A firm has Sales of $25,000,000, total assets of $22,000,000, current assets of $8,000,000, spontaneous liabilities of $5,000,000, a profit margin of 5 percent, a tax rate of 40%, and a dividend payout rate of 20 percent. Sales are expected to increase to $28,000,000 for the coming year, and the firm will need to increase its fixed assets at this level of sales (that is, fixed assets will increase proportionately with sales). Given this information, and using the equation approach, determine the additional funds needed for the coming year.
Q: capital of 8% which pet is 500,000 and with the following future cash flows in years one through…
A: NPV, or Net Present Value, is a financial metric used to determine the profitability of an…
Q: What are two ways you can calculate the cost of equity? Select all that apply, then click Submit…
A: The cost of equity can be calculated with following methods:Dividend growth model approach:Ke = (D1…
Q: 21. The Nintendo entertainment system (NES) was introduced to the North American market in 1985 at…
A: Price of NES @ 1985 = $180PCEPI in 1985 = 53.0PCEPI in 2022 = 123.1PCEPI is the measure of the…
Q: A bank offers 25-year, $185,000 mortgages at 4.8 percent and charges a $3,800 refundable loan…
A: APR, or Annual Percentage Rate, is the total cost of borrowing, including both interest and fees,…
Q: A stock has a beta of 1.3, and a market risk premium of 8%. The risk-free rate is 4%. What is…
A: The objective of this question is to calculate the expected return on a stock given its beta, the…
Q: You decide to invest in a portfolio consisting of 24 percent Stock A, 50 percent Stock B, and the…
A: The portfolio variance shows how the performance of various investments in a portfolio differs from…
Q: You are given the following information concerning three portfolios, the market portfolio, and the…
A: R Squared = Correlation 2Correclation = 0.80
Q: eBook A store has 5 years remaining on its lease in a mall. Rent is $1,900 per month, 60 payments…
A: The objective of the question is to determine whether the store should accept the new lease, what…
Q: Usually ground leases are for relatively short periods of time. True or False
A: That statement is somewhat False. Ground leases can vary in duration, ranging from relatively short…
Q: Dorothy & George Company is planning to acquire a new machine at a total cost of $37,500. The…
A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…
Q: Suppose that there is an upward shift in the expected rate of return on the risky asset, from 15% to…
A: The Capital Allocation Line (CAL) is a crucial concept in finance that illustrates the trade-off…
Q: do not earn
A: Non- Banking Financial Institutions - NBFCs are financial institutions that provide bank-related…
Q: Star City is considering an investment in the community center that is expected to return the…
A: Solution:-a)Calculation of Net present value If appropriate discount rate 22% as follows under:-
Q: Finch, Incorporated, is debating whether to convert its all-equity capital structure to one that is…
A: cash flow statement refers to the statement showing the movement of cash under operating, financing…
Q: An investor buys a property for $670,000 with a 25-year mortgage and monthly payments at 8.8% APR.…
A: Monthly payment refers to an amount that is paid every month for the repayment of a loan amount by…
Q: A company purchased an asset for $3,700.000 that will be used in a 3-year project. The asset is in…
A: Purchase price of asset =3,700,000Number of years =31-year depreciation =33.33%2-year depreciation…
Q: Canada trades a shipment of wheat to Saudi Arabia in exchange for a shipment of oil. What is this…
A: The correct answer to the question is barter.This is because, in barter transaction, goods or…
Q: 4 years ago you purchased a 12 year maturity, 3.3% coupon annual pay bond at a price of $90 per $100…
A: The time or period between the purchase of a security and the selling of a security is referred to…
Q: Estimate your firm's Weighted Average Cost of Capital. Assume that the current risk-free rate of…
A: Weighted average cost of capital(WACC) is the average cost of capital, which can be calculated by…
Q: Your factory has been offered a contract to produce a part for a new printer. The contract would…
A: IRR refers to the rate of return at which the NPV of the project or business is zero that means rate…
Q: Primo Management Company is looking at how best to evaluate the performance of its managers. Primo…
A: Total within sector selection=Large cap growth +Mid cap growth +Small cap growth.
Q: Assume Ford Motor Company is discussing new ways to recapitalize the firm and raise additional…
A: WACC is also known as weighted average cost of capital. It includes the cost of debt & cost of…
Q: Home Depot has debt outstanding with a face value of $30 billion. The coupon rate on these bonds is…
A: Face value: $30 billionCoupon rate: 6.2%YTM: 7.8%Tax rate: 26%
Q: Maroon has an expected return of 20%, and a variance of 0.015. Gray has an expected return of 19%,…
A:
Q: Block stock sells for $31 per share. It just paid a dividend of $1.14 per share. The company has a…
A: The cost of equity is the required rate of return based on the expectation of shareholders based on…
Q: MORTGAGE: 30-year, 5.25% Interest Rate, $155,000 Loan Amount. How much principal is paid the first…
A: Mortgage loans are paid by equal monthly payments and these monthly payments carry the payment for…
Q: Lopez Company is considering three alternative investment projects below: Project 1 5.1 years…
A: Net present value = Present value of cash inflows - Present value of cash outflows.
Q: Sebastian and Sunny are married. They are currently contemplating filing as married filing…
A: The correct answer is "D. Either both use itemized deductions, or both use standard deduction".This…
Q: 11. Thomson Electric Systems is considering a project that has the following cash flow and WACC…
A: Note : As per guidelines we can solve only three subparts So kindly post other parts separately.IRR…
Q: (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70 in interest,…
A: Honor code:As per the Q&A guidelines, if multiple subparts are asked at once then the answer for…
Q: Larry’s Levers, a large manufacturer of crowbars, has a book value debt-to-equity ratio of 0.30…
A: The objective of the question is to calculate the Weighted Average Cost of Capital (WACC) for…
Q: At age 26, you start an IRA to save for retirement. You deposit $125 at the end of each month. If…
A: Annuity refers to a stream of constant periodic cash flows. For instance a cash flow of $100 each…
Q: There is a zero coupon bond that sells for $4,432.06 and has a par value of $10,000. If the bond has…
A: The yield to maturity on the zero coupon bond is calculated using the following equationWhere, FV is…
Q: Break-even analysis can help compare locations on the basis of factors that are expressed in terms…
A: Introduction: Break-even analysis stands as a critical tool for businesses assessing the financial…
Q: Given the following information, what is the expected return on a portfolio that is invested 30…
A: Expected return of a portfolio is the sum of weighted average return of individual stocks. In order…
Q: Assume the market value of Ford's equity, preferred stock and debt are $8 billion, $3 billion and…
A: Cost of Equity is calculated by Capital Asset Pricing Model..Cost of Equity Ke = Risk free rate +…
Q: Last year, Absolute Zero Freezers paid a dividend equal to $0.77 per share. Absolute follows the low…
A: minimum (low regular) dividend = Dividend paid last year - Extra dividend paid
Q: Sugar Skull Corporation uses no debt. The weighted average cost of capital is 6.2 percent. If the…
A: Weighted Average Cost of Capital = 6.2%Market value of equity = $16 millionDebt = 0Tax rate = 0EBIT…
Q: compensation package includes incentive stock options. She was granted 100 ISO on October 1, XX01,…
A: To calculate the long-term capital gain from the sale of ISOthe bargain element should be calculated…
Q: 27. If the discount rate is 7%, what is the present value, to the nearest dollar, of an investment…
A: In this question, we are required to determine the present value of perpetuity.
Q: Tipialo Solutions Inc has 3 business segments with their respective asset value and asset beta as…
A: Answer:1. Calculate the total equity value of the company before the divestiture using the…
Q: A forklift Currency cost $39,000. You estimale that you will need to replace this forklift in w…
A: Variables in the question:PV=$ 39000n=10 yearsIncrease in the cost of forklift cost per year (r)=3%
Q: Cori's Corporation, has a book value of equity of $13,185. Long-term debt is $7,475. Net working…
A: Total Assets = Total liabilities + Shareholders' equity(Fixed Assets + Current Assets) = (Long term…
Q: The Loughran Corporation has issued zero-coupon corporate bonds with a five-year maturity. Investors…
A: Expected maturity value = [100*(1-default rate)] + [100 * default rate*Percentage receivable on…
Q: eases 3 years Create a table with: interest ranging from 0% o 50% increasing by 5% increments NPV…
A: Net present value is determined by deducting the initial investment from the current value of cash…
Q: Laurel, Inc., has debt outstanding with a coupon rate of 6.1% and a yield to maturity of 6.9%. Its…
A: After tax cost of debt= Pretax cost of debt * (1 - tax rate)
Q: what is the new NPV of the project?
A: Information on Original problem:Cash inflows:If the franchise is awarded − $8mIf the franchise was…
Q: You plan to save $2,000 each year for the next four years to pay for a vacation. You invest (and…
A:
Q: Robinson Robotics is considering two mutually exclusive projects, Project A and Project B. The…
A: NPV (Net Present Value) is a financial metric used to evaluate the profitability of an investment by…
Q: MIRR A project has an initial cost of $60,000, expected net cash inflows of $15,000 per year for 7…
A: Initial cost: $60,000Cash inflow per annum: 15,000Number of years: 7Cost of capital: 11%
Step by step
Solved in 3 steps with 3 images
- Assume that a firm has Sales of $25,000,000, total assets of $20,000,000, current assets of $8,000,000, spontaneous liabilities of $3,000,000, a profit margin of 3.800 percent, a tax rate of 40%, and a dividend payout rate of 60 percent. Also assume that sales are expected to increase to $28,000,000 for the coming year and that the firm will not need to increase its fixed assets at this level of sales. Given this information, and using the equation approach, determine the additional funds needed for the coming year. $174.400 $180,000 O $177.200 O $168.800 O $171.600VWX Inc., has sales of $500,000, net income of $80,000, dividend payout of 50%, total assets of $700,000 and target debt-equity ratio of 1.5. If the company grows at its sustainable growth rate in the coming year, how much new borrowing (to the nearest dollar) will take place?Gbenda Corporation has sales of $91,200, net income of $18,240, dividends paid of $3,830, total assets of $456,000, and total liabilities of $182,400. Assume that all costs and assets change spontaneously with sales. The tax rate and dividend payout ratios remain constant. If the firm’s managers project a firm growth rate of 10 percent for next year, what will be the amount of external financing needed to support this level of growth? Assume the firm is currently operating at full capacity.Multiple Choice- $25,536- $29,749- $45,600- $65,664- $41,387
- Green Caterpillar Garden Supplies Inc. has the following end-of-year balance sheet: Green Caterpillar Garden Supplies Inc. Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities: Cash and equivalents Accounts payable Accounts receivable Accrued liabilities Inventories Total Current Assets Net Fixed Assets: Net plant and equipment (cost minus depreciation) Total Assets $150,000 400,000 350,000 $900,000 $2,100,000 $3,000,000 Notes payable Total Current Liabilities Long-Term Bonds Total Debt Common Equity Common stock Retained earnings Total Common Equity Total Liabilities and Equity $250,000 150,000 100,000 $500,000 1,000,000 $1,500,000 800,000 700,000 $1,500,000 $3,000,000Sambonoza Enterprises projects its sales next year to be $4 million and expects to earn 5 percent of that amount after taxes. The firm is currently in the process of projecting its financing needs and has made the following assumptions (projections): 1. Current assets will equal 20 percent of sales, and fixed assets will remain at their current level of $1 million. 2. Common equity is currently $0.8 million, and the firm pays out half its after-tax earnings in dividends. 3. The firm has short-term payables and trade credit that normally equal 10 percent of sales, and it has no long- term debt outstanding. What are Sambonoza's financing requirements (i.e., total assets) and discretionary financing needs (DFN) for the coming year?We are predicting for the end of this fiscal year: Skunk Products' EBIT is $1000, its tax rate is 35%, depreciation is $100, capital expenditures are $200, accounts receivable increase by $100, and accounts payable decrease by $100. What is the free cash flow to the firm? The FCFF will grow at 3%, WACC is 10%. What is the value of the company's assets? FCFF1 = $
- Blur Corp. has an expected net operating profit after taxes, EBIT(1-T), of $7,600 million in the coming year. In addition, the firm is expected to have net capital expenditures of $1,140 million, and net operating working capital (NOWC) is expected to increase by $10 million. How much free cash flow (FCF) is Blur Corp. expected to generate over the next year? O $118,668 million $6,450 million O $8,730 million O $6,470 million Blur Corp.'s FCFs are expected to grow at a constant rate of 4.62% per year in the future. The market value of Blur Corp.'s outstanding debt is $31,412 million, and its preferred stocks' value is $17,451 million. Blur Corp. has 150 million shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 13.86%. Term Total firm value Intrinsic value of common equity Intrinsic value per share Value (Millions) Using the preceding information and the FCF you calculated in the previous question, calculate the appropriate values in this table.…Blur Corp. has an expected net operating profit after taxes, EBIT(1-T), of $7,600 million in the coming year. In addition, the firm is expected to have net capital expenditures of $1,140 million, and net operating working capital (NOWC) is expected to increase by $10 million. How much free cash flow (FCF) Is Blur Corp. expected to generate over the next year? ○ $118,668 million $6,450 million ○ $8,730 million O $6,470 million Blur Corp.'s FCFs are expected to grow at a constant rate of 4.62% per year in the future. The market value of Blur Corp.'s outstanding debt is $31,412 million, and its preferred stocks' value is $17,451 million. Blur Corp. has 150 million shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 13.86%. Term Total firm value Intrinsic value of common equity Intrinsic value per share Value (Millions) Using the preceding information and the FCF you calculated in the previous question, calculate the appropriate values in this table.…Consider a company that is projected to generate revenues of $104 million next year. Analysts expect revenues to grow at a 4.6% annual rate for the following two years (until the end of year 3) and then at a stable rate of 2.5% in perpetuity. If the company is expected to have a gross margin of 75%, operating margin of 35%, net margin of 25%, tax rate of 16.4%, and reinvestment rate of 34%, what is its expected free cash in four years from today? Answer in millions, rounded to one decimal place
- The projected cash flow for the next year for Minesuah Inc. is $125,000, and FCF is expected to grow at a constant rate of 6.8%. If the company's weighted average cost of capital is 15.7%, what is the value of its operations?A firm is considering investing in a project that is expected to generate total free cash flows of $58 million next year. After that they are expected to grow at 1.0%. To finance this project the firm will maintain a constant 65% of the firm value as debt, has a cost of capital of the firm's assets of 7.5%, corporate tax rate of 35%, and cost of debt capital of 4.7%. What is the value of this project? Round your answer to the nearest million-so for example $187,103,202.338 would be "187".Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $1.6 million. Its depreciation and capital expenditures will both be $301,000, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $47,000 over the next year. Its tax rate is 30%. If its WACC is 8% and its FCFs are expected to increase at 5% per year in perpetuity, what is its enterprise value?