Questions
Eggz, Inc., is considering the purchase of new equipment that will allow the company to collect...

Eggz, Inc., is considering the purchase of new equipment that will allow the company to collect loose hen feathers for sale. The equipment will cost $440,000 and will be eligible for 100 percent bonus depreciation. The equipment can be sold for $54,000 at the end of the project in 5 years. Sales would be $287,000 per year, with annual fixed costs of $50,000 and variable costs equal to 37 percent of sales. The project would require an investment of $31,000 in NWC that would be returned at the end of the project. The tax rate is 23 percent and the required return is 10 percent. Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

In: Finance

Suppose you are going to receive $11,000 per year for 7 years. The appropriate interest rate...

Suppose you are going to receive $11,000 per year for 7 years. The appropriate interest rate is 7 percent.
  
a. What is the present value of the payments if they are in the form of an ordinary annuity?

b. What is the present value if the payments are an annuity due?

c. Suppose you plan to invest the payments for 7 years, what is the future value if the payments are an ordinary annuity?

d. Suppose you plan to invest the payments for 7 years, what is the future value if the payments are an annuity due?

In: Finance

Western Tech is considering a new project that will require $118,000 of fixed assets and net...

Western Tech is considering a new project that will require $118,000 of fixed assets and net working capital of $16,000. The fixed assets will be depreciated on a straight-line basis to a zero salvage value over three years. Ignore bonus depreciation. This project is expected to produce an operating cash flow of $45,000 the first year with that amount decreasing by 5 percent annually for two years before the project is shut down. The fixed assets can be sold for $55,000 at the end of the project and all net working capital will be recovered. What is the net present value of this project at a discount rate of 11.5 percent and a tax rate of 23 percent? Multiple Choice −$3,770.30 −$5,456.32 $3,209.17 $12,136.54 $15,311.09

In: Finance

Determine whether the following statement is true for false: Given two bonds with the same price,...

Determine whether the following statement is true for false:
Given two bonds with the same price, face value, expiration date and yield, their coupons
payments must be identical.
Justify your answer by providing either a proof if true, or a counterexample if false

In: Finance

Bluegrass Mint Company has a debt-equity ratio of .30. The required return on the company’s unlevered...

Bluegrass Mint Company has a debt-equity ratio of .30. The required return on the company’s unlevered equity is 13.2 percent and the pretax cost of the firm’s debt is 7 percent. Sales revenue for the company is expected to remain stable indefinitely at last year’s level of $20,100,000. Variable costs amount to 70 percent of sales. The tax rate is 25 percent and the company distributes all its earnings as dividends at the end of each year.

  

a.

If the company were financed entirely by equity, how much would it be worth? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89)

b. What is the required return on the firm’s levered equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
c-1. Use the weighted average cost of capital method to calculate the value of the company. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89)
c-2. What is the value of the company’s equity? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89)
c-3. What is the value of the company’s debt? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89)
d. Use the flow to equity method to calculate the value of the company’s equity. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89)

Note: the answer for part a is $34,261,363.64----- the rest are wrong, please get them right as I am reposting this question again and this is my LAST question I can post this billing period. Please please please don't submit unless 100% sure

Thank you and have a blessed day :)

a. Value of the company $34,261,363.64 correct
b. Required return $13.66 incorrect %
c-1. Value of the company $33,107,613.47 incorrect
c-2. Value of equity $7,614,751.10 incorrect
c-3. Value of debt $25,492,862.37 incorrect
d. Value of equity $16.17r incorrect

In: Finance

You are considering a stock investment in one of two firms (NoEquity, Inc. and NoDebt, Inc.),...

You are considering a stock investment in one of two firms (NoEquity, Inc. and NoDebt, Inc.), both of which operate in the same industry and have identical operating income of $9.5 million. NoEquity, Inc. finances its $20 million in assets with $19 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc. finances its $20 million in assets with no debt and $20 million in equity. Both firms pay a tax rate of 30 percent on their taxable income.

Calculate the net income and return on assets for the two firms. (Enter your dollar answers in millions of dollars. Round all answers to 2 decimal places.)

In: Finance

In 2018, Usher Sports Shop had cash flows from investing activities of $420,000 and cash flows...

In 2018, Usher Sports Shop had cash flows from investing activities of $420,000 and cash flows from financing activities of −$464,000. The balance in the firm’s cash account was $627,000 at the beginning of 2018 and $604,000 at the end of the year.

Calculate Usher Sports Shop’s cash flow from operations for 2018. (Amounts to be deducted should be indicated by a minus sign.)

In: Finance

Williamson Industries has $5 billion in sales and $1.004 billion in fixed assets. Currently, the company's...

Williamson Industries has $5 billion in sales and $1.004 billion in fixed assets. Currently, the company's fixed assets are operating at 95% of capacity.

  1. What level of sales could Williamson Industries have obtained if it had been operating at full capacity? Write out your answer completely. For example, 25 billion should be entered as 25,000,000,000. Round your answer to the nearest cent.
    $  

  2. What is Williamson's target fixed assets/sales ratio? Do not round intermediate calculations. Round your answer to two decimal places.
      %

  3. If Williamson's sales increase 15%, how large of an increase in fixed assets will the company need to meet its target fixed assets/sales ratio? Write out your answer completely. For example, 25 billion should be entered as 25,000,000,000. Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest cent.
    $  

In: Finance

The Jimenez Corporation's forecasted 2020 financial statements follow, along with some industry average ratios. Jimenez Corporation:...

The Jimenez Corporation's forecasted 2020 financial statements follow, along with some industry average ratios.

Jimenez Corporation: Forecasted Balance Sheet as of December 31, 2020

Assets
Cash $    73,000
Accounts receivable 439,000
Inventories 893,000
  Total current assets $1,405,000
Fixed assets 431,000
Total assets $1,836,000
Liabilities and Equity
Accounts payable $   332,000
Notes payable    120,000
Accruals 150,000
  Total current liabilities $   602,000
Long-term debt 403,700
Common stock 575,590
Retained earnings 254,710
Total liabilities and equity $1,836,000
Jimenez Corporation: Forecasted Income Statement for 2020
Sales $4,290,000
Cost of goods sold 3,701,000
Selling, general, and administrative expenses 397,456
  Earnings before interest and taxes (EBIT) $   191,544
Interest expense 50,000
  Earnings before taxes (EBT) $   141,544
Taxes (25%) 35,386
Net income $   106,158
Jimenez Corporation: Per Share Data for 2020
EPS $  4.62
Cash dividends per share $  0.95
P/E ratio 5.0
Market price (average) $23.08
Number of shares outstanding 23,000

Industry Ratiosa
Quick ratio 1.0
Current ratio 2.7
Inventory turnoverb 7.0
Days sales outstandingc 32.0 days
Fixed assets turnoverb 13.0
Total assets turnoverb 2.6
Return on assets 9.1 %
Return on equity 18.2 %
Profit margin on sales 3.5 %
Debt-to-assets ratio 21.0 %
Liabilities-to-assets ratio 50.0 %
P/E ratio 6.0
Market/Book ratio 3.5
Notes:
aIndustry average ratios have been stable for the past 4 years.
bBased on year-end balance sheet figures.
cCalculation is based on a 365-day year.

Calculate Jimenez's 2020 forecasted ratios, compare them with the industry average data, and comment briefly on Jimenez's projected strengths and weaknesses. Assume that there are no changes from the prior period to any of the operating balance sheet accounts. Do not round intermediate calculation. Round your answers to two decimal places.

Ratios Firm Industry Comment
Quick ratio 1.0 -Select-StrongWeakItem 2
Current ratio 2.7 -Select-StrongWeakItem 4
Inventory turnover 7.0 -Select-PoorHighItem 6
Days sales outstanding days 32 days   -Select-PoorHighItem 8
Fixed assets turnover 13.0   -Select-PoorHighItem 10
Total assets turnover 2.6 -Select-PoorHighItem 12
Return on assets %    9.1% -Select-BadGoodItem 14
Return on equity % 18.2% -Select-BadGoodItem 16
Profit margin on sales %   3.5% -Select-BadGoodItem 18
Debt-to-assets ratio % 21.0% -Select-LowHighItem 20
Liabilities-to-assets ratio % 50.0% -Select-LowHighItem 22
P/E ratio 6.0 -Select-PoorHighItem 24
Market/Book ratio 3.5 -Select-PoorHighItem 26

So, the firm appears to be -Select-badlywellItem 27 managed.

In: Finance

2) You win the lottery! Your choices are Take $25 million today. Take $1 million today...

2) You win the lottery! Your choices are

  • Take $25 million today.
  • Take $1 million today and $1 million every year for the next 49 years (a total of $50 million)

a) If the interest rate is 0.1% compounded annually, which would you prefer?

b) If the interest rate is 4% compounded annually, which would you prefer?

c) At what annual interest rate would you be indifferent between the two?

(Hint: build a spreadsheet to compute the present value of each of the $1 million payments.)

In: Finance

Commonwealth Construction (CC) needs $2 million of assets to get started, and it expects to have...

Commonwealth Construction (CC) needs $2 million of assets to get started, and it expects to have a basic earning power ratio of 35%. CC will own no securities, so all of its income will be operating income. If it so chooses, CC can finance up to 45% of its assets with debt, which will have an 10% interest rate. If it chooses to use debt, the firm will finance using only debt and common equity, so no preferred stock will be used. Assuming a 35% tax rate on all taxable income, what is the difference between CC's expected ROE if it finances these assets with 45% debt versus its expected ROE if it finances these assets entirely with common stock? Round your answer to two decimal places.

In: Finance

The following are the cash flows of two projects: Year    Project A    Project B...

The following are the cash flows of two projects:

Year    Project A    Project B

0 -250    -250

1    130    150

2    130    150

3    130    150

4    130

If the opportunity cost is 10%, what is the profitability index for each project?

Project Profitability Index

A

B

  

In: Finance

Assume you have recently graduated with your business degree, and landed a new position at a...

Assume you have recently graduated with your business degree, and landed a new position at a company you had been researching during your senior year in college. You have been offered a lump-sum, sign-on bonus of $5,000. You also recently purchased a new condominium and vehicle. These items, in addition to your student loans, comprise your personal debt. Consider your debt reduction and investment earnings potential, as well as any applicable taxes. Assume that tax rates are stable over the next 10 years, and inflation is low (<1% per year) and does not change. Would you personally choose to invest the $5,000 sign-on bonus, or use it to pay down your debt? Regardless of your decision to either invest or pay down debt, be specific regarding the type of investment or debt payment you would make. Provide specific rationale for your decision. You may develop a quantitative example to support your rationale.

In: Finance

You shorted 1,000 shares of WDC at $55.6. Show your account equity position value. If the...

You shorted 1,000 shares of WDC at $55.6. Show your account equity position value. If the stock price fell to $40 in 6 months and the company paid $2.8 in dividends, what is your dollar gain and percentage gain? What if the price went up t $68 a share?(please show me how to do it in excel.)

In: Finance

Just Dew It Corporation reports the following balance sheet information for 2014 and 2015. JUST DEW...

Just Dew It Corporation reports the following balance sheet information for 2014 and 2015.


JUST DEW IT CORPORATION
2014 and 2015 Balance Sheets
Assets Liabilities and Owners’ Equity
2014 2015 2014 2015
  Current assets   Current liabilities
      Cash $ 10,620 $ 13,275       Accounts payable $ 52,560 $ 60,750
      Accounts receivable 21,420 29,925       Notes payable 19,260 24,075
      Inventory 67,860 82,575
        Total $ 99,900 $ 125,775         Total $ 71,820 $ 84,825
  Long-term debt $ 36,000 $ 27,000
  Owners’ equity
      Common stock and paid-in surplus $ 45,000 $ 45,000
      Retained earnings 207,180 293,175
  Net plant and equipment $ 260,100 $ 324,225   Total $ 252,180 $ 338,175
  Total assets $ 360,000 $ 450,000   Total liabilities and owners’ equity $ 360,000 $ 450,000

  

Prepare the 2014 and 2015 common-size balance sheets for Just Dew It. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

  

2014 2015
Assets
  Current assets
      Cash $ 10,620 % $ 13,275 %
      Accounts receivable 21,420 % 29,925 %
      Inventory 67,860 % 82,575 %
        Total $ 99,900 % $ 125,775 %
  Fixed assets
      Net plant and equipment $ 260,100 % $ 324,225 %
  Total assets $ 360,000 % $ 450,000 %
Liabilities and Owners’ Equity
  Current liabilities
      Accounts payable $ 52,560 % $ 60,750 %
      Notes payable 19,260 % 24,075 %
        Total $ 71,820 % $ 84,825 %
  Long-term debt $ 36,000 % $ 27,000 %
  Owners' equity
      Common stock and paid-in surplus $ 45,000 % $ 45,000 %
      Accumulated retained earnings 207,180 % 293,175 %
        Total $ 252,180 % $ 338,175 %
  Total liabilities and owners' equity $ 360,000 % $ 450,000 %

In: Finance