Lumberton Home Maintenance Company (LHMC) earned operating income of $6,000,000 on operating assets of $62,500,000 during 2018. The Tree Cutting Division earned $1,000,000 on operating assets of $10,000,000. LHMC has offered the Tree Cutting Division $1,250,000 of additional operating assets. The manager of the Tree Cutting Division believes he could use the additional assets to generate operating income amounting to $112,500. LHMC has a desired return on investment (ROI) of 8 percent.
Required
Calculate the return on investment for LHMC, the Tree Cutting Division, and the additional investment opportunity.
Calculate the residual income for LHMC, the Tree Cutting Division, and the additional investment opportunity
In: Accounting
Q2. Company B earned $20 million before interest and taxes on revenues of $60 million last year. Investment in fixed capital was $12 million, and depreciation was $8 million. Working capital investment was $3 million. The company expects earnings before interest and taxes (EBIT), investment in fixed and working capital, depreciation, and sales to grow at 12% per year for the next five years. After five years, the growth in sales, EBIT, and working capital investment will decline to a stable 4% per year, and investments in fixed capital and depreciation will offset each other. The company’s tax rate is 20%. Suppose that the weighted average cost of capital is 12% during the high growth stage and 8% during the stable stage. The calculation of FCFF in year 1 through year 5 is shown in the following table:
|
Year |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
|
Sales |
60.00 |
||||||
|
EBIT |
20 |
||||||
|
EBIT(1-T) |
16 |
||||||
|
Depreciation |
8 |
||||||
|
CAPEX |
12 |
||||||
|
Change in working capital |
3 |
||||||
|
FCFF |
Finish the table and use WACC model to calculate the value of the company.(please show the details)(50 points)
In: Finance
Bank of America (USA) believes that New Zealand dollar will appreciate over the next 90 days from US$0.48/NZ$ to US$0.50/NZ$. The following annual interest rates can be applied:
Currency Lending rate (Annual) Borrowing rate (Annual)
US dollar 7.10% 7.50%
New Zealand dollar 6.80% 7.25%
Bank of American has the capacity to borrow $5million from Chase bank. If Bank of America’s forecast is correct, what will be its US dollar profit of Bank of America from this foreign exchange speculation over the 90 days period?
Group of answer choices
About $5,093,750
About $5,296,875
About $203,125
About $266,451
In: Finance
A study of persons (N = 1170) indicted for murder in Kentucky revealed that each individual had an average number of 1.69 prior felony arrests. The standard deviation was 2.6.
a. Determine the z score for a murder defendant who had two prior felony arrests. Under the normal curve, what statement could you make about this z score.
In: Statistics and Probability
Go to the PCAOB website and find information related to the Ligand case (under Disciplinary Proceedings). Discuss the separate-but-related issues affecting both the engagement partner who was disciplined and the public accounting firm's monetary penalty. Present your thoughts about the fairness and appropriateness of the PCAOB’s actions related to the individual partner and the firm. 1 page 275 word
In: Accounting
1. What is the difference between diabetes insipidus and diabetes mellitus?
2. Compare and contrast use of oral and parenteral antidiabetic therapy.
3. What should the nurse teach the patient about Sliding-Scale Insulin coverage?
4. What client assessments are imperative for an
individual taking corticotropin therapy who is also taking
digitalis and an oral Glucophage?
In: Nursing
Introduce yourself. Explain your previous leadership experience and skills (both personally and professionally). Describe an individual who might serve as an inspiration for you in a future leadership role. Explain how this example might influence you. Evaluate what style of leadership seems to be a good fit for you as you prepare for a leadership role in social work, and why.
In: Psychology
In 2009, Vito opened Vito’s Italian Restaurant with his wife, Catherine. Before they opened Vito’s, Vito managed L’Italia Restaurant, and earned $45,000 per year. Catherine had just graduated from JMU, and turned down a job offer from PWC for $60,000 per year. To open the restaurant they used $200,000 of their own savings, which earned 5% interest per year. In additional, they borrowed $150,000 from a local bank. The interest rate on the loan was 10%. a(3). At the end of the first year of business, Vito’s had the following revenues and costs: Food sales $400,000 Beverage sales $350,000 Labour costs $380,000 Food costs $160,000 Rent $60,000 Advertising $30,000 Suppose Vito and Catherine ask you to determine whether or not they earned a profit. How would you respond as an accountant and as an economist?
In: Economics
A university financial aid office polled a random sample of 801801 male undergraduate students and 858858 female undergraduate students. Each of the students was asked whether or not they were employed during the previous summer. 571571 of the male students and 513513 of the female students said that they had worked during the previous summer. Give a 98%98% confidence interval for the difference between the proportions of male and female students who were employed during the summer.
Step 2 of 4:
Find the critical value that should be used in constructing the confidence interval.
In: Statistics and Probability
In a poll by the National Center for Women and Aging at Brandeis University, 51% of the women over fifty said that aging is not as bad as they had expected (USA Today, November 19, 2002). In a recent sample of 400 women over fifty, 224 said that aging was not as bad as they expected. What critical value, at the 1% level of significance, of the test statistic Z will be used to test the hypothesis that, in 2005, the percentage of women over fifty who felt that aging is not as bad as they expected was greater than 51%. State your answer to 3 places of decimal.
In: Statistics and Probability