Use the financial statements below for problems 4 to 7
Balance Sheet
|
Assets |
2017 |
2018 |
|
|
Cash |
$14,000 |
$9,282 |
|
|
Short-term investments. |
48,600 |
18,000 |
|
|
Accounts receivable |
351,200 |
632,160 |
|
|
Inventories |
710,200 |
1,287,360 |
|
|
Total current assets |
$1,124,000 |
$1,946,802 |
|
|
Gross fixed assets |
491,000 |
1,202,950 |
|
|
Less: accumulated depreciation |
146,200 |
263,160 |
|
|
Net fixed assets |
$344,800 |
$939,790 |
|
|
Total assets |
$1,468,800 |
$2,886,592 |
|
|
Liabilities and equity |
2017 |
2018 |
|
|
Accounts payable |
$145,600 |
$324,000 |
|
|
Notes payable |
200,000 |
720,000 |
|
|
Accruals |
136,000 |
284,960 |
|
|
Total current liabilities |
$481,600 |
$1,328,960 |
|
|
Long-term debt |
323,432 |
1,000,000 |
|
|
Common stock (100,000 shares) |
460,000 |
460,000 |
|
|
Retained earnings |
203,768 |
97,632 |
|
|
Total equity |
$663,768 |
$557,632 |
|
|
Total liabilities and equity |
$1,468,800 |
$2,886,592 |
|
Income Statement |
|||
|
2017 |
2018 |
||
|
Sales |
$5,432,000 |
$6,834,400 |
|
|
Cost of goods sold |
2,864,000 |
4,200,000 |
|
|
Other expenses |
340,000 |
720,000 |
|
|
Depreciation |
18,900 |
116,960 |
|
|
Total operating costs |
$3,222,900 |
$5,036,960 |
|
|
EBIT |
$2,209,100 |
$1,797,440 |
|
|
Interest expense |
62,500 |
176,000 |
|
|
Pretax earnings |
$2,146,600 |
$1,621,440 |
|
|
Taxes (40%) |
858,640 |
648,576 |
|
|
Net income |
$1,287,960 |
$972,864 |
4. Construct a common size balance sheets for 2017 and 2018. Comment on any changes in the percentages of assets and liabilities.
5. Construct a common size income statement 2017 and 2018. Comment on any of the changes in the composition of the income statement.
In: Finance
In: Finance
As director of capital budgeting, you are reviewing three potential investment projects with the following cost and cash flow projections.
|
Cash Flow |
Project A |
Project B |
Project C |
|
Investment Cost |
($400,000) |
($375,000) |
($400,000) |
|
Year One Cash Flow |
$200,000 |
$75,000 |
$50,000 |
|
Year Two Cash Flow |
$50,000 |
$75,000 |
$120,000 |
|
Year Three Cash Flow |
$75,000 |
$85,000 |
$140,000 |
|
Year Four Cash Flow |
$50,000 |
$225,000 |
$125,000 |
|
Year Five Cash Flow |
$125,000 |
$60,000 |
$125,000 |
1.Calculate the Payback Period for each project.
2.If the discount rate for all three projects is 10.5%, calculate the Net Present Value for each project.
In: Finance
In: Finance
|
Dove, Inc., had additions to retained earnings for the year just ended of $636,000. The firm paid out $75,000 in cash dividends, and it has ending total equity of $7.31 million. |
| a. | If the company currently has 680,000 shares of common stock outstanding, what are earnings per share? Dividends per share? What is book value per share? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| b. |
If the stock currently sells for $30.10 per share, what is the market-to-book ratio? The price-earnings ratio? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| c. | If total sales were $10.61 million, what is the price-sales ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
In: Finance
please answer the question by explaining the step by step process used in the calculation. and please discuss the results. thank you:)
Please set-up solution model for the following capital budget
problem. Explain the approach you plan to take and why. Then,
please perform the calculations of your model and draw
conclusions.
Capital Budget Problem:
This case continues following the new project of the WePPROMOTE Company, that you and your partner own. WePROMOTE is in the promotional materials business. The project being considered is to manufacture a very unique case for smart phones. The case is very durable, attractive and fits virtually all models of smart phone. It will also have the logo of your client, a prominent, local company and is planned to be given away at public relations events by your client.
More details have emerged and your estimates are becoming more precise.
The following are the new values to the data that you have been estimating up to this point:
Calculate the net present value, and determine whether the project is worth doing from a financial perspective.
In: Finance
Cruz Corporation has $100 billion of debt outstanding. An otherwise identical firm has no debt and has a market value of $450 billion. Under the Miller model, what is Cruz’s value if the federal-plus-state corporate tax rate is 28%, the effective personal tax rate on stock is 17%, and the personal tax rate on debt is 29%? Enter your answer in billions. For example, an answer of $1.23 billion should be entered as 1.23, not 1,230,000,000. Round your answer to two decimal places.
In: Finance
IYou have a bike store. Your assets consist of $10,400 in inventory, $1,000 in equipment (phones, computers, etc.) and $600 cash. You are capitalized with $10,000 owners’ equity and $2,000 debt at 6%. Assume your only variable cost are the bikes you purchase from the manufacturer, $60/bike. Your fixed costs total $2500.
During the year you purchased 250 bikes and sold them at $80/bike. But you only paid for half the bikes you bought; the rest were sold to you “on credit.” Your profits tax rate is 20%. What is your ROE for the year?
You “took out” all the profits. Do the “money in – money out” to calculate the net change in cash for the year. What does your balance sheet look like at the end of the year?
IISuppose a business is capitalized with $500,000 in Owners’ Equity plus $400,000 in loans which carry a 5% interest rate. This year’s projected revenue is $1 million, with variable and fixed costs $600,000 and $100,000 (no depreciation), respectively. Profits taxes are 25%.
Calculate the coverage ratio for the year. Do it two ways: By moving down the waterfall, to see the money available to service debt. And by moving up from the bottom of the waterfall – that is, adding back taxes and interest to profits.
In: Finance
Consider the following income statement for the Heir Jordan Corporation: HEIR JORDAN CORPORATION Income Statement Sales $ 46,200 Costs 34,200 Taxable income $ 12,000 Taxes (30%) 3,600 Net income $ 8,400 Dividends $ 2,800 Addition to retained earnings 5,600 The balance sheet for the Heir Jordan Corporation follows. Based on this information and the income statement, supply the missing information using the percentage of sales approach. Assume that accounts payable vary with sales, whereas notes payable do not. (Leave no cells blank - be certain to enter "0" whenever the item is not a constant percentage of sales. Enter each answer as a percent rounded 2 decimal places, e.g., 32.16.) HEIR JORDAN CORPORATION Balance Sheet Percentage of Sales Percentage of Sales Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 2,450 Accounts payable $ 4,000 Accounts receivable 4,000 Notes payable 8,400 Inventory 9,000 Total $ 15,450 Total $ 12,400 Long-term debt $ 21,000 Owners’ equity Common stock and paid-in surplus $ 14,000
Retained earnings 5,650 Fixed assets Net plant and equipment $ 37,600 Total $ 19,650 Total assets $ 53,050 Total liabilities and owners’ equity $ 53,050
In: Finance
Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. Therefore, it is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 2 days. Average number of payments per day 870 Average value of payment $ 820 Variable lockbox fee (per transaction) $ .20 Annual interest rate on money market securities 4.6 % a. What is the NPV of the new lockbox system? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose in addition to the variable charge that there is an annual fixed charge of $4,000 to be paid at the end of each year. What is the NPV now? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) (please explain)
In: Finance
|
Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 2 days. Assume 365 days a year. |
| Average number of payments per day | 770 | ||
| Average value of payment | $ | 720 | |
| Variable lockbox fee (per transaction) | $ | .20 | |
| Annual interest rate on money market securities | 5.3 | % | |
| a. |
What is the NPV of the new lockbox system? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
|||||||||
| b. |
Suppose in addition to the variable charge that there is an annual fixed charge of $4,000 to be paid at the end of each year. What is the NPV now? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
|||||||||
|
||||||||||
In: Finance
Austin Miller wishes to have $200,000 in a retirement fund 25 years from now. He can create the retirement fund by making a single lump-sum deposit today. Use next table to solve the following problems.
$
$
$
$
$
In: Finance
You are interested in buying a brand new Jalopy and expect the purchase price to be $19,000. The car dealership can offer financing at a 6% interest rate over 6 years. If you put $1,000 down towards the purchase and accept the financing terms,what will your monthly payment for the loan be?
Please Show the excel formula
In: Finance
a: Compute the future value of $1,900 continuously compounded for 8 years at an APR of 10 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b: Compute the future value of $1,900 continuously compounded for 5 years at an APR of 9 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c: Compute the future value of $1,900 continuously compounded for 10 years at an APR of 5 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
d: Compute the future value of $1,900 continuously compounded for 8 years at an APR of 7 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
In: Finance
In April 2016 a pound of apples cost $1.54, while oranges cost $1.18. Three years earlier the price of apples was only $1.33 a pound and that of oranges was $1.04 a pound. a. What was the annual compound rate of growth in the price of apples? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
a. What was the annual compound rate of growth in the price of apples? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Compound annual growth rate___________% per year
b. What was the annual compound rate of growth in the price of oranges? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Compound annual growth rate___________% per year
c. If the same rates of growth persist in the future, what will be the price of apples in 2030? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Price____________
d. What about the price of oranges? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Price __________
In: Finance