AFN equation

Broussard Skateboard's sales are expected to increase by 25% from $8.8 million in 2019 to $11.00 million in 2020. Its assets totaled $3 million at the end of 2019.

Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 5%, and the forecasted payout ratio is 40%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Do not round intermediate calculations. Round your answer to the nearest dollar.

QUESTION 2 (UNIT 3)
a) Distinguish the differences between stock splits and stock dividends.

b) Recent dividend distributed RM1. Suppose a firm is expected to increase dividends by 20% in one year and by 15% in two years. After that, dividends will increase at a rate of 5% per year indefinitely. If the required return is 20%, calculate the stock.

BBF302/05 FINANCIAL MANAGEMENT AND ANALYSIS
JULY 2020
ASSIGNMENT 2
Page 3 of 4
c) Capital Bhd. just paid a dividend of RM2.00 per share on its stock. The dividends are expected to grow at a constant 6 percent per year indefinitely. If investors require a 13 percent return on Capital stock, calculate;
i) The current stock price

ii) The stock price in 3 years

iii) The stock price in 15 years

On January 1, 2019, Smith Inc. granted 6,500 Stock Appreciation Rights (SAR) to its executives, exercisable 2 years after grant date (unless employment is terminated) and prior to 8 years from grant date. The executives are to receive cash at exercise date for the excess of the market price over the pre-established base price of $25. The year-end fair values of each SAR were $3, 5.50, and $4.80 in 2019, 2020 and 2021 respectively. The executives exercise their SARs on 8/7/22 when the market price was $32 per share.

1.     Prepare a properly labeled schedule to determine the amount of compensation expense for each of the four years.
2.    Prepare the journal entries at 12/31/19, 12/31/20, 12/31/21, and 8/7/22.

Oman International Marketing Company (OIMC) has decided to issue an IPO for OMR 4.980 Million in June 2020. The per share value is decided for 600 Baiza. Oman International Marketing has appointed your firm as an underwriter for this IPO. During the phase of ‘call for application’, your firm has received applications for 9.500 Million shares.

Required:

1. Whether OIMC’s IPO is undersubscribed or oversubscribed with current receipt of applications for shares i.e. 9.500 Million shares?
2. How many actual applications are needed for full subscription of OIMC’s IPO?
3. After receipt of applications for 9.500 Million shares, as an underwriter of this IPO, which treatment you would suggest to the management of Oman International Marketing Company to make this IPO up-to its ‘Full Subscription’ only?

Your brother has offered to give you $165?, starting next? year, and after that growing at 2.5% per year for the next 2020 years. You would like to calculate the value of this offer by calculating how much money you would need to deposit in a local bank so that the amount will generate the same cash flows as he is offering you. Your local bank will guarantee a 5.8% annual interest rate so long as you have money in the account. a. How much money will you need to deposit into the account? today? b. Assuming you deposited the amount of money in part ?(a?), and then withdrew the required payments each? year, calculate the remaining balance at the end of years? 1, 2, 10 and 19.? (Hint: To solve this problem it is best to use an excel? spreadsheet.)??

1. Meet the Runkles: Harry and Marcia. The Runkles have two boys, Brian and Terry. Brian turns 11 years old in 2020 and starts secondary school in (2021) while Terry is a year younger and starts the year after (2022). The Runkles’ neighbours send their children to a private school. It costs $10,000 p.a. for year 7 and increases at a rate of 15 percent p.a. for years 8, 9, 10, 11 and 12. If, instead of sending Brian and Terry to the private school, they send them to the public school for a total cost of $10,000 each across all years, how much will the Runkles have saved by the end of 2027, when Terry would finish up? [Note: this is not a time value question. Simply add up the differential].

It is December 2019. Google has offered to buy your internet startup. The Google negotiators and you both agree on the following expectations.

After 2024, cash flows are expected to grow by 5% per year. Based on the riskiness of your industry, you think that your weighted average cost of capital is 15%.

You have bank loans worth $400,000 outstanding.

What is the horizon value, i.e., the present value of all free cash flows from 2025 to infinity expressed in 2024-dollars?

What is the total value of the company?

What is the value per share of common stock if you have 100,000 shares outstanding?

Company X has issued a total of 1000 shares as of 2020.1.30, comprising 700 common shares, 100 non-debt preferred shares and 200 redeemable preferred shares.

1. What is the capital of this company?(the reason and calculation process together)

Company X repaid redeemable preferred shares in cash on March 1 and merged the shares 2:1 on April 1.

2. What is the capital as of April 2? ( the reason and calculatuon process together)

Company C carried out a paid-in capitsl increase wirh the payment deadline of April 15. A took over 60 shares by subscription to the same paid-in capital increase, and transferred 60 shares that were acquires to B on April 14 due to the urgent need for money.

3. After the settlement of accounts in 2020, who will receive the dividends?

Supply and Demand: In early 2020 the COVID-19 pandemic swept across the nation and world. In response, many workers moved from in-person working to remote working.
Webcams in particular showed an increase in the amount sold, especially the most well-known and trusted brands.

a. Most webcams are produced in China. The US is currently in a trade war with the Chinese which effectively causes additional costs on the production of Chinese goods through tariffs (i.e., taxes). Suppose after the next election, the US abandons the trade war and removes the tariffs. What effect should that have on the price of webcams?   

b. Logitech claims that it is ramping up capacity but is working to “overcome component shortages.” Using an elasticity of supply argument,explain what Logitech is claiming here. Do you expect that to last indefinitely?

AFN equation

Broussard Skateboard's sales are expected to increase by 25% from $7.0 million in 2019 to $8.75 million in 2020. Its assets totaled $3 million at the end of 2019.

Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 4%, and the forecasted payout ratio is 50%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Do not round intermediate calculations. Round your answer to the nearest dollar.