after depositing 23795890.29 today into an account which offers 12% compounded annually, how many times will you be able to make annual withdrawals of 2675000.00 from the account .
if A, the first withdrawal is made today, immediately after the deposit?
B, the first withdrawal is made one year from today?
In: Finance
The top part of Ramakrishnan, Inc.’s 2018 and 2017 balance sheets is listed below (in millions of dollars).
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Current assets: | Current liabilities: | |||||||||||||||
| Cash and marketable securities | $ | 36 | $ | 27 | Accrued wages and taxes | $ | 33 | $ | 32 | |||||||
| Accounts receivable | 144 | 129 | Accounts payable | 88 | 77 | |||||||||||
| Inventory | 207 | 188 | Notes payable | 75 | 67 | |||||||||||
| Total | $ | 387 | $ | 344 | Total | $ | 196 | $ | 176 | |||||||
Calculate Ramakrishnan, Inc.’s current ratio for 2018 and 2017. (Round your answers to 2 decimal places.)
Calculate Ramakrishnan, Inc.’s quick ratio for 2018 and 2017. (Round your answers to 2 decimal places.)
Calculate Ramakrishnan, Inc.’s cash ratio for 2018 and 2017. (Round your answers to 2 decimal places.)
In: Finance
Using the data in the table to the right, calculate the return for investing in the stock from January 1 to December 31. Prices are after the dividend has been paid.
Date Price Dividend
Jan 1 $ 32.42 0
Feb 5 $ 32.17 $ 0.18
May 14 $ 30.73 $ 0.21
Aug 13 $ 32.83 $ 0.17
Nov 12 $ 38.79 $ 0.21
Dec 31 $ 42.84 0
In: Finance
CFO of LincolnHike Inc. has created the firm’s pro forma balance sheet for the next fiscal year. Sales are projected to grow by 20% to 295.5 million. Current assets, fixed assets, and short-term debt are 20 percent, 90 percent, and 15 percent of sales respectively. The company pays out 40 percent of its net income in dividends. The company currently has 32 million of long-term debt, and 16 million in common stock par value. The profit margin is 12%. (20 points)
Construct the current balance sheet for the firm using the projected sales figure.
Based on the sales growth forecast, how much does the company need in external funds for the upcoming fiscal year.
Construct the firm’s pro forma balance sheet for the next fiscal year and confirm the external funds needed that you calculated in part (b).
In: Finance
Super Sonics Entertainment is considering buying a machine that costs $435,000. The machine will be depreciated over five years by the straight-line method and will be worthless at that time. The company can lease the machine with year-end payments of $107,500. The company can issue bonds at a 9 percent interest rate. If the corporate tax rate is 35 percent, should the company buy or lease?
In: Finance
Allen Products LP, wants to do a scenario analysis for the coming year. The pessimistic prediction for sales is $ 900,000; the most likely amount of sales is $ 1,118,000; and the optimistic prediction is $ 1,288,000. Allen's income statement for the most recent year is shown here
Allen Products, Inc. Income Statement for
the Year Ended December 31, 2019
Sales revenue $937,400
Less: cost of good sold 436,828
Gross profits $500,572
Less: operating expenses 245,599
Operating profits $254,973
Less: interest expense 30,934
Net profit before taxes $224,039
Less: taxes (rate 25%) 56,010
Net profits after taxes $168,029
a. Use the percent-of-sales method, the income statement for December 31,2019, and the sales revenue estimates to develop pessimistic, most likely, and optimistic pro forma income statements for the coming year.
b. Explain how this method could result in overstatement of profits for the pessimistic case and understatement of profits for the most likely and optimistic cases.
c. Restate the pro forma income statements prepared in part a. to incorporate the following assumptions about the costs:
$252,497 of the cost of goods sold is fixed; the rest is variable. $193,516 of the operating expenses is fixed; the rest is variable. All the interest expense is fixed.
d. Compare your findings in part c. to your findings in part a. Do your observations confirm your explanation in part b?
Use the percent-of-sales method, the income statement for December 31, 2019, and the sales revenue estimates to develop pessimistic, most likely, and optimistic pro forma income statements for the coming year.
Complete the pro forma income statement for the year ending December 31, 2020 that is shown below (pessimistic scenario): (Round the percentage of sales to one decimal place and the pro forma income statement accounts to the nearest dollar.)
In: Finance
1. How do you think financial ratios differ across different industries? Compare two industries of your choice and select a few ratios and explain whether you think the ratios would be higher or lower for each of those industries and explain why. 2. What are some uses and limitations of financial ratios?
In: Finance
Explain the valuation of constant growtn and super normal growth of stock
In: Finance
List and explain steps involved in Capital Budgeting process.
In: Finance
|
Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt-equity ratio of .75. It’s considering building a new $47 million manufacturing facility. This new plant is expected to generate aftertax cash flows of $5.9 million in perpetuity. The company raises all equity from outside financing. There are three financing options: |
| 1. |
A new issue of common stock: The flotation costs of the new common stock would be 7.7 percent of the amount raised. The required return on the company’s new equity is 15 percent. |
| 2. |
A new issue of 20-year bonds: The flotation costs of the new bonds would be 3.3 percent of the proceeds. If the company issues these new bonds at an annual coupon rate of 5.6 percent, they will sell at par. |
| 3. |
Increased use of accounts payable financing: Because this financing is part of the company’s ongoing daily business, it has no flotation costs and the company assigns it a cost that is the same as the overall firm WACC. Management has a target ratio of accounts payable to long-term debt of .10. Assume there is no difference between the pretax and aftertax accounts payable costs. |
|
What is the NPV of the new plant? Assume that PC has a 23 percent tax rate. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar amount, e.g., 1,234,567.) |
|
In: Finance
Problem 1: Endowment losses. An American university endowment has experienced severe losses over the past year. The value of the university's endowment is $1B as of today (t=0). The interest rate (i.e. the expected annual investment return on the endowment) is r = 7%. (a) What amount can the university spend from the endowment at t=1 if it would like the amount spent to grow by g=4% per year from then on and has no other resources than the endowment? (b) The planned spending is, however, much larger. Back when things looked better, the university set up plans to spend $40M at t=1, with future spending growing by 4% per year. What is the PV of the planned spending? How large is the shortfall between the PV of the planned spending and the value of the endowment? (c) The university president approaches the university's business school for innovative ideas for how to cover the shortfall to avoid having to cut spending. The business school 1 suggests that the university sets up a campus in Abu Dhabi and negotiates the following deal: Abu Dhabi will pay the university $200M today (t=0) for the right to name the campus after the famed university for the next 12 years (i.e. up to t=12) and have classes taught by professors from the university. The new campus would be ready to open two years from now (t=2). At the end of each of the following 10 years (t=3, 4, 5, 6, ...,12) Abu Dhabi would pay the university $24M (Abu Dhabi would also cover the cost of hiring extra faculty and travel cost for US faculty to go teach on the new campus, so the $24M is the university's per year profit). The deal would end at t=12. What is the PV of the deal with Abu Dhabi? Is it sufficient to cover the shortfall? (d) The university president is impressed with the PV calculations but would also like to know exactly how the endowment will develop over the years, assuming the deal with Abu Dhabi is accepted. At t=0 after the initial payment from Abu Dhabi, the value of the endowment is $1.2B. What is the value of the endowment at t=1 (after interest is received and after paying for the university's t=1 spending)? What is the value of the endowment at t=12 (after interest is received, after the last payment from Abu Dhabi and after paying for the university's t=12 spending)? At what time will the endowment equal zero if the deal with Abu Dhabi is not accepted (please report the time at which the endowment rest goes negative)? Hint: Do not bother with Excel functions here, just calculate the value of the endowment in a spreadsheet year by year for the different cases.
In: Finance
In: Finance
Please discuss the 4 elements of the life cycle of a business venture and please provide an example of a company or business which you consider to be in each of the 4 elements and why you believe that each is in the respective life cycle. You may use multiple businesses.
In: Finance
You are buying a house and the mortgage company offers to let you pay a "point"
(1.0 %
of the total amount of the loan) to reduce your APR from
6.46 %
to
6.21 %
on your
$ 403 comma 000
,
30
-year
mortgage with monthly payments. If you plan to be in the house for at least five years, should you do it? (Note: Be careful not to round any intermediate steps less than six decimal places.)
The monthly mortgage payment at 6.46% APR is:
The monthly mortgage payment at 6.21% APR is:
The lower interest rate on the mortgage results in monthly savings of:
The PV of the monthly savings is:
The balance of the mortgage at the end of five years at 6.46% APR is:
The balance of the mortgage at the end of five years at 6.21% APR is:
The principle reduction due to the lower interest rate is:
The PV of the principle reduction is:
The net benefit or cost is:
The net benefit is (positive or negative); therefore, you (should or should not) pay the point.
In: Finance