Dozier corporation is a fast growing supplier of office products.

BA 350 Week 8 Final Exam Sum ( 100% Correct Solution + Steps by Steps Calculation succeeding a while details *****)

2-4 – (Income Statement)

Pearson Brothers recently reputed an EBITDA of \$7.5 Favorite and net pay of \$1.8 favorite. It had \$2.0 favorite of divide expenditure, and its oppidan tax objurgate was 40%. What was its impute for depreciation and amortization?

2-7 – (Corpoobjurgate Tax Liability)

The Talley Corporation had a taxable pay of \$365,000 from operations succeeding all uncounted requires but anteriorly (1) divide impute of \$50,000, (2) dividends contemptible of \$15,000, (3) dividends remunerated of \$25,000, and (4) pay taxes. What are the corporation’s boundaryal and medium tax objurgates on taxable pay?

Chapter 3 Problem 3-8, 3-10

3-8 – (Profit Boundary and Score Ratio)

Assume you are given the behindcited relationships for the Clayton Corporation: Sales/entirety possessions   1.5 Retaliate on possessions (ROA)   3% Retaliate on equity (ROE)   5% Calculate Clayton’s use boundary and score narration.

3-10 – (Times-interest-earned narration)

The Manor Corporation has \$500,000 of score ungathered, and it pays an divide objurgate of 10% annually: Manor’s annual sales are \$2 favorite, its medium tax objurgate is 30%, and its net use boundary on sales is 5%. If the corporation does not restrain a TIE narration of at lowest 5 to 1, then its bank succeed dross to reform the hypothecation and closing succeed outcome. What is Manor’s TIE narration?

Chapter 12 Problem 12.1 12-4

12.1 – (AFN Equation)

Baxter Video Product’s sales are anticipateed to amplifyth by 20% from \$5 favorite in 2010 to \$6 favorite in 2011. Its possessions entiretyed \$3 favorite at the end of 2010. Baxter is already at liberal ability, so its possessions must amplify at the identical objurgate as proposed sales. At the end of 2010, prevalent liabilities were\$1 favorite, consisting of \$250,000 of recitals payable, \$500,000 of notes payable, and \$250,000 of accruals. The succeeding-tax use boundary is prearrangeed to be 5%, and the prearrangeed payout narration is 70%. Use the AFN equation to prearrange Baxter’s affixed funds needed for the advenient year.

12-4 – (Sales Increase)

Bannister Legal Services generated \$2,000,000 in sales during 2010, and its year-end entirety possessions were \$1,500,000. Also, at year-end 2010, prevalent liabilities were \$500,000, consisting of \$200,000 of notes payable, \$200,000 of recitals payable, and \$100,000 of accruals. Looking forward to 2011, the corporation regards that its possessions must amplifyth at the identical objurgate as sales, its gratuitous liabilities succeed amplifyth at the identical objurgate as sales, its use boundary succeed be 5%, and its payout narration succeed be 60%. How great a sales amplifyth can the corporation close succeeding a whileout having to train funds visiblely; that is, what is its self-supporting amplifyth objurgate?

Chapter 13 Problem 13-6, 13-7, 13-8

13-6:

Brooks Enterprises has never remunerated a dividend. At-liberty important course is proposed to be

\$80,000 and \$100,000 for the proximate 2 years, respectively; succeeding the relieve year, FCF is anticipateed to amplify at a perennial objurgate of 8%. The corporation’s weighted medium require of important is 12%.

a.      What is the final, or horizon, appraise of operations? (Hint: Ascertain the appraise of all at-liberty important courses more Year 2 discounted end to Year 2.)

b.   Calculate the appraise of Brooks’s operations.

13- 7

Dozier Corporation is a faithful amplifying supplier of duty products. Analysts contrivance the behindcited at-liberty important courses (FCFs) during the proximate 3 years, succeeding which FCF is anticipateed to amplify at a perennial 7% objurgate. Dozier’s weighted medium require of important is WACC = 13%.

YEAR

1        2         3

At-liberty Important Course (\$millions)     -\$20     \$30      \$40

a.)    What is Dozier’s final, or horizon, appraise? (Hint: Ascertain the appraise of all at-liberty important courses more year 3 discounted end to Year 3.)

b.)    What is the prevalent appraise of operations for Dozier?

c.)    Suppose Dozier has \$10 favorite in interchangeable securities, \$100 favorite in score, and 10 favorite divides of hoard. What is the real absorb per divide?

13.8

The counteract fencing of Hutter Amalgamated is shown underneath. If the 12/31/2010 appraise of operations is \$756 favorite, what is the 12/31/2010 real market appraise of equity?

Assets                                                             Liabilities and Equity

Cash                                      \$20.0               Accounts Payable              \$19.0

Marketable securities                77.0               Notes Payable                      151.0

Accounts receivable                 100.0                  Accruals                               51.0

Inventories                               200.0                   Entirety prevalent liabilities  \$221.0

Entirety prevalent possessions      \$397.0                  Hanker term bonds               190.0

Net Establish and equipment           279.0                        Preferred hoard                    76.0

Common hoard

(par plus PIC)                       100.0

Retained obtainings                89.0

Contemptible equity                 \$189.0

Total Assets                            \$676.0             Entirety liabilities                    \$676.0

Chapter 4 Problem 4-4, 4-5, 4-20, 4-22

4-4:

If you guard coin today in an recital that pays 6.5% annual divide, how hanker succeed it charm to inclose your coin?

4-5:

You possess \$42,180.53 in a brokerage recital, and you contemplation to guard an affixed \$5,000 at the end of complete advenient year until your recital entiretys \$250,000. You anticipate to obtain 12% annually on the recital. How frequent years succeed it charm to stretch your appearance?

4-20:

a. Set up an amortization list for a \$25,000 hypothecation to be reremunerated in resembling instalments at the end of each of the proximate 5 years. The divide objurgate is 10%.

b. How great must each annual liquidation be if the hypothecation is for \$50,000? Assume that the divide objurgate sweepings at 10% and that the hypothecation is calm?} remunerated off aggravate 5 years.

c. How great must each liquidation be if the hypothecation is for \$50,000, the divide objurgate is 10%, and the hypothecation is remunerated off in resembling installments at the end of each of the proximate 10 years? This hypothecation is for the identical whole as the hypothecation in allot b, but the liquidations are stretch out aggravate twice as frequent periods. Why are these liquidations not half as great as the liquidations on the hypothecation in allot b?

4-22:

Washington-Pacific invested \$4 favorite to buy a credit of establish and contemplationt some adolescent fade trees. The trees can be harvested in 10 years, at which limit W-P contemplations to dispose-of the jungle at an anticipateed absorb of \$8 favorite. What is W-P’s anticipateed objurgate of retaliate?

Chapter 5 Problem 5-15, 5-21

5-15;

Absalom Motors’s 14% coupon objurgate, semiannual liquidation, \$1,000 par appraise bonds that confirmed in 30 years are seduceable 5 years from now at a absorb of \$1,050. The bonds dispose-of at a absorb of \$1,353.54, and the concede flexion is lifeless. Assuming that divide objurgates in the distribution are anticipateed to survive at their prevalent plane, what is the best regard of the ostensible divide objurgate on new bonds?

5-21:

Suppose Hillard Manufacturing sold an outcome of bonds succeeding a while a 10-year manliness, a \$1,000 par appraise, a 10% coupon objurgate, and semiannual divide liquidations.

a.  Two years succeeding the bonds were outcomed, the going objurgate of divide on bonds such as these level to 6%. At what absorb would the bonds dispose-of?

b.  Imagine that, 2 years succeeding the primal assistance, the going divide objurgate had erect to 12%. At what absorb would the bonds dispose-of?

c.  Suppose, as in allot a, that divide objurgates level to 6%, 2 years succeeding the outcome limit. Imagine aid that the divide objurgate surviveed at 6% for the proximate 8 years. What would betide to the absorb of the bonds aggravate limit?

Chapter 6 Problem 6-4, 6-10

6-4:

A hoard's retaliates possess the behindcited distribution:

Demand for              Probability of      Rate of retaliate

Company's               this Demand        if this demand

Products                   Occuring             Occurs

Weak                       0.1                 (50%)

Below Average       0.2                  (5)

Average                  0.4                  16

Above medium       0.2                  25

Strong                     0.1                  60

1.0

Calculate the hoard's anticipateed retaliate, model hiatus, and coefficient of discrepancy.

6-10:

You possess a \$2 favorite portfolio consisting of a \$100,000 bombardment in each of 20different hoards. The portfolio has a beta of 1.1. You are because dispose-ofing \$100,000 merit of one hoard succeeding a while a beta of 0.9 and using the pay to acquisition another hoard succeeding a while a beta of 1.4. What succeed the portfolio’s new beta be succeeding these transactions?

Chapter 7 Problem 7-4, 7-10

7-4:

Nick’s Enchiladas Incorporated has preferred hoard ungathered that pays a dividend of \$5 at the end of each year. The preferred dispose-ofs for \$50 a divide. What is the hoard’s required objurgate of retaliate?

7-10:

The beta coefficient for Hoard C is bC = 0.4 and that for Hoard D is bD = −0.5. (Stock D’s beta is privative, indicating that its objurgate of retaliate rises whenever retaliates on most other hoards drop. There are very few privative-beta hoards, although assemblage production and gold mining hoards are sometimes cited as examples.)

a.       If the risk-at-liberty objurgate is 9% and the anticipateed objurgate of retaliate on an medium hoard is 13%, what are the required objurgates of retaliate on Stocks C and D?

b.      For Hoard C, imagine the prevalent absorb, P0, is \$25; the proximate anticipateed dividend,D1, is \$1.50; and the hoard’s anticipateed perennial amplifyth objurgate is 4%. Is the hoard in makeweight? Explain, and represent what would betide if the hoard were not in makeweight.

Chapter 8 Problem 8-4, 8-5, 8-6

8-4:

The prevalent absorb of a hoard is \$33, and the annual risk-at-liberty objurgate is 6%. A seduce liberty succeeding a while a impress absorb of \$32 and succeeding a while 1 year until dolefulness has a prevalent appraise of \$6.56. What is the appraise of a put liberty written on the hoard succeeding a while the identical drill absorb and dolefulness limit as the seduce liberty?

8-5:

Use the Black-Scholes Model to ascertain the absorb for a seduce liberty succeeding a while the behindcited inputs: (1) prevalent hoard absorb is \$30, (2) impress absorb is \$35, (3) limit to dolefulness is 4 months, (4) annualized risk-at-liberty objurgate is 5%, and (5) discord of hoard retaliate is 0.25.

8-6:

The prevalent absorb of a hoard is \$20. In 1 year, the absorb succeed be either \$26 or \$16. The annual risk-at-liberty objurgate is 5%. Ascertain the absorb of a seduce liberty on the hoard that has a impress absorb of \$21 and that expires in 1 year. (Hint: Use daily compounding.)

Chapter 9 Problem 9-3, 9-8, 9-13

9-3:

Duggins Veterinary Supplies can outcome perennial preferred hoard at a absorb of \$50 a divide succeeding a while an annual dividend of \$4.50 a divide. Ignoring flotation requires, what is the corporation’s require of preferred hoard, rps?

9-8;

David Ortiz Motors has a target important make of 40% score and 60% equity. The concede to manliness on the corporation’s ungathered bonds is 9%, and the corporation’s tax objurgate is 40%. Ortiz’s CFO has fitted the corporation’s WACC as 9.96%. What is the corporation’s require of equity important?

9-13:

Messman Manufacturing succeed outcome contemptible hoard to the national for \$30. The anticipateed dividend and the amplifyth in dividends are \$3.00 per divide and 5%, respectively. If the flotation require is 10% of the outcome’s entire pay, what is the require of visible equity, re?

BA/350 Week 8 Final

BA350 Week 8 Final Exam

BA 350 Week 8 Final Exam Sum

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