3-1 staff revenue after taxation
An investor recently purchased a corporate bond that pays off 9%. It’s in the
federal and state category of 36%. What performance will get after taxes?
3-2 staff revenue after taxation
Corporate bonds issued by Johnson Corporation produce 8% interest
at this time. Municipal bonds of equal risk produce 6%. To what rate
tax to an investor will be indifferent between buying one or the other?
3-5 staff revenue after taxation
Shrieves Corporation has $ 10,000 that it plans to invest in marketable securities.
Decides to purchase bonds from AT & T (off which 7.5%), municipal bonds
Florida (off which 5%) and preferred stock of the same company, whose
reditúan 6% dividend. The company tax rate is 35% and 70% of the dividends
are exempt. What value should I select?, Assuming that investments
pose the same risk and that its decision is based solely on performance
after taxes. How much after tax yields the value to performance
higher?
3-7 Analysis of Income and Cash Flow
Menendez Corporation expects to sell $ 12 million. Costs, excluding depreciation, represent 75% of sales and depreciation of $ 1.5 million.Las cash sales charge and all costs minus depreciation will de liquidarse year is expected. The federal and state tax rate is 40%.
a. Prepare an income statement. What will be the expected net cash flow of the company?
b. Suppose Congress changed the tax laws and that doubled the cost of depreciation de company. No changes in operations. How would affect that recorded in earnings and net cash flow?
c. Now suppose that Congress doubled the depreciation but reduced
50%. How does that affect the net cash flow?
d. If it were your business, would you prefer that Congress doubled the expense depreciacióno halved? Explain.
3-9 back and forth with loss
Herrmann Company earned $ 150,000 before taxes in the past 15 years and
future plans to obtain the same amount before taxes. But in 2005 he suffered
a loss of $ 650,000. Seek a tax credit when filing
for that year and receive a check from U.S. Treasury. Show how
calculates the credit and then enter the tax paid in the next 5 years. For
facilitate the calculations assume a tax rate of 40% on all income.
Liquidity Ratio 4-1
Ace Industries has current assets of $ 3 million. The current ratio is 1.5 and the quick ratio 1.0. What is the level of current liabilities? What will be the level of inventories?
4-2 Period average debt
The average collection period is 40 Baker Brothers days. The promediodiarias sales amount to $ 20,000. What will be the level of accounts receivable? Suppose the añotiene 365 days.
4-5 Calculation of reasons
Suppose Brauer Corporation has the following relationships:
Sales / total assets 1.5%
Return on assets (ROA) 3%
Return on equity (ROE) 5%
Calculate the profit margin and debt ratio.
4-7 Calculation of reasons
Kretovich Company has a quick ratio of 1.4, a ratio of circulating 3.0, a rotation of inventory 6 times, total current assets of $ 810,000, cash and marketable securities of $ 120,000. What were your annual sales and their average period? Assume a year of 365 days.
4-9 Analysis of reasons
Then we give the data for Barry Computer Company and averages
their industry.
a. Calculate the reasons stated above.
b. Construct the extended Du Pont equation applicable to the company and its industry.
c. Describe the strengths and weak points revealed in the analysis.
d. Assume that the company doubled sales and inventories, accounts
receivable, and common equity during 2005. How that information will affect
analyzing the reasons validity? (Hint: Think about averages and the effects
that rapid growth will have on the reasons if averages are not used. Not
no calculation is needed.)
Barry Computer Company: Balance Sheet at December 31, 2005 (in thousands)
Cash $ 77,500 Accounts payable $ 129,000
Accounts receivable 336 000 Notes payable 84 000
Inventories 241 500 Other current liabilities 117 000
Total current assets $ 655,000 Total liabilities $ 330,000
Net fixed assets 292 500 Long-term debt 256 500
Stockholders’ equity 361 000
Total assets $ 947,500 Total liabilities and equity $ 947,500
Barry Computer Company: income statement for the year endedDecember 31, 2005 (in thousands)
Sales $ 1,607,500
Cost of goods sold 1,392,500
Selling, general and administrative 145 000
Earnings before interest and taxes (EBIT) $ 70,000
Interest expense 24 500
Earnings before tax (PBT) $ 45,500
State and federal income taxes 40% 18 200
Net income $ 27,300
Reason Barry Industry Average
Assets / Liabilities 2.0 ????
Average period of 35 days cobranzaa
Sales / Stock 6.7%
Sales / fixed assets 12.1%
Sales / total assets 3.0%
Net income / sales 1.2%
Net / total assets 3.6% Profit
Net income / equity 9.0%
Total debt / assets 60.0%
13-4 Corporate Valuation
Dozier Corporation is a supplier of office products grows rapidly.
Analysts project the free cash flow (FCF) for the next 3 years; lapsed
this time provide a constant growth rate of 7%. The average cost
weighted capital is 13%.
Time 1 2 3
Free cash flow ($ millions) – $ 20 $ 30 $ 40
a. What is the terminal value of the company? (Hint: determine the value of effective free flows after year 3, net for the year.)
b. What is the present value of operations?
VMA 13-6
A company has a capital of $ 200 million. Wait a return on equity
invested 9%, forecasted constant growth of 5% and an average cost
weighted capital of 10%. What is the value of its operations? And what is its value
aggregate market?
15-5
Payment of dividends
Wei Corporation expects net income of $ 15 million next year. the reason
debt is currently 40%. Has profitable investment opportunities for $ 12
million and does not change the ratio of debt. Under the distribution model
residual (and assuming all payments are made in dividends), how much should
ascend its dividend payout ratio in the next year?
Policy 15-7 residual distribution
Welch Company is considering three independent projects, each of which
requires an investment of $ 5 million. Then the internal rate of return is appended
estimated (TIR) and the capital cost of the projects:
Project A (high risk): Cost of capital projects
Project A (high risk): Cost of Capital = 16%; IRR = 20%
Project M (Medium risk): Cost of Capital = 12%; IRR = 10%
Project B (low risk): Cost of Capital = 8%; IRR = 9%
Note that the cost of capital varies because the level of project risk is not
equal. The optimal capital structure calls for 50% debt and 50% common stock.
The company expects net income of $ 7,287,500. Which is why if based payment
dividends on the residual model (all distributions are made ??through
dividends)?
2.Keiser University has warrants on the market that allows people who own it are allowed to buy 1 share of University at the price of $ 25 . to. Calculate the value of the warrants of execution of the organization if the common shares are sold to each the following rates: (1) $ 20, (2) $ 25, (3) $ 30), (4) $ 100. (NOTE: The value of a warrant of execution is the difference between the stock price and the purchase price specified by the warrant if the authorization is executed.)
3. Everglades University, Inc. planned to finance their growth. Main company executives agreed that a university such as yours should finance growth through the sale of common shares and no debt. However, they felt that the current $ 42 for the price of the common shares of the company does not reflect their true value, so they decided to sell a convertible security. Considered a convertible bond they feared the burden of fixed interest if the common stock does not increase enough in price to make conversion attractive. They decided to offer a convertible preferred stock, which paid a dividend of $ 2.10 per share.
a. The conversion ratio will be 1.0; that is, each part of the action
convertible preferred can be converted into one share of common stock. Therefore, the nominal value of the convertible (and the issue price) will be equal to the conversion price, which in turn will be determined as a reward (ie, the percentage by which the conversion price exceeds the stock price) on the current market price of the common stock. What if the conversion price is set at a10% premium? And a prize a30%?
4.How do you think the decision of a private organization to go public affects its ability to attract new capital and floating costs that are involved in it?
5.You just graduated from Keiser University program and has gotten a job as manager of a fund managed by a prestigious investment banking firm. You have been given a portfolio of $ 300 million to manage and invest. The fund’s pension and retirement and their prospective term extension cord is at moderate risk of capital loss and required an annual income of 9%. To reduce the risk of investment have given instructions to make 12 investments of $ 25 million dollars each. Your first task is to determine whether you are administering the fund must invest $ 25 million in company stock you have selected for your first decision to invest.
a. Analysis of business strategy
b. Prospective Analysis
c. finding