STATEMENT OF CASH FLOWS W.C. Cycling had $55,000 in cash at year-end 2014 and $25,000 in cash at year-end 2015. The firm invested in property, plant, and equipment totaling $250,000. Cash flow from financing activities totaled $170,000. a. What was the cash flow from operating activities? b. If accruals increased by $25,000, receivables and inventories increased by $100,000, and depreciation and amortization totaled $10,000, what was the firm’s net income?
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If a firm’s ROE is low and management wants to improve it, explain how using more debt might help.
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Profit margins and turnover ratios vary from one industry to another. What differences would you expect to find between the turnover ratios, profit margins, and DuPont equa- tions for a grocery chain and a steel company?
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1- Your firm is has equity of $2,460,000.00 and debt of $1,480,000.00 and the cost of the equity is 11.70% and the cost of the debt is 6.60%. Given that the tax rate is 15.00%, what is your firm's weighted average cost of capital (WACC)? (enter your value as a percent (i.e. 20.5 for 20.5%) tolerance is 0.1)
2- Your firm is has equity of $2,270,000.00 and debt of $4,060,000.00. The firm has been estimate to have a beta of 1.50 and the expected market risk premium (MRP) is 4.72% with the risk-free rate at 3.58%. The firm just recently issued bonds which traded at $905.58 on it's issue date and they have a 10-year maturity (assume standard corporate bonds). The stated rate on the bonds was 3.60%. What is your firm's weighted average cost of capital (WACC) if the tax rate is 30.00%? (enter your value as a percent (i.e. 20.5 for 20.5%) tolerance is 0.1)
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In 1895, the first a sporting event was held. The winner's prize money was $130. In 2007, the winner's check was $1,173,000. (Do not round your intermediate calculations.) |
| Required: | |
| (a) | What was the percentage increase per year in the winner's check over this period? |
| (Click to select) 8.52 8.57 -24.12 8.47 8.37 | |
| (b) | If the winner's prize increases at the same rate, what will it be in 2040? |
| (Click to select) 17,430,895.58 17,697,884.24 130.00 16,653,153.67 17,167,814.42 |
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Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.32 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1.735 million in annual sales, with costs of $650,000. The project requires an initial investment in net working capital of $250,000, and the fixed asset will have a market value of $180,000 at the end of the project. The tax rate is 21 percent. |
| a. | What is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, e.g., 1,234,567. A negative answer should be indicated by a minus sign.) |
| b. |
If the required return is 12 percent, what is the project's NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Year 0: _____ Year 1: _____ Year 2: _____ Year 3: _____ NPV: ______ |
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The Kretovich Company had a quick ratio of 1.2, a current ratio of 3.0, a days sales outstanding of 36.5 days (based on a 365-day year), total current assets of $795,000, and cash and marketable securities of $130,000. What were Kretovich's annual sales? Do not round intermediate calculations. Round your answer to the nearest dollar.
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Assume you are considering a portfolio containing two assets, L and M. Asset L will represent 56 % of the dollar value of the portfolio, and asset M will account for the other 44 %. Assume that the portfolio is rebalanced at the end of each year. The expected returns over the next 6 years, 2018dash2023, for each of these assets are summarized in the following table:
| Projected Return | ||
| Year | Asset L | Asset M |
| 2018 | 14% | 21% |
| 2019 | 14% | 17% |
| 2020 | 16% | 17% |
| 2021 | 18% | 13% |
| 2022 | 16% | 12% |
| 2023 | 18% | 10% |
a. Calculate the expected portfolio return, r Subscript p, for each of the 6 years. b. Calculate the average expected portfolio return, r overbar Subscript p, over the 6-year period. c. Calculate the standard deviation of expected portfolio returns, s Subscript p, over the 6-year period. d. Assume that asset L represents 44 % of the portfolio and asset M 56 %. Calculate the average expected return and standard deviation of expected portfolio returns over the 6-year period. e. Compare your answers to the answers from parts b and c.
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Assume you are considering a portfolio containing two assets, L and M. Asset L will represent 44 % of the dollar value of the portfolio, and asset M will account for the other 56 %. The projected returns over the next 6 years, 2018-2023, for each of these assets are summarized in the following table: a. Calculate the projected portfolio return, r p, for each of the 6 years. b. Calculate the average expected portfolio return, r overbar Subscript p, over the 6-year period. c. Calculate the standard deviation of expected portfolio returns, s Subscript p, over the 6-year period. d. How would you characterize the correlation of returns of the two assets L and M? e. Discuss any benefits of diversification achieved through creation of the portfolio.
| Projected Return | ||
| Year | Asset L | Asset M |
| 2018 | 13% | 21% |
| 2019 | 15% | 17% |
| 2020 | 16% | 16% |
| 2021 | 18% | 14% |
| 2022 | 17% | 13% |
| 2023 | 19% | 11% |
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Two friends, Kyle and Wes, graduated college and started working on their career at the same time. Both friends were 25 at the time.
As soon as Kyle was eligible for the 401K benefit he started depositing $100 per month for the next ten years.
Wes decided he so enjoyed having a real income that he wanted to spend it on fast cars, awesome threads, the most recent smart phone and video game system, and clubbing every weekend. Wes chose not to invest in his 401K for a while.
After ten years, Kyle decided to buy a house and couldn't afford to invest in his 401K anymore, so he stopped with his $100 per month deposit, but never touched his balance.
After ten years, Wes's party days were slowing down, he no longer needed the fancy clothes, and didn't need the newest gadgets as much, so he started investing $100 per month in his 401K for the next twenty years.
Both friends averaged 8% over the life of their investment in a mixed mutual fund.
At age 55, the friends decided to see where they stood for retirement savings. Calculate the following:
1. What is Wes' total investment after investing $100 per month for 20 years?
2. Who has the higher balance?
3. What does this tell us about the time value of money?
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Respond to the following paragraph :
The features that drive the valuations that differ in Vegas Chips are: The forecasted rate of growth of earnings per year, the way the ratios change over the years and the dividend pay ratio of earnings.
The additional information that would be required by the investors to gain confidence in the projections would be to look at the reports done by the analysts and see the connection in the investing pattern. With that information they should plan whether to invest in the project or not. They should see what factors are affecting the companies growth, the competition in the industry, the probability of multiple projections, earning and dividend payouts.
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Note: This problem is for the 2018 tax year.
On November 1, 2008, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom is summarized as follows:
Pet Kingdom's business address is 1010 Northwest Parkway, Dallas, TX 75225; its telephone number is (214) 555-2211; and its e-mail address is [email protected].
The employer identification number is 11-1111111, and the principal business activity code is 453910.
Janet and Kim each own 50% of the common stock; Janet is president and Kim is vice president of the company. No other class of stock is authorized.
Both Janet and Kim are full-time employees of Pet Kingdom. Janet's Social Security number is 123-45-6789, and Kim's Social Security number is 987-65-4321.
Pet Kingdom is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Pet Kingdom uses the straight-line method of depreciation for book purposes and accelerated depreciation (MACRS) for tax purposes.
During 2018, the corporation distributed cash dividends of $250,000.
Pet Kingdom's financial statements for 2018 are shown below.
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*Depreciation for tax purposes is $136,000.
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During 2018, Pet Kingdom made estimated tax payments of $56,000 each quarter to the IRS.
If an answer is zero, enter "0".
Enter all amounts as positive numbers.
If required, round final answers to the nearest dollar.
Please help with Schedule M-1, M-2, M-3
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Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25 years after he retires - that is, until age 85. He wants his first retirement payment to have the same purchasing power at the time he retires as $55,000 has today. He wants all his subsequent retirement payments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: Your father realizes that if inflation occurs the real value of his retirement income will decline year by year after he retires). His retirement income will begin the day he retires, 10 years from today, and he will then receive 24 additional annual payments. Inflation is expected to be 6% per year from today forward. He currently has $50,000 saved and expects to earn a return on his savings of 7% per year with annual compounding. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet How much must he save during each of the next 10 years (with equal deposits being made at the end of each year, beginning a year from today) to meet his retirement goal? (Note: Neither the amount he saves nor the amount he withdraws upon retirement is a growing annuity.) Do not round intermediate calculations. Round your answer to the nearest dollar.
Required Annuity Payments Father's current age 50 Number of years until retirement 10 Number of years living in retirement 25 1st retirement payment, same purchasing power today as $55,000 Inflation rate 6.00% Current savings at t = 0 $50,000 Percentage return earned 7.00% Step 1. Calculate retirement payments, beginning at t = 10 Formulas Fixed retirement payments #N/A Step 2. Calculate the value of current savings at t = 10 Value of current savings, 10 years from today #N/A Step 3. Calculate the value of the annuity due of retirement payments at t = 10 Value of annuity due #N/A Step 4. Calculate the net amount that must be accumulated at t = 10 to receive desired retirement payments Net amount needed in 10 years #N/A Step 5. Calculate the value of annual deposit needed to meet desired retirement goal Value of annual deposit to meet retirement goal #N/A View comments (1)
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Du Pont System of Ratio Analysis
1a) List the intuitive interpretations (names of the five components of the Return on Equity in the Du Pont System of Ration Analysis.
b) State whether a firms tax burden ratio will be higher or lower if it pays less taxes relative to pretax profit and give reason for your answer.
c) State whether a firms interest-burden ratio will be higher or lower if it pays more Interest relative to Earnings Before Interest and Taxes and give the reason for your answer.
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