We are evaluating a project that costs $856,800, has a nine-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 90,000 units per year. Price per unit is $56, variable cost per unit is $40, and fixed costs are $770,000 per year. The tax rate is 25 percent, and we require a return of 12 percent on this project
. 2. What is the degree of operating leverage at the accounting break-even point? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
b-1. Calculate the base-case cash flow and NPV. (Do not round intermediate calculations. Round your cash flow answer to the nearest whole number, e.g., 32. Round your NPV answer to 2 decimal places, e.g., 32.16.)
b-2. What is the sensitivity of NPV to changes in the quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c. What is the sensitivity of OCF to changes in the variable cost figure? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. )
In: Finance
1) Dob Co has a Beta of 1.32 at a time when the expected market return is 8.7% and the risk free rate is 2.2%. What is Dob Co's expected return?
(Enter your response as a percentage with two decimal places, ex: 12.34).
2) If the market risk premium is 11%, the risk-free rate is 3.8%, and Nate Corp has a beta of 2.03, what is the required return for Nate Corp?
(Enter your response as a percentage with two decimal places, ex: 12.34)
3) What is the price of bond paying a coupon rate of 4.5% that has a par value of $1000, and has 7 years to maturity with a Yield to Maturity of 2.3%?
(Enter the absolute value of your response to two decimal places, ex: 123.45 NOT -123.45)
4) What is the yield to maturity for a bond with 12 years to maturity, a coupon rate of 4.5% making payments semi-annually, a face value of $1000 if it currently sells for $957?
(Enter your response as a percentage with two decimal places, ex: 12.34)
Please get me the answer for all the 4 question please.. please please
In: Finance
Q.333 The Endot Manufacturing Company, a manufacturer and wholesaler of widgets, has provided you with the following financial information. The Company has asked you to make an analysis of the firm’s financial condition. In addition to the information given below, you have been informed that the firm has no lease payments but has principal payments of $2 million per year on its Long-term debt. Endot uses a 365-day year in preparing its ratios. Endot has 5,000,000 common shares outstanding. Endot’s financial statements are as follows:
Balance Sheet as of December 31, 2014 (Millions of Dollars)
Cash
45
Accounts Payable
45
Marketable Securities
33
Notes Payable
45
Accounts Receivable
66
Other Current Liabilities
21
Inventory
159
Total Current Liabilities
111
Total Current Assets
303
Total Long Term Liabilities
24
Total Liabilities
135
Gross Fixed Assets
225
Less Depreciation
78
Common Stock
114
Net Fixed Assets
147
Retained Earnings
201
Total Shareholder Equity
315
Total Assets
450
Total Liabilities and Equity
450
Statement of Income and Expenses for Year Ended December 31, 2014 (Millions of Dollars)
Net Sales
795.0
Costs of Goods Sold
660.0
Gross Profit
135.0
Fixed Expense
73.5
EBITDA
61.5
Depreciation Expense
12.0
EBIT
49.5
Interest Expense
4.5
EBT
45.0
Taxes (40%)
18.0
Net Income
27.0
What was Endot's Quick (Acid Test) Ratio?
a. 0.37
b. 1.30
c. 1.73
d. 2.00
e. 2.73
Q 388 The Endot Manufacturing Company, a manufacturer and wholesaler of widgets, has provided you with the following financial information. The Company has asked you to make an analysis of the firm’s financial condition. In addition to the information given below, you have been informed that the firm has no lease payments but has principal payments of $2 million per year on its Long-term debt. Endot uses a 365-day year in preparing its ratios. Endot has 5,000,000 common shares outstanding. Endot’s financial statements are as follows:
Balance Sheet as of December 31, 2014 (Millions of Dollars)
Cash
45
Accounts Payable
45
Marketable Securities
33
Notes Payable
45
Accounts Receivable
66
Other Current Liabilities
21
Inventory
159
Total Current Liabilities
111
Total Current Assets
303
Total Long Term Liabilities
24
Total Liabilities
135
Gross Fixed Assets
225
Less Depreciation
78
Common Stock
114
Net Fixed Assets
147
Retained Earnings
201
Total Shareholder Equity
315
Total Assets
450
Total Liabilities and Equity
450
Statement of Income and Expenses for Year Ended December 31, 2014 (Millions of Dollars)
Net Sales
795.0
Costs of Goods Sold
660.0
Gross Profit
135.0
Fixed Expense
73.5
EBITDA
61.5
Depreciation Expense
12.0
EBIT
49.5
Interest Expense
4.5
EBT
45.0
Taxes (40%)
18.0
Net Income
27.0
If Endot's common stock is currently selling for $104.49 per share, what is Endot's Price to Earnings Ratio?
a.
580.5X
b.
104.49X
c.
41.8X
d.
19.35X
e.
It is impossible to determine the P/E ratio from the information given
In: Finance
Pick any real world company that you've worked for or are interested in and write about what kinds of capital they have raised or are raising. (200words)
In: Finance
|
Year 1 |
Year 2 |
||
|
Revenues |
126.1126.1 |
155.6155.6 |
|
|
COGS and Operating Expenses (other than depreciation) |
36.236.2 |
57.157.1 |
|
|
Depreciation |
28.128.1 |
39.139.1 |
|
|
Increase in Net Working Capital |
2.32.3 |
8.68.6 |
|
|
Capital Expenditures |
28.528.5 |
37.637.6 |
|
|
Marginal Corporate Tax Rate |
3535% |
3535% |
a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.)
b. What are the free cash flows for this project for years 1 and 2?
a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.)
Calculate the incremental earnings of this project below: (Round to one decimal place.)
|
Incremental Earnings Forecast (millions) |
Year 1 |
|
|
Sales |
$ |
|
|
Operating Expenses |
$ |
|
|
Depreciation |
$ |
|
|
EBIT |
$ |
|
|
Income tax at 35% |
$ |
|
|
Unlevered Net Income |
$ |
In: Finance
|
Weston Industries has a debt–equity ratio of 1.1. Its WACC is 8.2 percent, and its pretax cost of debt is 6.4 percent. The corporate tax rate is 35 percent. |
| a. |
What is the company’s cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Cost of equity capital | % |
| b. |
What is the company’s unlevered cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Unlevered cost of equity capital | % |
| c-1. |
What would the cost of equity be if the debt–equity ratio were 2? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Cost of equity | % |
| c-2. |
What would the cost of equity be if the debt–equity ratio were 1.0? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Cost of equity | % |
| c-3. |
What would the cost of equity be if the debt–equity ratio were zero? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Cost of equity | % |
In: Finance
You are constructing a portfolio for an investor with a risk aversion of A=10. You can invest their money in a riskless asset with a return of 0.015, or a risky asset with an expected return of 0.097 and a standard deviation of 0.06. What proportion of their assets should you put in the risky asset?
In: Finance
A pension fund manager is considering three mutual funds. The
first is a stock fund, the second is a long-term government and
corporate bond fund, and the third is a T-bill money market fund
that yields a sure rate of 4.5%. The probability distributions of
the risky funds are:
| Expected Return | Standard Deviation | |
| Stock fund (S) | 15% | 35% |
| Bond fund (B) | 6% | 29% |
The correlation between the fund returns is 0.0517.
What is the Sharpe ratio of the best feasible CAL? (Do
not round intermediate calculations. Round your answer to 4 decimal
places.)
SHARPE RATIO:
In: Finance
A pension fund manager is considering three mutual funds. The
first is a stock fund, the second is a long-term government and
corporate bond fund, and the third is a T-bill money market fund
that yields a sure rate of 3.0%. The probability distributions of
the risky funds are:
| Expected Return | Standard Deviation | |||
| Stock fund (S) | 12 | % | 41 | % |
| Bond fund (B) | 5 | % | 30 | % |
The correlation between the fund returns is .0667.
Suppose now that your portfolio must yield an expected return of 9%
and be efficient, that is, on the best feasible CAL.
a. What is the standard deviation of your
portfolio? (Do not round intermediate calculations. Round
your answer to 2 decimal places.)
b-1. What is the proportion invested in the T-bill fund? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b-2. What is the proportion invested in each of
the two risky funds? (Do not round intermediate
calculations. Round your answers to 2 decimal places.)
In: Finance
According to the buyer resolution theory, a purchase is made only after the client has made five buying decisions.
What are they and how does this help the salesperson to assist the client?
Successful salespeople have also adopted a product strategy that involves the discovery of buying motives that influence the purchase decision. Distinguish between the emotional and rational buying motives of a client.
Please discuss these items in detail
In: Finance
The market price of a stock is $24.66 and it just paid a dividend of $1.82. The required rate of return is 11.24%. What is the expected growth rate of the dividend?
In: Finance
You own $3,300 worth of stock in a company that is expected to pay dividend of $12 per share in 1 year and a liquidating dividend of $45 per share in 2 years. The required return on stock is 20%. Your preference is to receive equal dividends in each of the next 2 years. Show how you would accomplish this by creating homemade dividends.
In: Finance
Calculation of individual costs and WACC Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following weights: 30% long-term debt, 10% preferred stock, and 60% common stock equity (retained earnings, new common stock, or both). The firm's tax rate is 26%.
Debt The firm can sell for $1030 a 20-year, $1,000 -par-value bond paying annual interest at a 7.00% coupon rate. A flotation cost of 2.52% of the par value is required.
Preferred stock 10.00% (annual dividend) preferred stock having a par value of $100 can be sold for $96 . An additional fee of $2 per share must be paid to the underwriters.
Common stock The firm's common stock is currently selling for $90 er share. The stock has paid a dividend that has gradually increased for many years, rising from $2.25 ten years ago to the $3.67 dividend payment D0, that the company just recently made. If the company wants to issue new new common stock, it will sell them $2.00 below the current market price to attract investors, and the company will pay $3.50 per share in flotation costs.
a. Calculate the after-tax cost of debt.
b. Calculate the cost of preferred stock.
c. Calculate the cost of common stock (both retained earnings and new common stock).
d. Calculate the WACC for Dillon Labs.
In: Finance
In: Finance
Determine the before and after-tax return from each of the following trades. Assume a
marginal tax rate of 40%.
a. You purchase a bond today that has a quoted price of 94.455/94.695, a fixed coupon
rate of 6% (paid quarterly) which last paid a coupon 40 days prior. You sell the
bond in exactly one year for a quoted price of 97.565/97.950.
b. You purchased a newly issued bond one year ago. At the time of issuance, the bond
was sold by the company for par, had a coupon rate of 5.5% (paid semi-annually)
and 10 years to maturity. The YTM on the bond today is 6.25% and you sell it.
In: Finance