined the coopereprimand year, FCF is anticipateed to accrue at a continuous trounce of 8%. The corporation’s weighted middle require of excellent is 12%.

a.      What is the marginal, or horizon, prize of operations? (Hint: Confront the prize of all unobstructed excellent careers balance Year 2 discounted end to Year 2.)

b.   Calculate the prize of Brooks’s operations.

 

13- 7

 

Dozier Corporation is a dissipated accrueing supplier of duty products. Analysts contrivance the subjoined unobstructed excellent careers (FCFs) during the present 3 years, subjoined which FCF is anticipateed to accrue at a continuous 7% trounce. Dozier’s weighted middle require of excellent is WACC = 13%.

                      

YEAR

                                                              1        2         3        

            Unobstructed Excellent Career ($millions)     -$20     $30      $40

a.)    What is Dozier’s marginal, or horizon, prize? (Hint: Confront the prize of all unobstructed excellent careers balance year 3 discounted end to Year 3.)

b.)    What is the ordinary prize of operations for Dozier?

c.)    Suppose Dozier has $10 favorite in trafficable securities, $100 favorite in obligation, and 10 favorite divides of store. What is the natural expense per divide?

 

 

13.8

 

The counteract quibble of Hutter Amalgamated is shown adown. If the 12/31/2010 prize of operations is $756 favorite, what is the 12/31/2010 natural traffic prize 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                   Whole ordinary liabilities  $221.0

           Whole ordinary possessions      $397.0                  Hanker order bonds               190.0

Net Introduce and equipment           279.0                        Preferred store                    76.0

                                                                        Common store

                                                                       (par plus PIC)                       100.0

                                                                       Retained gainings                89.0

                                                                          Vulgar equity                 $189.0

Total Assets                            $676.0             Whole liabilities                    $676.0

 

 

 

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

 

4-4:

 

If you ease currency today in an statement that pays 6.5% annual curiosity-behalf, how hanker procure it follow to embrace your currency?

 

4-5:

 

You feel $42,180.53 in a brokerage statement, and you guile to ease an joined $5,000 at the end of integral forthcoming year until your statement wholes $250,000. You anticipate to gain 12% every-year on the statement. How frequent years procure it follow to obtain your goal?

 

4-20:

 

a. Set up an amortization register for a $25,000 advance to be reremunerated in similar instalments at the end of each of the present 5 years. The curiosity-behalf trounce is 10%.

b. How bulky must each annual reimbursement be if the advance is for $50,000? Assume that the curiosity-behalf trounce recrement at 10% and that the advance is stagnant remunerated off balance 5 years.

c. How bulky must each reimbursement be if the advance is for $50,000, the curiosity-behalf trounce is 10%, and the advance is remunerated off in similar installments at the end of each of the present 10 years? This advance is for the corresponding totality as the advance in segregate b, but the reimbursements are expand out balance twice as frequent periods. Why are these reimbursements not half as bulky as the reimbursements on the advance in segregate b?

 

4-22:

 

Washington-Pacific invested $4 favorite to buy a deposit of fix and guilet some imconfirmed delayer trees. The trees can be harvested in 10 years, at which determination W-P guiles to retail the forest at an anticipateed expense of $8 favorite. What is W-P’s anticipateed trounce of produce?

 

 

 

 

Chapter 5 Problem 5-15, 5-21

5-15;

 

Absalom Motors’s 14% coupon trounce, semiannual reimbursement, $1,000 par prize bonds that confirmed in 30 years are allureable 5 years from now at a expense of $1,050. The bonds retail at a expense of $1,353.54, and the furnish deflexion is smooth. Assuming that curiosity-behalf trounces in the husbanding are anticipateed to survive at their ordinary smooth, what is the best deem of the professed curiosity-behalf trounce on new bonds?

 

5-21:

 

Suppose Hillard Manufacturing sold an children of bonds delay a 10-year manliness, a $1,000 par prize, a 10% coupon trounce, and semiannual curiosity-behalf reimbursements.

a.  Two years subjoined the bonds were childrend, the going trounce of curiosity-behalf on bonds such as these cut to 6%. At what expense would the bonds retail?

b.  Divine that, 2 years subjoined the moderebuke offering, the going curiosity-behalf trounce had erect to 12%. At what expense would the bonds retail?

c.  Suppose, as in segregate a, that curiosity-behalf trounces cut to 6%, 2 years subjoined the children determination. Divine excite that the curiosity-behalf trounce surviveed at 6% for the present 8 years. What would supervene to the expense of the bonds balance determination?

 

Chapter 6 Problem 6-4, 6-10

 

6-4:

 

A store's produces feel the subjoined distribution:

Demand for              Probability of      Rate of produce

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 store's anticipateed produce, measure discontinuance, and coefficient of exception.

 

 

6-10:

 

You feel a $2 favorite portfolio consisting of a $100,000 siege in each of 20different stores. The portfolio has a beta of 1.1. You are because retailing $100,000 expense of one store delay a beta of 0.9 and using the pay to dissipation another store delay a beta of 1.4. What procure the portfolio’s new beta be subjoined these transactions?

 

Chapter 7 Problem 7-4, 7-10

 

7-4:

 

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

 

7-10:

 

The beta coefficient for Store C is bC = 0.4 and that for Store D is bD = −0.5. (Stock D’s beta is privative, indicating that its trounce of produce rises whenever produces on most other stores descend. There are very few privative-beta stores, although assemblage production and gold mining stores are casually cited as examples.)

a.       If the risk-unobstructed trounce is 9% and the anticipateed trounce of produce on an middle store is 13%, what are the required trounces of produce on Stocks C and D?

 

b.      For Store C, divine the ordinary expense, P0, is $25; the present anticipateed dividend,D1, is $1.50; and the store’s anticipateed continuous accrueth trounce is 4%. Is the store in makeweight? Explain, and recount what would supervene if the store were not in makeweight.

 

 

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

 

8-4:

 

The ordinary expense of a store is $33, and the annual risk-unobstructed trounce is 6%. A allure non-interference delay a impel expense of $32 and delay 1 year until spiritlessness has a ordinary prize of $6.56. What is the prize of a put non-interference written on the store delay the corresponding exertion expense and spiritlessness determination as the allure non-interference?

 

8-5: 

 

Use the Black-Scholes Model to confront the expense for a allure non-interference delay the subjoined inputs: (1) ordinary store expense is $30, (2) impel expense is $35, (3) determination to spiritlessness is 4 months, (4) annualized risk-unobstructed trounce is 5%, and (5) estrangement of store produce is 0.25.

 

8-6:

 

The ordinary expense of a store is $20. In 1 year, the expense procure be either $26 or $16. The annual risk-unobstructed trounce is 5%. Confront the expense of a allure non-interference on the store that has a impel expense 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 children constant preferred store at a expense of $50 a divide delay an annual dividend of $4.50 a divide. Ignoring flotation requires, what is the corporation’s require of preferred store, rps?

 

9-8;

 

David Ortiz Motors has a target excellent organization of 40% obligation and 60% equity. The furnish to manliness on the corporation’s uncollected bonds is 9%, and the corporation’s tax trounce is 40%. Ortiz’s CFO has conducive the corporation’s WACC as 9.96%. What is the corporation’s require of equity excellent?

 

9-13:

 

Messman Manufacturing procure children vulgar store to the common for $30. The anticipateed dividend and the accrueth in dividends are $3.00 per divide and 5%, respectively. If the flotation require is 10% of the children’s unseemly pay, what is the require of superficial equity, re?

 

 

 

 

BA/350 Week 8 Final

BA350 Week 8 Final Exam

BA 350 Week 8 Final Exam Sum

 

 

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