Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 23 percent for the next 3 years, with the growth rate falling off to a constant 5 percent thereafter.

If the required return is 9 percent and the company just paid a $3.60 dividend. what is the current share price?

Part 4: UNDERSTANDING THE FINANCIAL STATEMENTS OF BUSINESS CUSTOMERS

You are provided with the following financial ratios of Rob Unlimited:

Return on assets:   Income before interest and tax/total assets x 100/1 = 61.666666%

Gross profit ratio:   Gross profit/Principal revenue x 100/1    = 30%

Operating margin    Operating income/principal revenue x 100/1       = 12.333333%

Net income margin: Net income before taxation/ Principal revenue x 100/1     = 10.666667%

Turnover ratio of fixed assets: Principal revenue / fixed assets      = 15 times          

Turnover ratio of current assets: principal revenue/ current assets      = 7.5 times

Current ratio: current assets/current liabilities   = 3:1

Asked: Use the information from the ratios to complete the statement of financial position and statement of comprehensive income for Rob Unlimited.

Statement of financial position as at 28 February 20xx                                                        

Shareholder Interest

Ordinary share capital                  $500,000

General reserves                          $_______

Non-current liabilities

Long term loan                             $600,000

Current liabilities

Trade creditors                             $200,000

Other Short term loans                  $_______

Total                                               $______

Non-current assets

Vehicles and equipment                  $______

Current assets

cash                                             $150000

Debtors                                         $_______

stock                                             $600000

Total                                              $________

Statement of comprehensive income for the year ended 28 February 20xx

Principle revenue              $9000000

Inventory beginning of year                  $900000

Plus purchase                                        $______

Less Inventory end of year   $600000

Cost of goods sold $6300000

Gross income $_______

Operating expenses    $_______

Depreciation $90000

Net income before interest and taxation $1110000

Interest payments $_______

Net income before taxation    $_______

u are required to produce a table showing bond valuesand the impact of changes in interest rate over the lifeof a bond and a diagram demonstrating the link between the changes in values(due to changes in interest rate) and time to maturity. The bond has a face value of $1,000, pays a coupon rate of 7% p.a paid annually and it is issued with 10 years to maturity. All calculations should be executed in excel.Your table should show the following:The value of the bond, year by year(from dateof issue until its maturity), assuming all other things remain the same. The value of the bond, year by year, from date of issue until its maturity, assuming that market interest rate increasesby 1.5%(hence yield to maturity increases by 1.5%), all other things remain the same.The potential%change in value, year by year, from the date of issue until its maturity.The % change in value demonstratesthe impact of the increasein interest rate on the bond value (or interest rate risk), for each year of maturity.From your table produce a diagram that demonstrates the relationship between% change in value and time to maturity. The initial market interest rate (yield to maturity) to be used is 12%. show your formulas used

CAP TABLES ASSIGNMENT:

Exhibits 2 and 3 are sensitivity analysis (i. higher initial investment, ii. longer time to exit)

“X” means some calculation or a number needs to be filled in that cell. Absence of “X” means no calculation/number is expected. Submit the above exhibits the way they are presented here showing all the calculations in appropriate column(s)

Bethesda Mining Company reports the following balance sheet information for 2018 and 2019. BETHESDA MINING COMPANY Balance Sheets as of December 31, 2018 and 2019 2018 2019 2018 2019 Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 63,014 $ 79,447 Accounts payable $ 187,422 $ 195,111 Accounts receivable 64,781 85,139 Notes payable 82,520 134,088 Inventory 117,852 182,862 Total $ 269,942 $ 329,199 Total $ 245,647 $ 347,448 Long-term debt $ 232,000 $ 168,750 Owners’ equity Common stock and paid-in surplus $ 223,000 $ 223,000 Accumulated retained earnings 179,352 216,427 Fixed assets Net plant and equipment $ 658,647 $ 589,928 Total $ 402,352 $ 439,427 Total assets $ 904,294 $ 937,376 Total liabilities and owners’ equity $ 904,294 $ 937,376 Calculate the following financial ratios for each year: a. Current ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Quick ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. Cash ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) d. Debt-equity ratio and equity multiplier. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) e. Total debt ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

What risks are associated with fixed interest securities, such as bonds? How do these risks differ with those associated with money market securities?

As a financial advisor you have a high wealth client who is thinking about making some life changes. Stanley is 50 (today is his birthday), and he want to retire at 65. He wants to put away the same amount of money every birthday (starting today) up to and including his 65th birthday. He then wants to be able to withdraw $100,000 every birthday (starting with his 66th) up to and including his 85th birthday.   He believes he can earn an average annual return of 9.5% by investing in higher risk investments over the next ten years, but will put it in a lower risk portfolio on retirement – which he thinks will earn 8%

A. Ignoring taxes, how much does Stanley need to save each year to achieve this objective?

B. As Stanley’s advisor you note that Japan has amongst the highest life expectancy in the world, and the average expectancy for males is 80.5 years?  You suggest to Stanley that he will spend less as he gets older is unlikely to need $100,000 a year for living from the age of 75 on – and advise that it would be more like $60,000. In this case what would Stanley’s revised annual saving need to be.

Tax credits are dollar-for-dollar reductions in taxable income.

Social security taxes are paid on earned income but not on investment income.

Dividends received from the stock you own will be taxable income.

Murray (age 68, single) just sold his home of 35 years so that he could relocate nearer his grandchildren. He realized a $400,000 capital gain on the home. How much of this gain will Murray have to pay taxes on?

Bethesda Mining Company reports the following balance sheet information for 2018 and 2019. BETHESDA MINING COMPANY Balance Sheets as of December 31, 2018 and 2019 2018 2019 2018 2019 Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 63,014 $ 79,447 Accounts payable $ 187,422 $ 195,111 Accounts receivable 64,781 85,139 Notes payable 82,520 134,088 Inventory 117,852 182,862 Total $ 269,942 $ 329,199 Total $ 245,647 $ 347,448 Long-term debt $ 232,000 $ 168,750 Owners’ equity Common stock and paid-in surplus $ 223,000 $ 223,000 Accumulated retained earnings 179,352 216,427 Fixed assets Net plant and equipment $ 658,647 $ 589,928 Total $ 402,352 $ 439,427 Total assets $ 904,294 $ 937,376 Total liabilities and owners’ equity $ 904,294 $ 937,376 Calculate the following financial ratios for each year: a. Current ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Quick ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. Cash ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) d. Debt-equity ratio and equity multiplier. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) e. Total debt ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

1. Gordon has been giving dance lessons for Elvira`s Studio for the last three years. He decides to strike out on his own and open his own dance studio. Discuss the relative merits of sole proprietorship and corporation. Which do you recommend?

2. After five years, the business has been growing steadily and Gordon wants to open other location. On a personal level, Gordon plans to marry and purchase a home as well as some income property. Should he change his business form to a partnership or a corporation?

Briefly describe Michael Porter's Five-Forces Model of industry competition. Why is it important to pay attention to these five forces of competition?

A sinking fund is set up so that level annual payments will accumulate, at i %p.a compounding annually, to $50,000 in 10 years. Assuming the payments made are at each year-end, after exactly 5 years the sinking fund will be: [Note: a sinking fund allows for money to be set aside by periodical deposits in order to accumalte an amout to e.g replace equipment or repay debt due at a future date]

What is the value (to the nearest cent) of a 4 year 5.9% coupon bond with a face value of $1,000. The yield-to-maturity on the bond is 11.7% and the bond makes semi-annual coupon payments.

Select one: a. $818.84 b. $2447.84 c. $822.71 d. $642.37

A three-year old 10-year 8% semi-annual coupon bond is selling at $1,200 today. If the yield increases by 25 basis points, how much of the price change is due to

convexity of the bond? (Face Value = $1,000)

Introductory data:Julia Gupta is 40 years old and has never married. She wants to retire at age 62 with an 80% wage replacement ratio. Julia currently earns $100,000 as an employee and has managed to save $100,000 toward her retirement goal (including investment assets and cash equivalents). She is currently saving $5,000 per year in her 401(k) plan. Her employer’s plan calls for a 50% match for contributions.Financial goal:Julia’s primary goal is to retire at age 62 with an 80% wage replacement, including Social Security, projected to be $30,000 in today’s dollars at normal retirement age of 67. She wants to plan for a life expectancy to age 95.

Economic and investment information

1. General inflation is expected to average 3.0% annually for the foreseeable future.
2. Julia’s expected investment portfolio rate of return is 8.5%.
3. Julia’s marginal income tax rate is 25%.
4. Social Security Tax is 7.65%.

Requirements:Please submit no more than five pages of the analysis, including references, tables, and graphs. In your analysis, please include as detailed as possible, including calculation steps. One submission per group. Please note: If any groups/individuals have the same report, both will earn zero credit. The analyses depends on your assumptions, so there are no absolutely right answers. Please design a financial plan to meet her financial goal.Do you think ($5,000 saving + employer’s contribution) matches her goal

• If not, how to make adjustment? Please consider the following scenarios:
  • Should she save more per year before retirement?
  • Should she delay retirement?