The most recent financial statements for Alexander Co. are shown here: Income Statement Balance Sheet Sales $ 39,200 Current assets $ 24,800 Long-term debt $ 55,000 Costs 29,600 Fixed assets 81,000 Equity 50,800 Taxable income $ 9,600 Total $ 105,800 Total $ 105,800 Taxes (34%) 3,264 Net income $ 6,336 Assets and costs are proportional to sales. The company maintains a constant 40 percent dividend payout ratio and a constant debt–equity ratio. What is the maximum dollar increase in sales that can be sustained assuming no new equity is issued? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Maximum increase in sales $

THREES ELECTRONICS COMPANY Threes Electronics is a mid-sized electronics manufacturer located in Santa Monica, California. The company president is Jack Tripper, who inherited the company. The company originally repaired radios and other household appliances when it was founded over 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electronic items. One of the major revenue-producing items manufactured by Threes Electronic is a Personal Digital Assistant (PDA). Threes Electronics currently has one PDA model on the market and sales have been excellent. The PDA is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffet music. However, as with any electronic item, technology changes rapidly, and the current PDA has limited features in comparison with newer models. Threes Electronic spent $750,000 to develop a prototype for a new PDA that has all the features of the existing one, but adds new features such as cell phone capability. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new PDA. Threes Electronic can manufacture the new PDA for $86 each in variable costs. Fixed costs for the operation are estimated to run $3 million per year. The estimated sales volume is 70,000, 80,000, 100,000, 85,000, and 75,000 per each year for the next five years, respectively. The unit price of the new PDA will be $250. The necessary equipment can be purchased for $15 million and will be depreciated on a 7-year MACRS schedule. It is believed the value of the equipment in five years will be $3 million. Net working capital for the PDAs will be 20 percent of sales and will occur with the timing of the cash flows for the year (i.e., there is a no initial outlay for NWC). Changes in NWC will thus first occur in Year 1 with the first year’s sales. Threes Electronic has a 35 percent (federal & state) corporate tax rate. Threes Electronic plans to finance by a combination of 1/3 debt and 2/3 internal equity (i.e., retained earnings). The beta of the firm’s stock is 1.75. The firm uses a risk-free rate of 4% and the market risk premium of 7%. Threes has 15,000 9 percent semi-annual coupon bonds outstanding, $1,000 par value per bond, 15 years to maturity, selling for 108 percent of par. Threes Electronic can issue bonds for $5 ~ $6 million in the similar terms. Construct a project cash flow statement; estimate the cost of capital; and provide NPV, IRR, payback period (our target PB is 3 years) and profitability index of this project.

Kolby’s Korndogs is looking at a new sausage system with an installed cost of $655,000. This cost will be depreciated straightline to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $85,000. The sausage system will save the firm $183,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $35,000. If the tax rate is 22 percent and the discount rate is 8 percent, what is the NPV of this project?

If you currently own a business or are thinking about starting a business. What are defensive actions you would take to protect your business against some of the perils over which you have minimal control (taxes, interest rate, etc.)? Please I need a mini essay thanks

How are emerging markets shaping globalization?

Is it better for a firm's actual stock price in the market to be under, over, or equal to its intrinsic value? Would your answer be the same from the standpoint of stockholders in general and a CEO who is about to exercise a million dollars in options and then retire? Explain.

Stock A and Stock B prices and dividends, along with the Market Index, are shown below. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends.

1. Use the data given to calculate annual returns for Stock A, Stock B, and the Market Index, and then calculate average annual returns for the two stocks and the index. (Hint: Remember, returns are calculated by subtracting the beginning price from the ending price to get the capital gain or loss, adding the dividend to the capital gain or loss, and then dividing the result by the beginning price. Assume that dividends are already included in the index. Also, you cannot calculate the rate of return for 2011 because you do not have 2010 data.)
2. What dividends do you expect for Stock A over the next three years if you expect the dividend to grow at the rate of 3% per year for the next three years? In other words, calculate D1, D2, and D3. Note that D0 = $1.50.
3. Assume that Stock A has a required return of 13%. You will use this required return rate to discount the dividends calculated earlier. If you plan to buy the stock, hold it for three years, and then sell it for $27.05, what is the most you should pay for it?

Genetic Insights Co. purchases an asset for $10,522. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, respectively. Genetic Insights has a tax rate of 30%. The asset is sold at the end of six years for $3,906

Your company is looking at updating its production process by adding a new piece of equipment. The company uses a 9% cost of capital in its capital budgeting decisions. The new equipment will cost $350,000 and the company expects the following annual cash flows for 5 years as a result of the purchase (note that year 1 is negative): Year 1 (10,000) Year 2 45,000 Year 3 127,000 Year 4 168,000 Year 5 145,000 A) Calculate the Net Present Value (NPV) of the acquisition project. B) Calculate the Internal Rate of Return (IRR) of the acquisition project. C) Should the company purchase the new equipment? Explain.

Dave and Sharon are a professional couple in their late 30s. They have managed to save a $200,000 deposit for a house worth $1million. They can take out a mortgage for 4.9% per annum for 30 years. Rent growth rate is 2.5% per annum, inflation rate is 2% per annum, and return on investment is 4% per annum. Cost of selling a home is 2.5% of its value, maintenance and insurance is 1.5% per annum. Ignore other costs.

They can rent a similar property for $650 per month.

Dave believes house prices will grow at 4.5% per annum. If he is correct, are they better off buying or renting?

Sharon is less optimistic than Dave, and thinks that house prices will only grow at 1.6% per annum. If she is correct, are they better off buying or renting?

Justify your answer.

Asset management ratios

Asset management ratios are used to measure how effectively a firm manages its assets, by relating the amount a firm has invested in a particular type of asset (or group of assets) to the amount of revenues the asset is generating. Examples of asset management ratios include the average collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fixed asset turnover ratio, and the total asset turnover ratio.

Consider the following case:

Franklin Aerospace has a quick ratio of 2.00x, $36,225 in cash, $20,125 in accounts receivable, some inventory, total current assets of $80,500, and total current liabilities of $28,175. The company reported annual sales of $200,000 in the most recent annual report.

Over the past year, how often did Franklin Aerospace sell and replace its inventory?

9.11x

8.28x

2.86x

8.01x

The inventory turnover ratio across companies in the aerospace industry is 9.108x. Based on this information, which of the following statements is true for Franklin Aerospace?

Franklin Aerospace is holding more inventory per dollar of sales compared with the industry average.

Franklin Aerospace is holding less inventory per dollar of sales compared with the industry average.

You are analyzing two companies that manufacture electronic toys—Like Games Inc. and Our Play Inc. Like Games was launched eight years ago, whereas Our Play is a relatively new company that has been in operation for only the past two years. However, both companies have an equal market share with sales of $200,000 each. You’ve collected company data to compare Like Games and Our Play. Last year, the average sales for all industry competitors was $510,000. As an analyst, you want to make comments on the expected performance of these two companies in the coming year. You’ve collected data from the companies’ financial statements. This information is listed as follows: (Note: Assume there are 365 days in a year.)

Data Collected (in dollars)

Using this information, complete the following statements to include in your analysis.

Answer choices

1A. High or Low

1B. Like Games or Our Play

1C. Our play Or Likes Games

2A. Lower or Higher

2B. Higher or Lower

3A. 1.05X or 0.80X

3B Lower or Higher

What is the NPV for the car selection example below?

Example: Buy an Electric Vehicle?

Chevy Malibu: $30,000 cost  12K miles/yr  30 mph  Maintenance: $1K in year 1; 5% CAGR  Resale of $5K in ten years  Gas: $3.50/g; 10% CAGR  D = 7% 

Nissan Leaf: $40,000 cost  12K miles/yr  5 miles per kWh  Maintenance: $700 in year 1; 5% CAGR  New battery in year 5: $5,000  Resale of $3K in ten years  $0.11/kWh; 10% CAGR  D = 7%

Suppose there is a 3-year bond with a $1000 face value, 12% coupon payments and a 6% yield to maturity.

a) Without any calculation, briefly explain whether this bond will be selling a premium or a discount

b) Calculate the price of this bond.

c) Calculate the duration of this bond. d) If someone buys this bond and holds it for three years, what is their rate of return? e) Suppose after one year, interest rates in the economy fall by 2%. If the person that bought this bond sells it at that time, what would be their rate of return? (Hint: First think about what the fall in interest rates will do to the bond’s price and then think about the rate of return.)