On January 2, 2006, in the strategic committee meeting of the company, Christine Carmen Chairman, President and Chief Executive Officer said, we are optimistic about 2006 and the years beyond. The proposed projects presently under consideration will enable us efficiently to expand our productivity in order to meet ever-increasing customers demand with high quality engineered products and systems for defense, aerospace and industrial applications.
Carmen Corporation is a supplier of sophisticated, highly engineered products and systems for defense, aerospace and industrial applications. The Company has three business segments.
The Company's Defense segment provides integrated front-line war-fighting systems and components, including electronic warfare systems, reconnaissance and surveillance systems, aircraft weapons suspension and release systems and airborne mine countermeasures systems.
The Company's Communications and Space Products segment supplies antenna products and ultra-miniature electronics and systems for the remote sensing, communications and electronic warfare industries.
The Company's Engineered Materials segment supplies piezoelectric ceramic products for commercial and military markets and advanced fiber composite structural products for the aircraft, communication, navigation, chemical, petrochemical, paper, and oil industries.
Carmen Corporation has the following financial statements:
|
Table 1 CARMEN COMPANY |
|||
|
Balance Sheet 12/31/2005 |
|||
|
Assets |
Liability & Equity |
||
|
Cash |
$6,000,000 |
Account Payable |
$1,000,000 |
|
Account Receivable |
$8,000,000 |
Notes Payable |
$3,000,000 |
|
Inventory |
$3,000,000 |
Accrued Taxes |
$1,000,000 |
|
Current Asset |
$17,000,000 |
Current Liabilities |
$5,000,000 |
|
GFA |
$40,000,000 |
Long-term debt |
$10,000,000 |
|
Accumulated Depreciation |
($2,000,000) |
Preferred Stock (0.5 million shares) |
$15,000,000 |
|
Net Fixed Assets |
$38,000,000 |
Common Stock (1 million shares) |
$10,000,000 |
|
Returned Earnings |
$15,000,000 |
||
|
Common Equity |
$25,000,000 |
||
|
Total Asst |
$55,000,000 |
Total Liability & Equity |
$55,000,000 |
|
Table 2 -Income Statement (12/31/2005) |
|
|
Sales |
$25,000,000 |
|
Cost of Sales |
-8,500,000 |
|
Earnings Before Depreciation and Amortization (EBITDA) |
$16,500,000 |
|
Depreciation |
-1,550,000 |
|
Earnings Before Interest and taxes (EBIT) |
$14,950,000 |
|
Interest Expense |
($950,000) |
|
Taxable Income |
$14,000,000 |
|
Taxes (40%) |
($5,600,000) |
|
Net Income |
$8,400,000 |
Its established common stock’s dividend payout ratio after the preferred stock dividends payment is 50 percent and it is expected to grow at a constant rate of 9 percent in the future. The tax rate is 40 percent and investors requiring a rate of return of 15% on the common stock.
Preferred stock is trading at a price of $40 per share, with a dividend of $4.8. The 30-year long-term debt with a par value of $1,000 was issued 10 years ago with a coupon rate of 8%. The bonds can be refinanced at the market interest rate of 10 percent today.
Carmen has the following investment opportunities:
|
Table 3 |
Project |
Annual Net |
|
|
Project |
Cost |
Cash Flow |
Life |
|
Defense 1 |
$1,000,000 |
$219,120 |
7 |
|
Defense 2 |
$2,000,000 |
368,580 |
10 |
|
Eng. Materials 1 |
$1,000,000 |
222,851 |
8 |
|
Eng. Materials 2 |
$2,000,000 |
542,784 |
6 |
|
Communication and Space 1 |
$1,000,000 |
202168 |
9 |
|
Communication and Space 2 |
$1,000,000 |
319,775 |
5 |
Part I
Determine the book value and market value of the capital structure.
Determine the weighted average cost of capital (WACC) for each of the capital structure.
Calculate the internal rate of return (IRR) and Net Present Value of each project and compare them against the book value and market value weighted average cost of capital.
Are there any conflict between NPV and IRR? How do you resolve the conflict in ranking?
e.
How much of the internal fund is available for investments?
Are there any issues about the projects you should consider before yourrecommendation?
In: Finance
CARMEN CORPORATION
On January 2, 2006, in the strategic committee meeting of the company, Christine Carmen Chairman, President and Chief Executive Officer said, we are optimistic about 2006 and the years beyond. The proposed projects presently under consideration will enable us efficiently to expand our productivity in order to meet ever-increasing customers demand with high quality engineered products and systems for defense, aerospace and industrial applications.
Carmen Corporation is a supplier of sophisticated, highly engineered products and systems for defense, aerospace and industrial applications. The Company has three business segments.
The Company's Defense segment provides integrated front-line war-fighting systems and components, including electronic warfare systems, reconnaissance and surveillance systems, aircraft weapons suspension and release systems and airborne mine countermeasures systems.
The Company's Communications and Space Products segment supplies antenna products and ultra-miniature electronics and systems for the remote sensing, communications and electronic warfare industries.
The Company's Engineered Materials segment supplies piezoelectric ceramic products for commercial and military markets and advanced fiber composite structural products for the aircraft, communication, navigation, chemical, petrochemical, paper, and oil industries.
Carmen Corporation has the following financial statements:
|
Table 1 CARMEN COMPANY |
|||
|
Balance Sheet 12/31/2005 |
|||
|
Assets |
Liability & Equity |
||
|
Cash |
$6,000,000 |
Account Payable |
$1,000,000 |
|
Account Receivable |
$8,000,000 |
Notes Payable |
$3,000,000 |
|
Inventory |
$3,000,000 |
Accrued Taxes |
$1,000,000 |
|
Current Asset |
$17,000,000 |
Current Liabilities |
$5,000,000 |
|
GFA |
$40,000,000 |
Long-term debt |
$10,000,000 |
|
Accumulated Depreciation |
($2,000,000) |
Preferred Stock (0.5 million shares) |
$15,000,000 |
|
Net Fixed Assets |
$38,000,000 |
Common Stock (1 million shares) |
$10,000,000 |
|
Returned Earnings |
$15,000,000 |
||
|
Common Equity |
$25,000,000 |
||
|
Total Asst |
$55,000,000 |
Total Liability & Equity |
$55,000,000 |
|
Table 2 -Income Statement (12/31/2005) |
|
|
Sales |
$25,000,000 |
|
Cost of Sales |
-8,500,000 |
|
Earnings Before Depreciation and Amortization (EBITDA) |
$16,500,000 |
|
Depreciation |
-1,550,000 |
|
Earnings Before Interest and taxes (EBIT) |
$14,950,000 |
|
Interest Expense |
($950,000) |
|
Taxable Income |
$14,000,000 |
|
Taxes (40%) |
($5,600,000) |
|
Net Income |
$8,400,000 |
Its established common stock’s dividend payout ratio after the preferred stock dividends payment is 50 percent and it is expected to grow at a constant rate of 9 percent in the future. The tax rate is 40 percent and investors requiring a rate of return of 15% on the common stock.
Preferred stock is trading at a price of $40 per share, with a dividend of $4.8. The 30-year long-term debt with a par value of $1,000 was issued 10 years ago with a coupon rate of 8%. The bonds can be refinanced at the market interest rate of 10 percent today.
Carmen has the following investment opportunities:
|
Table 3 |
Project |
Annual Net |
|
|
Project |
Cost |
Cash Flow |
Life |
|
Defense 1 |
$1,000,000 |
$219,120 |
7 |
|
Defense 2 |
$2,000,000 |
368,580 |
10 |
|
Eng. Materials 1 |
$1,000,000 |
222,851 |
8 |
|
Eng. Materials 2 |
$2,000,000 |
542,784 |
6 |
|
Communication and Space 1 |
$1,000,000 |
202168 |
9 |
|
Communication and Space 2 |
$1,000,000 |
319,775 |
5 |
Part I
Determine the book value and market value of the capital structure.
Determine the weighted average cost of capital (WACC) for each of the capital structure.
Calculate the internal rate of return (IRR) and Net Present Value of each project and compare them against the book value and market value weighted average cost of capital.
Are there any conflict between NPV and IRR? How do you resolve the conflict in ranking?
How much of the internal fund is available for investments?
Are there any issues about the projects you should consider before your recommendation?
In: Finance
Income Statement and Balance Sheet Green Bay Corporation began business in July 2017 as a commercial fishing operation and a passenger service between islands. Shares of stock were issued to the owners in exchange for cash. Boats were purchased by making a down payment in cash and signing a note payable for the balance. Fish are sold to local restaurants on open account, and customers are given 15 days to pay their account. Cash fares are collected for all passenger traffic. Rent for the dock facilities is paid at the beginning of each month. Salaries and wages are paid at the end of the month. The following amounts are from the records of Green Bay Corporation at the end of its first month of operations: Accounts receivable $18,300 Notes payable $57,000 Boats 74,100 Passenger service revenue 11,910 Capital stock 38,200 Rent expense 3,800 Cash 7,650 Retained earnings ? Dividends 6,200 Salary and wage expense 17,300 Fishing revenue 20,240
Using the data given, prepare an income statement for the month ended July 31, 2017.
| Green Bay Corporation | ||
| Income Statement | ||
| For the Month Ended July 31, 2017 | ||
| Revenues: | ||
| Total revenues | ||
| Expenses: | ||
| Total expenses | ||
2. Using the data given, prepare a balance sheet at July 31, 2017.
| Green Bay Corporation | |
| Balance Sheet | |
| July 31, 2017 | |
| Assets | |
| Total assets | |
| Liabilities and stockholders' equity | |
| Total liabilities and stockholders' equity | |
3. While assessing the long-term viability of the Notes Payable, which of the following would you least consider?
| 1. | The due date. |
| 2. | The interest rate. |
| 3. | The amount of the note. |
| 4. | Any assets been offered as collateral for the loan. |
In: Accounting
|
A small business owner visits her bank to ask for a loan. The owner states that she can repay a loan at $2,300 per month for the next three years and then $4,600 per month for two years after that. If the bank is charging customers 8.25 percent APR, how much would it be willing to lend the business owner? |
In: Finance
General Electric (GE) sells over $5 billion worth of goods and services to Chinese customers in the business market. Go to http://www.ge.com and complete the following
For each business division identify one to three products/businesses that likely address important needs or priorities in China? explain how their contributions may be beneficial to the country?
In: Finance
A small business owner visits his bank to ask for a loan. The owner states that he can repay a loan at $2,100 per month for the next three years and then $1,100 per month for two years after that. If the bank is charging customers 10.00 percent APR, how much would it be willing to lend the business owner?
In: Finance
A small business owner visits his bank to ask for a loan. The owner states that he can repay a loan at $2,100 per month for the next three years and then $3,100 per month for the two years after that. If the bank is charging customers 6.75 percent APR, how much would it be willing to lend the business owner?
In: Finance
A small business owner visits his bank to ask for a loan. The owner states that he can repay a loan at $2,100 per month for the next three years and then $3,100 per month for the two years after that. If the bank is charging customers 6.75 percent APR, how much would it be willing to lend the business owner?
In: Finance
Given demand curve for Silvana Chocolates Company ( SCC )
QD = 10,000 - 25P.
e. Suppose that the price of SCC rose to P = $250.What would be
the new point-price elasticity of demand? What is total revenue at
this price? What is marginal revenue at this price?
f. Suppose that the supply Curve of SCC is given by the equation QS
= -5,000 + 50P.What is the relationship between quantity supplied
and quantity demanded at a price of $300?
g. In this market, what is the equilibrium price and quantity?
In: Economics
In: Economics