Get college assignment help at uniessay writers Net income 1500, Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 250 Amortization of software 400 Tax benefits of employee 450 stock plans Special charges 200 (Gains)/losses on investments 20 Change in operating assets and liabilities: Receivables 600 Inventories 250 Pension assets (475) Other assets 70 Accounts payable (50) Pension liabilities 85 Other liabilities 200 Net cash provided by operating activities 3,500 Cash flows from investing activities: Payments for plant and other (2,000) property Proceeds from disposition of plant and other property 800 Investment in software (500) Purchases of marketable securities and other investments (1,500) Proceeds from disposition of 1,200 marketable securities and other investments Net cash used in investing Activities (2,000) Additional information: Cash interest receipts 110 Cash interest payments (200) From the reformulated equity statement: Shareholders’ equity December 31, 2002 5,500 Shareholders’ equity December 31, 2003 4,760 Net payout to shareholders 2,500 The firm’s tax rate is 35%. Calculate free cash flow for 2003.( 15 points), b. Calculate net payments to debt holders and issuers for 2003.( 15 points) c. Calculate comprehensive income for 2003.( 10 points)
Which of the following statements is most correct and explain why? a. Indexing tax brackets reduces the extent of
Desai Industries is analyzing an average-risk project, and the following data have been developed. Unit sales will be constant, but the sales price should increase with inflation. Fixed costs will also be constant, but variable costs should rise with inflation. The project should last for 3 years, it will be depreciated on a straight-line basis, and there will be no salvage value. This is just one of many projects for the firm, so any losses can be used to offset gains on other firm projects. What is the project’s expected NPV? WACC 10.0% Net investment cost (depreciable basis) $200,000 Units sold 50,000 Average price per unit, Year 1 $25.00 Fixed op. cost excl. deprec. (constant) $150,000 Variable op. cost/unit, Year 1 $20.20 Annual depreciation rate 33.333% Expected inflation rate per year 5.00% Tax rate 40.0% A $15,925 b. $16,764 c $17,646 d.$18,528 e. $19,455
12. Jobe Enterprise’s sales are expected to increase from $4 in 2007 million to $6 million in 2008 or by 50%. Its assets totaled $3 million at the end of 2007. Jobe is at full capacity so its assets must grow at the same rate as projected sales. At the end of 2007, current liabilities were $1 million, consisting of $250,000 in accounts payable and $500,000 of notes payable, and $250,000 of accruals. The after-tax profit margin is forecasted to be 5% and the forecasted payout ratio is 70%. Use the AFN formula to forecast Jobe’s additional funds needed for the coming year.
. Which one of the following statements is correct? A. The unexpected return is always negative. B. The expected return minus the unexpected return is equal to the total return. C. Over time, the average return is equal to the unexpected return. D. The expected return includes the surprise portion of news announcements. E. Over time, the average unexpected return will be zero.
Textile Importers paid a $1.60 per share annual dividend last week. Dividends are expected to increase by 4 percent annually. What is one share of this stock worth to you today if your required rate of return is 13.5 percent?
70. Tucker’s National Distributing has a current market value of equity of $10,665. Currently, the firm has excess cash of $640, total assets of $22,400, net income of $3,210, and 500 shares of stock outstanding. Tucker’s is going to use all of its excess cash to repurchase shares of stock. What will the stock price per share be after the stock repurchase is completed? A. $20.87 B. $20.94 C. $21.06 D. $21.33 E. $21.42
A lease versus purchase analysis should compare the cost of leasing to the cost of owning, assuming that the asset purchased A) is financed with short-term debt. B) is financed with long-term debt. C) is financed with debt whose maturity matches the term of the lease. D) is financed with a mix of debt and equity based on the firm’s target capital structure, i.e., at the WACC. E) is financed with retained earnings.
Operating leases often have terms that include A) maintenance of the equipment by the lessor. B) full amortization over the life of the lease. C) very high penalties if the lease is cancelled. D) restrictions on how much the leased property can be used. E) much longer lease periods than for most financial leases.
A preferred stock paying 9% dividend on a $150 par value. If a new issue is offered, flotation costs will be 12% of the current price of $175.
Get college assignment help at uniessay writers If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.97 shekels per dollar, then the forward rate for the Israeli shekel is selling at a ________________ to the spot rate. A) premium of 8% B) premium of 18% C) discount of 18% D) discount of 8% E) premium of 16%
Callaghan Motors’ bonds have 11 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 7%; and the yield to maturity is 9%. What is the bond’s current market price? Round your answer to two decimal places
Suppose you are a typical person in the U.S. economy. You pay 4 percent of your income in a state income tax and 15.3 percent of your labor earnings in federal payroll taxes (employer and employee shares combined). You also pay federal income taxes as in Table 3. How much tax of each type do you pay if you earn $20,000 a year? Taking all taxes into account, what are your average and marginal tax rates? What happens to your tax bill and to your average and marginal tax rates? What happens to your tax bill and to your average and marginal tax rates if your income rises to $40,000?
2. Calculate the NPV for a project costing $200,000 and providing $20,000 annually for 40 years. The discount rate is 8%. By how much would the NPV change if the inflows were reduced to 30 years? (25%)
Net present value: Kingston, Inc., is looking to add a new machine at a cost of $4,133,250. The company expects this equipment will lead to cash flows of $814,322, $863,275, $937,250, $1,017,112, $1,212,960, and $1,225,000 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment?
3. (TCO D) Bond value – semiannual payment Assume that you wish to purchase a 20-year bond that has a maturity value of $1,000 and makes semiannual interest payments of $40. If you require a 10 percent nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
NPV Valuation [LO1] The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is “looking up.” As a result, the cemetery project will provide a net cash inflow of $85,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 6 percent per year forever. The project requires an initial investment of $1,400,000. Required: (a) If Yurdone requires a 13 percent return on such undertakings, the NPV of the project is $ ________(Do not include the dollar sign ($). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16)) and the cemetery business should not be started. (b) The company is somewhat unsure about the assumption of a 6 percent growth rate in its cash flows. The company would just break even at a constant growth rate of _______percent (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) if it still required a 13 percent return on investment.
Calculating NPV and IRR [LO1, 5] A project that provides annual cash flows of $28,500 for nine years costs $138,000 today. If the required return is 8 percent, the NPV for the project is $ ____and you would accept the project. If the required return is 20 percent, the NPV is $ ____ and you would reject the project. At a discount rate of _____percent, you would be indifferent between accepting the project and rejecting it.
The returns on the common stock of New Image Products are quite cyclical. In a boom economy, the stock is expected to return 32 percent in comparison to 14 percent in a normal economy and a negative 28 percent in a recessionary period. The probability of a recession is 25 percent while the probability of a boom is 10 percent. What is the standard deviation of the returns on this stock? A. 19.94 percent B. 21.56 percent C. 25.83 percent D. 32.08 percent E. 39.77 percent
The aftertax cost of debt: A. varies inversely to changes in market interest rates. B. will generally exceed the cost of equity if the relevant tax rate is zero. C. will generally equal the cost of preferred if the tax rate is zero. D. is unaffected by changes in the market rate of interest. E. has a greater effect on a firm’s cost of capital when the debt-equity ratio increases.
Preston Industries has two separate divisions. Each division is in a separate line of business. Division A is the largest division and represents 70 percent of the firm’s overall sales. Division A is also the riskier of the two divisions. Division B is the smaller and least risky of the two. When management is deciding which of the various divisional projects should be accepted, the managers should: A. allocate more funds to Division A since it is the largest of the two divisions. B. fund all of Division B’s projects first since they tend to be less risky and then allocate the remaining funds to the Division A projects that have the highest net present values. C. allocate the company’s funds to the projects with the highest net present values based on the firm’s weighted average cost of capital. D. assign appropriate, but differing, discount rates to each project and then select the projects with the highest net present values. E. fund the highest net present value projects from each division based on an allocation of 70 percent of the funds to Division A and 30 percent of the funds to Division B.
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