Safelight is planning its operations for the coming year, and the CFO wants you to forecast the firm's additional funds needed (AFN). Data for use in the forecast are shown below. Based on the AFN equation, by how much would the AFN for the coming year change (indicate an increase or a decrease in AFN) if Safelight increased the dividend payout ratio from 20% to 25% and net profit margin decreased from 20% to 15%? All dollars are in millions.
|
Last year's sales = S0 |
$300 |
Last year's accounts payable |
$50.0 |
|
|
Sales growth rate = g |
10% |
Last year's notes payable (to bank) |
$15.0 |
|
|
Last year's spontaneous assets = A* |
$500 |
Last year's accruals |
$20.0 |
|
|
Last year's profit margin = PM |
20.0% |
Initial dividend payout ratio |
20.0% |
|
|
Expected profit margin = PM new |
15% |
New dividend payout ratio |
25.0% |
In: Finance
A security will pay $300 in one year and $700 in two years. If the appropriate discount rate is 9.1% per year, what is the value of the security today?
Question 11 options:
| 1)$863.07 | |
| 2)$856.98 | |
| 3)$852.41 | |
| 4)$873.48 | |
| 5)$841.16 |
In: Finance
1. Bob is considering buying a home and selling it in one year. At t=0 it will cost him $100,000 to buy the home. At t=1 he will sell it for $150,000. Buying transaction costs (at t=0) are 5% of the purchase price, and selling transaction costs (at t=1) are 8% of the sale price. Note: each time period is a year. Write out the Net Present Value function for Bob s investment for a general annual discount rate i. Plug all of the numbers you can into the function. Sample Answer: NPV(i)= -100 + (5)/(1+i)^1 + 105/(1+i)^2"
In: Finance
In: Finance
A 5-year bond with a face value of $1000 has a coupon rate of 6%, with semiannual payments. What is the coupon payment for this bond per 6-month period?
| A. |
not enough information |
|
| B. |
$60 |
|
| C. |
$30 |
In: Finance
Discounted Tires plans to save $10,866, $20,585, and $27,782 at the end of each year for Years 1 to 3, respectively. If it earns 5 percent on its savings, how much will the firm have saved at the end of Year 3?
In: Finance
Over the last year the inflation rate was 3.8 percent and the interest rate on US Treasury Bonds was slightly below 2 percent. As an investor in bonds
a. what would you expect to happen to interest rates?
b. using the three bond rules, in terms of prices, maturity, and coupon rates, what type of bonds should an investor purchase? Explain.
c. Which bond is more price sensitive, a zero coupon 20 year to maturity government issued bond or a 5 percent coupon AAA rated 20 year corporate bond? Explain why?
d. Which bond is more price sensitive, a 8 percent coupon bond that matures is 6 years or a 8 percent bond that matures in 4 years? Why?
Note: the concept of a bond’s duration allows bonds of different coupons and maturity dates to be compared in terms of price sensitivity.
In: Finance
How much money do you need to save each year to be a millionaire by the time you are 65 if you can earn an interest rate of 8% and you start saving when you were born? Please use two decimals rounded up.
In: Finance
What is $100 today, plus $100 at the end of 1 year, plus $200 at the end of 2 years, plus $300 at the end of 3 years, worth to you today, given a discount rate of 4%
What is $100 today, plus $100 at the end of 1 year, plus $200 at the end of 2 years, plus $300 at the end of 3 years, worth to you at the end of year 3, given a discount rate of 4%?
In: Finance
CBS agreed to pay $1,000M per year for nine years to retain the rights to the football games. The first payment will be made at the end of this year. If CBS has an opportunity interest rate of 12%, what is the value today of the total payments that CBS will make?
In: Finance