Discuss whether Johnson & Johnson has been successful in all of their acquisitions.
In: Finance
Simtek currently pays a $2.50 dividends per share next year 's dividend is expected to be $3 per share. after next year , dividends are expected to increase at a 9% annual rate for 3years and a 6% annual rate thereafter.
a. what is the current value of a share of Simtek stock to an investor who requires a 15% return on his or her investment.
b. if the dividend in year 1 is expected to be $3 and the growth rate over the following three years is expected to be only 7% and then 6% thereafter, what will the new stock price be?
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Review and analyse Cash Flow Statement of Vodafone and DT.
Specify your key observations.
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|
The Morning Jolt Coffee Company has projected the following quarterly sales amounts for the coming year: |
| Q1 | Q2 | Q3 | Q4 | |||||||||
| Sales | $ | 750 | $ | 780 | $ | 860 | $ | 940 | ||||
| a. |
Accounts receivable at the beginning of the year are $340. The company has a 45-day collection period. Calculate cash collections in each of the four quarters by completing the following (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places, e.g., 32.16.): |
| Q1 | Q2 | Q3 | Q4 | |||||
| Beginning receivables | $ | $ | $ | $ | ||||
| Sales | 750.00 | 780.00 | 860.00 | 940.00 | ||||
| Cash collections | ||||||||
| Ending receivables | $ | $ | $ | $ | ||||
| b. |
Recalculate the cash collections with a collection period of 60 days. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places, e.g., 32.16.) |
| Q1 | Q2 | Q3 | Q4 | |||||
| Beginning receivables | $ | $ | $ | $ | ||||
| Sales | 750.00 | 780.00 | 860.00 | 940.00 | ||||
| Cash collections | ||||||||
| Ending receivables | $ | $ | $ | $ | ||||
| c. |
Recalculate the cash collections with a collection period of 30 days. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places, e.g., 32.16.) |
| Q1 | Q2 | Q3 | Q4 | |||||
| Beginning receivables | $ | $ | $ | $ | ||||
| Sales | 750.00 | 780.00 | 860.00 | 940.00 | ||||
| Cash collections | ||||||||
| Ending receivables | $ | $ | $ | $ | ||||
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Consider a one-year, 10 percent coupon bond with a face value of $1,000 issued by a private corporation. The one-year risk-free rate is 10 percent. The corporation has hit on hard times, and the consensus is that there is a 20 percent probability that it will default on its bonds. If an investor were willing to pay at most $775 for the bond, is that investor risk neutral or risk averse?
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Explain (in no more than 3 sentences) why we, for example, tend to use put options for X ≤ $228.82 to back-out the IV(implied volatility), but for X > $228.82, we use the call options. For your information, the last traded price for Tesla Inc. on 25 July 2019 was $228.82.
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Minion, Inc., has no debt outstanding and a total market value of $211,875. Earnings before interest and taxes, EBIT, are projected to be $14,300 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 20 percent higher. If there is a recession, then EBIT will be 35 percent lower. The company is considering a $33,900 debt issue with an interest rate of 6 percent. The proceeds will be used to repurchase shares of stock. There are currently 7,500 shares outstanding. Assume the company has a tax rate of 21 percent. |
| a-1. |
Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| a-2. | Calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to the nearest whole number, e.g., 32.) |
| b-1. | Calculate earnings per share, EPS, under each of the three economic scenarios after the recapitalization. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| b-2. | Calculate the percentage changes in EPS when the economy expands or enters a recession assuming recapitalization has occurred. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
In: Finance
In: Finance
In: Finance
2. Use the following balance sheet and simplified income statement in answering parts (a) – (c) below: BALANCE SHEET Cash $75,000 Accounts receivables100,000 Inventory95,000 Fixed assets$500,000 Total assets$770,000 Account payable$135,000 Other current liabilities50,000 Long-term debt150,000 Stockholders’ equity (75,000 shares)$435,000 Total liability and equity$770,000 INCOME STATEMENT Sales$1,250,000 Less: Cost of goods sold635,000 Less: All expenses (incl. taxes)370,000 Net Income$245,000 a.) Based on the financial information above, conduct a liquidity analysis for this firm by determining the current ratio, net working capital, the ratio of current assets/total assets, and the cash conversion period. b.) What is the current market price of the firm’s stock (P0) if the firm’s P/E ratio is 11.5? Hint: Note that a firm’s earnings per share = NI/S, where NI = earnings. Therefore P0 = P/E x E/S c.) A proposal is made by this firm’s CFO to increase the current ratio to 2x. The CFO suggests that the firm issue 5,000 new shares of common stock (ignore any flotation costs) and the estimated price per share based on secondary market conditions will be $28.50. The proceeds from the equity issue will be added to the firm’s cash account. Assuming everything else remains the same, determine: i) The impact on the firm’s liquidity position by re-calculating the current ratio, net working capital, the ratio of current assets/total assets, and the cash conversion period as you did in part (a) above. ii) The new market price (assume the P/E ratio is constant at 11.5). iii) Based on your estimate of the new price per share of this company’s stock, should the firm adopt the changes suggested by the CFO? Briefly explain.
In: Finance
Swink Electric, Inc., has just developed a solar panel capable of generating
200 percent more electricity than any solar panel currently on the market. As a
result, Swink is expected to experience a 15 percent annual growth rate for the
next five years. When the five-year period ends, other firms will have developed
comparable technology, and Swink’s growth rate will slow to 5 percent per year
indefinitely. Stockholders require a return of 12 percent on Swink’s stock.
The firm’s most recent annual dividend (D0), which was paid yesterday, was
$1.75 per share.
| 2.d. (6 points) | Calculate the dividend yield (D1/P0), the expected capital gains yield for the current year (Year 1). | ||||||||
| Hint: The total rate of return is equal to dividend yield plus capital gains yield. Total rate of return is equal to the required rate of return. | |||||||||
| Dividend yield = D1/P0 | |||||||||
| Total expected rate of return | |||||||||
| Expected Capital gains yield | |||||||||
In: Finance
The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $57,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.
|
Year |
Cash Flow |
||
|
1 |
$ |
21,000 |
|
|
2 |
24,000 |
||
|
3 |
28,000 |
||
|
4 |
14,000 |
||
|
5 |
9,000 |
||
a. If the cost of capital
is 11 percent, what is the net present value of selecting a new
machine? (Do not round intermediate calculations and round
your final answer to 2 decimal places.)
What is the Net present value? ________________
b..
what is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
What is the Internal rate of return? _______________%
c, Should the project be accepted? Yes or No.
Please give a calculated solution using a calculator. Thanks!
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You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak street-sweeper accident. In the trial, doctors testified that it will be five years before the plaintiff is able to return to work. The jury has already decided in favor of the plaintiff. You are the foreperson of the jury and propose that the jury give the plaintiff an award to cover the following: |
| (a) |
The present value of two years’ back pay. The plaintiff’s annual salary for the last two years would have been $67,000 and $70,000, respectively. |
| (b) |
The present value of five years’ future salary. You assume the salary will be $73,000 per year. |
| (c) | $245,000 for pain and suffering. |
| (d) |
$40,000 for court costs. |
| Assume the salary payments are equal amounts paid at the end of each month. |
|
If the interest rate you choose is an EAR of 8 percent, what is the size of the settlement? |
In: Finance
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Aday Acoustics, Inc., projects unit sales for a new 7-octave voice emulation implant as follows: |
| Year | Unit Sales | |||
| 1 | 76,200 | |||
| 2 | 81,600 | |||
| 3 | 87,800 | |||
| 4 | 84,500 | |||
| 5 | 71,900 | |||
|
Production of the implants will require $1,540,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales increase for the following year. Total fixed costs are $4,100,000 per year, variable production costs are $149 per unit, and the units are priced at $331 each. The equipment needed to begin production has an installed cost of $19,100,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as 7-year MACRS property. In five years, this equipment can be sold for about 20 percent of its acquisition cost. The company is in the 24 percent marginal tax bracket and has a required return on all its projects of 18 percent. MACRS schedule. |
|
What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
|
What is the IRR of the project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
In: Finance
(Bond valuation relationships) The 18-year, $1 comma 000par value bonds of Waco Industries pay 9percent interest annually. The market price of the bond is $885
,and the market's required yield to maturity on a comparable-risk bond is 12percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you given the market's required yield to maturity on a comparable-risk bond.
Should you purchase this bond?
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