Office Problem (Use the attached spreadsheets as a guide)
Property: Office One, Anytown, U.S.A.
Acquisition date: December 31, 1999
Purchase Price: 2000 NOI @ 10% CAP RATE
Deal Terms: 65% financed with debt, 9% interest-only, 10-year term
35% equity ownership
Base Year 1999: Rental Income $1,600,000
Escalation Income $ 0
Less: Janitorial & Cleaning $ 330,000
Labor $ 215,250
Utilities $ 60,000
Management Fee $ 80,000
Real Estate Taxes $ 80,000
Assumptions: Vacancy Rate : 9%
Growth Rates: Rental Income 5% Annually
Janitorial & Cleaning 3% Annually
Utilities 3% Annually
Management Fee 3% Annually
In 2001, Labor and Real Estate Taxes escalate by 13.07 and 10%, respectively, and remain at those levels for the remainder of the holding period. Tenant pays the increase over the stated Base Year.
Sell on December 31, 2004
Selling Expenses- 5% of sale price (2005 NOI @ 10% Cap Rate)
Depreciable Basis = 80% of cost (calculate depreciation using straight-line method)
Owner’s Ordinary Tax Rate: 39.6%
Use Post-1997 capital gains & recapture tax rates (20% & 25% respectively)
REQUIRED:
9A) Pro-forma Analysis for both Pre-Tax and After- Tax scenarios
9B) Calculations for:
Adjusted Basis
Capital Gains and Recapture Taxes
Net Sales Proceeds
Break Even Occupancy (2000 & 2004)
Cash-on-Cash Returns (annually)
Gross Rent Multiplier ((2000 & 2004)
Debt Service Coverage (2000 & 2004)
Before and After Tax IRR
Before and After Tax NPV @12%
In: Accounting
USE THE INFORMATION BELOW FOR PROBLEMS 1-4
An analyst wishes to estimate the share price for Ashley Corporation. The following information
is made available:
Estimated profit margin = 15%
Total asset turnover = 2
Financial leverage = 1.2
Estimated dividend payout ratio = 75%
Required rate of return = 14%
Estimated EPS = $2.50
1. Calculate the firm's ROE.
2. Calculate the firm's sustainable growth rate.
3. Calculate the firm’s P/E multiple.
4. Calculate the firm’s estimated share price.
USE THE INFORMATION BELOW FOR PROBLEMS 5-8
At the end of the year 2004 the Office Equipment Industry had free cash flow to equity (FCFE)
of $2.50 per share. The following annual growth rates in FCFE are projected:
Year
Growth Rate
2005
10%
2006
15%
2007
20%
2008
25%
2009
20%
2010
15%
2011
10%
2012
7%
From year 2013 onward growth in FCFE is expected to remain constant at 5% per year. The
industry has a beta of 0.90 and the current industry price is $105. Currently the yield on 10-year
Treasury notes is 5% and the equity risk premium is 4%
5. Calculate the required rate of return on equity. (Hint: derived from CAPM)
6. Calculate the present value now (Year 2004) of FCFE during the period of increasing growth
(that is for years 2005 to 2008).
7. Calculate the present value now (Year 2004) of FCFE during the period of constant growth
(that is for years 2013 onwards).
8. Calculate the intrinsic value of the industry now (Year 2004).
In: Finance
Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 2.8% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s most recent dividend, D0, was $2.69, and its required rate of return is 15%. What is the expected Horizon Value at t=4?
In: Finance
Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 2.8% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s most recent dividend, D0, was $2.69, and its required rate of return is 15%. What is the current price of the common stock?
In: Finance
Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 3.4% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s most recent dividend, D0, was $4.07, and its required rate of return is 12%. What is the expected Horizon Value at t=4?
In: Finance
QUESTION 10
The sign on a church in your neighborhood reads “All are welcome at Sunday Service.” Because the church has limited seating and is usually full, the Sunday Service is
| a. |
a club good. |
|
| b. |
a common resource. |
|
| c. |
a public good. |
|
| d. |
a private good. |
4 points
QUESTION 11
It is commonly argued that national defense is a public good. Nevertheless, the weapons used by the U.S. military are produced by private firms. We can conclude that
| a. |
weapons are rival in consumption and excludable, but national defense is not rival in consumption and not excludable. |
|
| b. |
national defense is rival in consumption and excludable, but weapons are not rival in consumption and not excludable. |
|
| c. |
resources would be used more efficiently if private firms provided national defense. |
|
| d. |
resources would be used more efficiently if the government produced the weapons. |
4 points
QUESTION 12
Consider a public road that anyone is allowed to drive on. If the road is often congested, the road would be considered a
| a. |
club good. |
|
| b. |
private good. |
|
| c. |
public good. |
|
| d. |
common resource. |
4 points
QUESTION 13
Which of the following is a disadvantage of government provision of a public good such as national defense?
|
(i) |
The government does not know the exact willingness of consumers to pay for the public good. |
|
(ii) |
The free-rider problem is more likely to occur when the government provides a public good than when the private sector provides a public good. |
|
(iii) |
Taxpayers do not agree on the optimal quantity of the public good that the government should provide. |
| a. |
(i) only |
|
| b. |
(i) and (iii) only |
|
| c. |
(i), (ii), and (iii) |
|
| d. |
(i) and (ii) only |
In: Economics
Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 22% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
a. $26.57
b. $32.69
c. $28.97
d. $23.39
e. $27.37
Excel in detail please
In: Finance
Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 3.4% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s most recent dividend, D0, was $1.68, and its required rate of return is 12%. What is the expected Horizon Value at t=4? And what is the current price of the common stock? (please show work)
In: Finance
1. Explain the difference between Plane Stress problem and Plane Strain Problem. Give an example.
2. What is the displacement boundary condition you would like to apply after cutting through the symmetric line?
3. What are the FEA results we would be interested in 2-D stress-strain analysis?
In: Mechanical Engineering
Power series
Find the particular solution of the differential equation: (x^2+1)y"+xy'-4y=0 given the boundary conditions x=0, y=1 and y'=1. Use only the 7th degree term of the solution. Solve for y at x=2. Write your answer in whole number.
In: Advanced Math