Question

In: Finance

Part A: Below are some of the components for Prufrock Corp. income statement for the year...

Part A: Below are some of the components for Prufrock Corp. income statement for the year ending December 31st, 2016. Use the values to fill in the income statement and calculate the net income. All values are given in millions of dollars and there may be more lines provided than needed. (6 points)

 Sales = $70,000  Tax Rate = 34%  Depreciation = $16,000  Interest Paid = $450  Cost of Goods Sold = $35,000

Part B: Prufrock Corp. has 4,000 million shares outstanding. If they do not reinvest any of their earnings what will be the dividend per share paid out this year? (3 points)

Part C: Assume that the dividend from Part B will be paid out one year from today. After the initial dividend from part B is paid, the dividend is expected to grow at a rate of 4% per year. Investors require a 10% return on their investment. What is the current share price? (7 points)

Solutions

Expert Solution

Part A
Sale        70,000
Cost of goods sold       (35,000)
Operating Income        35,000
Less depreciation       (16,000)
Income before Interest & Tax        19,000
Less interest            (450)
Income before Tax        18,550
Tax @ 34%         (6,307)
Net Income after tax        12,243
Part B
Net income after tax        12,243
Add Depreciation        16,000
Total Cash Profit        28,243
No of shares           4,000
Dividend per share =28243/4000
            7.06
Part B
Share price =Current Dividend*(1+Growth rate)/(Rate of return-Growth Rate)
Share price =7.06/(10%-4%)
Share price 117.67

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

An income statement for Iyekqv603 Corp. for the first quarter of the year is presented below:...
An income statement for Iyekqv603 Corp. for the first quarter of the year is presented below: Iyekqv603 Corp. Income Statement For Quarter Ended March 31 Sales $ 910,000 Cost of goods sold 645,000 Gross margin 265,000 Selling and administrative expenses Selling $ 103,000 Administration 110,000 213,000 Net operating income $ 52,000 On average, a book sells for $65. Variable selling expenses are $6 per book with the remaining selling expenses being fixed. The variable administrative expenses are 5% of sales...
Presented below is information related to Donaldson Corp., for the year 2020. Prepare an income statement...
Presented below is information related to Donaldson Corp., for the year 2020. Prepare an income statement and answer the question below and other questions requiring the use of this income statement. Net sales $1,820,000 Cost of goods sold 1,240,000 Selling expenses 86,000 Administrative expenses 74,000 Dividend revenue 25,000 Interest revenue 20,000 Interest expense 50,000 Write-off of goodwill due to impairment 40,000 Depreciation expense omitted in 2018 105,000 Dividends declared 12,000 Effect on prior year’s of change in accounting principle (credit)...
Shown below is an income statement in the traditional format for April Corp. that sells a...
Shown below is an income statement in the traditional format for April Corp. that sells a single product having a sales volume of 15,000 units. Cost formulas are also shown (for example, COGS includes fixed costs of $23,000 and variable costs of $3.20 per unit): Sales ………………………………………………………………… $108,000 Cost of goods sold ($23,000 + $3.20 per unit) ……………………… (71,000) Gross profit ………………………………………………………… $ 37,000 Operating expenses: Selling ($9,000 + $0.82 per unit) …………………………………… (21,300) Administrative ($12,800 +$0.07 per unit)…………………………… (13,850)...
The income statement of Indigo Company is shown below. INDIGO COMPANY INCOME STATEMENT FOR THE YEAR...
The income statement of Indigo Company is shown below. INDIGO COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue $ 6,630,000 Cost of goods sold    Beginning inventory $ 1,840,000    Purchases 4,520,000    Goods available for sale 6,360,000    Ending inventory 1,530,000    Cost of goods sold 4,830,000 Gross profit 1,800,000 Operating expenses    Selling expenses 450,000    Administrative expenses 660,000 1,110,000 Net income $ 690,000 Additional information: 1. Accounts receivable decreased $ 290,000 during the year. 2. Prepaid expenses increased $ 180,000...
The income statement of Waterway Company is shown below. WATERWAY COMPANY INCOME STATEMENT FOR THE YEAR...
The income statement of Waterway Company is shown below. WATERWAY COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020 Sales revenue $6,210,000 Cost of goods sold    Beginning inventory $2,070,000    Purchases 4,570,000    Goods available for sale 6,640,000    Ending inventory 1,490,000    Cost of goods sold 5,150,000 Gross profit 1,060,000 Operating expenses    Selling expenses 450,000    Administrative expenses 570,000 1,020,000 Net income $40,000 Additional information: 1. Accounts receivable decreased $300,000 during the year. 2. Prepaid expenses increased $170,000 during the year. 3. Accounts...
Below is the 2009 contribution income statement of a company. Contribution Income Statement For Year Ended...
Below is the 2009 contribution income statement of a company. Contribution Income Statement For Year Ended December 31, 2009 Sales (12,000 units) $1,440,000 Less variable costs Cost of goods sold $480,000 Selling and administrative 132,000 (612,000) Contribution margin 828,000 Less fixed costs Manufacturing overhead 510,000 Selling and administrative 220,000 (730,000) Net income $98,000 During the coming year, the company expects an increase in variable manufacturing costs of $8 per unit and in fixed manufacturing costs of $72,000. (a) If sales...
The income statement of Rodriquez Company is shown below: RODRIQUEZ COMPANY Income Statement For The Year...
The income statement of Rodriquez Company is shown below: RODRIQUEZ COMPANY Income Statement For The Year Ended December 31, 2012 Sales $6,900,000 Cost of goods sold Beginning inventory $1,900,000 Purchases 4,400,000 Goods available for sale 6,300,000 Ending inventory 1,600,000 Cost of goods sold 4,700,000 Gross profit 2,200,000 Operating expenses Selling expenses 450,000 Administrative expenses 700,000 1,150,000 Net income $1,050,000 Additional information: 1. Accounts receivable decreased $310,000 during the year. 2. Prepaid expenses increased $170,000 during the year. 3. Accounts payable...
Analyzing and Interpreting Income Components and Disclosures The income statement for Xerox Corporation follows. Year ended...
Analyzing and Interpreting Income Components and Disclosures The income statement for Xerox Corporation follows. Year ended December 31 (in millions) 2010 2009 2008 Revenue Equipment sales $3,857 $3,550 $4,679 Supplies, paper and other 3,377 3,096 3,646 Sales 7,234 6,646 8,325 Service, outsourcing and rentals 13,739 7,820 8,485 Finance income 660 713 798 Total Revenues 21,633 15,179 17,608 Cost and expenses Cost of sales 4,741 4,395 5,519 Cost of service, outsourcing and rentals 9,195 4,488 4,929 Equipment financing interest 246 271...
The year end income statement for Sophie Corporation is presented below: Sophie Corporation Income Statement For...
The year end income statement for Sophie Corporation is presented below: Sophie Corporation Income Statement For the Year Ended December 31, 2019 Sales (600 units) $36,000 Cost of Goods Sold Labor $9,000 Material $10,800 Fixed Overhead $1,800 $21,600 Gross Profit $14,400 Administrative Expense Fixed $5,400 Variable $3,600 $9,000 Operating Income $5,400 Do not enter dollar signs or commas in the input boxes. Round all answers to the nearest whole number. For Unit calculations round your answers up to the nearest...
The year end income statement for Sophie Corporation is presented below: Sophie Corporation Income Statement For...
The year end income statement for Sophie Corporation is presented below: Sophie Corporation Income Statement For the Year Ended December 31, 2019 Sales (560 units) $28,000 Cost of Goods Sold Labor $7,000 Material $8,400 Fixed Overhead $1,400 $16,800 Gross Profit $11,200 Administrative Expense Fixed $4,200 Variable $2,800 $7,000 Operating Income $4,200 Do not enter dollar signs or commas in the input boxes. Round all answers to the nearest whole number. For Unit calculations round your answers up to the nearest...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT