Get college assignment help at uniessay writers Mini Case This Mini Case is available in MyFinance Lab, Assume that you write a column for a very widely followed financial blog titled, “Finance Questions: Ask the Expert.” Your job is to field readers’ questions that deal with finance. This week you are to address two going Question 1: I own 8 percent of the Standlee Corporation’s 30,000 shares of common stock, which recently traded for a price of $98 per share. The company has since declared its plans gage in a two-for-one stock split. What will my financial position be after the stock split, compared to my current position? (Hint: Assume the stock price falls proportionately.) b. The executive vice-president in charge of finance believes the price will not fall in propor- tion to the size of the split and will only fall 45 percent because she thinks the pre-split price is above the optimal price range. If she is correct, what will be my net gain from the split? Question 2: You are on the board of directors of the B. Phillips Corporation, and Phillips has an- nounced its plan to pay dividends of $550,000. Presently there are 275,000 shares outstanding, and the earnings per share is $6. It looks to you like the stock should sell for $45 after the ex-dividend date. If instead of paying a dividend, the management decides to repurchase stock What should be the repurchase price that is equivalent to the proposed dividend? (Hint: Ignore any tax effects.) b. How many shares should the company repurchase? c. You want to look out for the small shareholders. If someone owns 100 shares, do you think he would prefer that the company pay the dividend or repurchase stock? questions from your readers that have to do with dividends. most to en- a. a.
Exercise 8-13 The cash records of Dawes Company show the following four situations. For July: $15,750, but the bank statement indicates that only $15,600 in deposits were received during the month. 1. The June 30 bank reconciliation indicated that deposits 2. The June 30 bank reconciliation also reported outstanding checks of $680. During the month of July, Dawes Company’s books show that $17,200 of checks were issued. The bank statement showed that $16.400 of checks cleared the bank in July transit total $920. During July, the general ledger account Cash shows deposits n September, deposits per the bank statement totaled $25,700, deposits per books were $26,400, and deposits in transit at September 30 were $2,100o. September 30 were $2.100. 4. September, cash disbursements per books were $23,700, checks clearing the bank were $25,000, and outstanding checks There were o bank debit or credit memoranda. No errors were made by either the bank or Dawes Company. (a) In situation (1), what were the deposits in transit at July 31? Deposits in transit at July 31 (b) In situation (2), what were the outstanding checks July 31? Outstanding checks at July 31 c) n situation (3), what were the deposits in transit at August 31? Deposits in transit at August 31 (d) In situation (4), what were the outstanding checks August 31? Qutstanding checks at August 31 Click if you would like to Show Work for this question: Open Show Wark
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Fill in the missing numbers for the following income statement. (Do not round intermediate calculations.) $ Sales 664,400 426,400 Costs 101,600 Depreciation EBIT Taxes (22%) Net income b. Calculate the OCF. (Do not round intermediate calculations.) What is the depreciation tax shield? (Do not round intermediate calculations.) c. b. OCF Depreciation tax shield C.
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Fill in the missing numbers for the following income statement. (Do not round intermediate calculations.) Sales 660,800 422,200 Costs Depreciation 99,800 EBIT Taxes (21% Net income b. Calculate the OCF. (Do not round intermediate calculations.) c. What is the depreciation tax shield? (Do not round intermediate calculations.) OCF Depreciation tax shield C.
Question 2 (Structured mandate): Consider an Insurance firm that needs to make 2 liability payments over the next 7 years: the first liability payment of $2m is due at the end of 3 years and the second iability payment of $5m is due at the end of 7 years. The firm will use the following three bonds to classically immunise the liability payments. Details of the bonds are as follows (assume all bonds pay coupon interest on annual basis, and the YTM for all bonds and liabilities are 8%) Bond Maturity Coupon Interest 5% 1 years A 10% 3 years B 0% 10 years C a) Calculate the present value of the liability stream. b) Calculate the Macaulay’s Duration of the liability stream. c) Calculate the Macaulay’s Duration for each bond. Calculate the investment (proportion only) d) liability stream. e) in Bond A and C only to classically immunise the Suppose that the liability stream needs to be immunised with all three bonds, and the investment in Bond B is fixed at 30%, what is the investment (proportion only) in Bond A and C
Name: The par value (or face value) 1. A bond issued 5 years ago has an is $1,000. The annual coupon rate on the bond is 7 percent. The coupon payments are made semiannually. The annual required return on the bond (or market interest rate or yield to maturity) is 9 percent. Assume that the next coupon payment occurs six months from today. What should be the value of the bond today? original maturity of 30 years. 2. A bond is currently sold at $1,200. The par value of the bond is $1,000. The bond matures in 20 years. The annual yield to maturity (or required rate of return) on the bond is 8 percent. What is the coupon rate on the bond if the coupon is paid semiannually? The next payment occurs six months from today. 3. A firm will pay a common stock dividend of $3.50 next year. The required return on common stock is 14 percent. The firm has a constant growth rate of 5 percent per year indefinitely. Compute the current price of the stock.
4. A company just paid $4.00 annual dividend. The firm has a stock price of $70, and a constant growth rate of 5 percent. Compute the required rate of return. 5. Suppose a firm is expected to pay a dividend next year of $5.00 per share. profits for the company are expected to grow at a rate of 30 percent in year 2 and year 3, and then at 6 percent per year thereafter indefinitely. Dividend growth is expected to match sales growth. If the required return is 16 percent, what is the value of a share of firm’s stock? Both sales and 6. A company has just paid an annual dividend of $4.00 per share. The company will increase its dividend by 30 percent next year. The firm will then reduce its dividend growth rate by 6 percent each year until the dividend reaches the industry average of 6 percent growth. The firm will then maintain that dividend growth rate forever. The required rate of return for the company is 13 percent. Find the price of the stock.
Get college assignment help at uniessay writers It has a required rate The preferred stock of XYZ Corp. pays a fixed annual dividend of $6. 7. of return of 12 percent. Compute the price of the preferred stock. 8. A company has preferred stock outstanding that pays a fixed annual dividend of $7. price of $70. What is the required rate of return on the preferred stock? It has a
P7-18 (similar to) Question Help Using the free cash flow valuation model to price an IPO Personal Finance Problem Assume that you have an opportunity to buy the stock of CoolTech, Inc., an IPO being offered for $11.21 per share. Although you are very much interested in owning the company, you are concerned about whether it is fairly priced. To determine the value of the shares, you have decided to apply the free cash flow valuation model to the firm’s financial data that you’ve accumulated from a variety of data sources. The key values you have compiled are summarized in the following table, a. Use the free cash flow valuation model to estimate CoolTech’s common stock value per share. b. Judging by your finding in part a and the stock’s offering price, should you buy the stock? c. On further analysis, you find that the growth rate in FCF beyond 2023 will be 5% rather than 4%. What effect would this finding have on your responses in parts a and b? a. The value of CoolTech’s entire company is $ (Round to the nearest dollar.) Data Table (Click on the icon located on the top-right comer of the data table below order to copy its contents into a spreadsheet.) Free cash flow Year (t) FCF Other data $720,000 2020 Growth rate of FCF, beyond 2023 to infinity 4% Weighted average cost of capital 13% Market value of all debt $2,080,000 Market value of preferred stock $830,000 2021 $870,000 2022 $970,000 $1,090,000 2023 Number of shares of common stock be issued 1,100,000 Enter your answer in the answer ? Print Done 5 parts remaining
Common stock value-Variable growth Newman Manufacturing is considering a cash purchase of the stock of Grips Tool. During the year just completed, Grips earned $3.42 per share and paid cash dividends of $1.72 per share (Do $1.72). Grips’ earnings and dividends are expected to grow at 40% per year for the next 3 years, after which they are expected to grow 8% per year to infinity. What is the maximum price per share that Newman should pay for Grips if it has a required return of 13% on investments with risk characteristics similar to those of Grips?? The maximum price per share that Newman should pay for Grips is $ (Round to the nearest cent.)
Capital Expenditure Requests: CERS Part of Stryker’s capital allocation process was structured around formal requests for authority to spend funds referred to as Capital Expenditure Requests (“CERS”). Nominally, CERS were forms that had to be filled out before authority to spend could be obtained. More broadly, they embodied a proposal and approval process that was utilized throughout the entire corporation. Internal guidelines split proposals into two broad categories: Operational and M
Question 3 tb 9en 16 ttesn no asniow 20 marks Ann has bought BigBank bonds as an investment. She purchased the bonds on 31 December 2012 (just after the semi-annual coupon pavment due on that date had been paid), for a yield to maturity of 5% p.a. The bonds have a face value of $1000, a coupon rate of 4% p.a., a maturity date of 31 December 2030, and pay coupons twice a year. What price (per bond) did Ann pay for these bonds on 31 December 2012? a. (6 marks
CASES Intel Case Case 3.1 The 2013 Intel Form 10-K can be found at the following Web site: www.pearsonglobal editions.com/fraser. (a) Using the consolidated statements of operations, analyze the profitability of Intel by preparing a common-size income statement for the past three years. In addition, calculate sales growth and operating expense growth for each two year period presented, as well as effective tax rates for all three years. (b) Using the consolidated statements of stockholders’ equity for Intel, explain the key reasons for the changes in the common stock, accumulated other compre- hensive income, and retained earnings accounts. Evaluate these changes INTEL CORPORATION CONSOLIDATED STATEMENTS OF INCOME Three Years Ended December 28, 2013 (In Millions, Except Per Share Amounts) 2013 2012 2011 $ Net revenue 52,708 53,341 $ 53,999 Cost of sales 21,187 20,190 20,242 33,757 Gross margin 31,521 33,151 8,350 7,670 Research and development Marketing, general and administrative 10,611 10,148 8,088 8,057 240 Restructuring and asset impairment charges Amortization of acquisition-related intangibles Operating expenses 291 308 260 18,513 19,230 16,280 12,291 14,638 17,477 Operating income Gains (losses) on equity investments, net 471 141 112 (151) 192 Interest and other, net 94 Income before taxes 12,611 14,873 17,781 Provision for taxes 3,868 2,991 4,839 $ 9,620 $ 11,005 $ Net income 12,942 $ 1.94 $ Basic earnings per common share 2.20 2.46 2.13 $ $ $ Diluted earnings per common share 1.89 2.39 Weighted average common shares outstanding: Basic 4,970 4,996 5,256 Diluted 5,160 5,411 5,097 INTEL CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENS IVE INCOME Three Years Ended December 28, 2013 (In Millions) 2012 2013 2011 Net income $ 12,942 9,620 11,005 $ Other comprehensive income, net of tax: Change in net unrealized holding gains (losses) on available-for- sale investments |(170) 1,181 470 Change in net deferred tax asset valuation allowance (26) (11) (99) Change in net unrealized holding gains (losses) on derivatives 85 (89) (119) Change in net prior service costs 18 4 |(172) Change in actuarial valuation 520 (588) Change in net foreign currency translation adjustment 38 10 (142) Other comprehensive income (loss) 382 (1,114) 1,642 Total comprehensive income $ 11,262 $ 11,387 $ 11,828 INTEL CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Common Stock and Capital in Excess of Par Value Accumulated Comm nsive Income (Loss) Three Years Ended December 28, 2013 (In Millions, Except Per Share Amounts) Number of Shares Retained Amount Earnings Total Balance as of December 25, 2010 16,178 $ 32,919 $ 5,511 $ 333 49,430 Components of comprehensive income, net of tax: Net income 12,942 12,942 Other comprehensive income (loss) (1,114) (1,114) Total comprehensive income 11,828 Proceeds from sales of shares through employee equity incentive plans, net tax deficiency, and other 2,019 2,019 142 Assumption eqawards in connection with acquisitions 48 48 Share-based compensation 1,053 1,053 Repurchase of common stock (653) (2,262) (12,078) (14,340) Cash dividends declared ($0.7824 per common share) (4,127) (4,127) Balance as of December 31, 2011 5,000 17,036 (781) 29,656 45,911 Components of comprehensive income, net of tax: Net income 11,005 11,005 Other comprehensive income (loss) 382 382 Total comprehensive income Proceeds from sales of shares through employee equity incentive plans, net excess tax benefit, and other 11,387 148 2,257 2,257 Share-based compensation 1,108 1,108 Repurchase of common stock Cash dividends declared ($0.87 per common share) (204) (4,173) (937) (5,110) (4,350) 32,138 (4,350) 4,944 Balance as of December 29, 2012 19,464 (399) 51,203 Components of comprehensive income, net of tax: Net income 9,620 9,620 Other comprehensive income (loss) 1,642 1,642 Total comprehensive income 11,262 Proceeds from sales of shares through employee equit deficiency, and other Share-based compensation net tax ent p 1,593 130 1,593 1,117 1,117 Repurchase of common stock Cash dividends declared ($0.90 per common share) (107) (638) (1,802) (2,440) (4,479) (4,479) 35,477 $ Balance as of December 28, 2013 21,536 $ 4.967 1.243 58,256
The General Hospital is evaluating new office equipment offered by four companies. The useful life of the equipment is 7 years C 2 C 3 C 4 C 1 First cost $15,000 $18,000 $25,000 $20,000 Maintenance and operating cost annual) 1,600 1262 400 991 Annual benefit 8,000 9,000 13,000 11,000 Salvage value 3,500 6,000 4,500 4823 When doing an incremental analysis looking at it from an investment perspective the companies need to be ranked as follows Select one: C 4-C 3-C 2-C 1 C 1-C 2-C 3-C 4 C 3-C 4-C 2-C 1 C 1-C 2-C 4-C 3
Common stock value Zero growth Personal Finance Problem Kelsey Drums, Inc., is a well-established supplier of fine percussion instruments to orchestras all over the United States. The company’s class A common stock has paid a dividend of $3.51 per share per year for the last 12 years. Management expects to continue to pay at that amount for the foreseeable future. Kim Arnold purchased 300 shares of Kelsey class A common 9 years ago at a time when the required rate of return for the stock was 7.2%. She wants to sell her shares today. The current required rate of return for the stock is 10.20%. How much total capital gain or loss will Kim have on her shares? The value of the stock when Kim purchased it was per share. (Round to the nearest cent.) The value of the stock if Kim sells her shares today is $ per share. (Round to the nearest cent.) The total capital gain (or loss) Kim will have on her shares is $ (Round to the nearest dollar. Enter a positive number for a capital gain and a negative number for a loss.)
Common stock value Constant growth Use the constant-growth model (Gordon growth model) to find the value of the firm shown in the following table: (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Dividend expected next Dividend growth rate Required return year $1.48 8.4% 12.7% The value of the firm’s stock is $ (Round to the nearest cent.)
Preferred stock valuationJones Design wishes to estimate the value of its outstanding preferred stock. The preferred issue has a par value of $60 and pays an annual dividend of $5.40 per share. Similar-risk preferred stocks are currently earning an annual rate of return of 7.8%. a. What is the market value of the outstanding preferred stock? b. If an investor purchases the preferred stock at the value calculated in part a, how much does she gain or lose per share if she sells the stock when the required return on similar-risk preferred stocks has risen to 9.6%? a. The market value of the outstanding preferred stock is $ per share. (Round to the nearest cent.) f the required return on similar-risk preferred stocks has risen to 9.6%, the value of the stock will be $per share. (Round to the nearest cent.) b. If an investor purchased the preferred stock at the value calculated in part a and sells the stock when the required return on similar-risk preferred stocks has risen to 9.6%, the gain or loss is $per share. (Round to the nearest cent. Enter a positive number for a gain and a negative number for a loss.)
aluation with price/earnings multiples For the firm shown in the following table, use the data given to estimate its common stock value employing price/earmings P/E) multiples. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Expected EPS Price/earnings multiple $2.31 8.1 The value of the firm’s common stock is $ (Round to the nearest cent.)
The post Question: Mini Case This Mini Case Is Available In MyFinance Lab, Assume That You Write A Column For A Very Widely Followed Financial Blog Titled, “Finance Questions: Ask The Expert.” Your Job Is To Field Readers’ Questions That Deal With Finance. This Week You Are To Address Two Going Question 1: I Own 8 Percent Of The Standlee Corporation’s 30,000 Shares Of … appeared first on uniessay writers.