## Spreadsheet Exercise

The current balance in accounts receivable for Eboy Corporation is 443,000. This level was achieved with annual 365 days credit sales of 3,544,000. The firm offers its customers credit terms of net 30. However in an effort to help its cash flow position and to follow the actions of its rivals, the firm is considering changing its credit terms from net 30 to 2 10 net 30. The objective is to speed up the receivable collections and thereby improve the firm's cash flows. Eboy would like to increase...

## Stock Splits Nathan Detroit

If the firm's dividend policy were based on a constant payout ratio of 40 for all years with positive earnings and 0 otherwise, what would be the annual dividend for each year b. If the firm had a dividend payout of 1.00 per share, increasing by 0.10 per share whenever the dividend payout fell below 50 for two consecutive years, what annual dividend would the firm pay each year c. If the firm's policy were to pay 0.50 per share each period except when earnings per share exceed 3.00, when an...

## Principles Of Managerial Finance Warm Up Exercises Answers

Capital Structure 826 Long-Term Debt 827 in practice Global Focus Take an Overseas Assignment to Take a Step Up the Corporate Ladder 828 18.5 Short-Term Financial Decisions 831 Cash Management 832 Credit and Inventory 18.6 Mergers and Joint Ventures 836 Chapter 18 Case Assessing a Direct Investment in Chile by U.S. Computer Corporation 843 Integrative Case 6 Organic Solutions 846 B Solutions to Self-Test Problems B-1 C Answers to Selected End-of-Chapter Problems C-l Web Chapter Financial...

## Has Target Capital Structure Of 60 Common Stock 30 Debt And 10 Preferred Stock. The Company Wishes To Issue New 30

The effect of tax rate on WACC Equity Lighting Corp. wishes to explore the effect on its cost of capital of the rate at which the company pays taxes. The firm wishes to maintain a capital structure of 30 debt, 10 preferred stock, and 60 common stock. The cost of financing with retained earnings is 14 , the cost of preferred stock financing is 9 , and the before-tax cost of debt financing is 11 . Calculate the weighted average cost of capital WACC given the tax rate assumptions in parts a to c....

## P12-21 Eps And Optimal Debt Ratio Williams Glassware Has Estimated At Various Debt Ratios The Expected Earnings Per

Financial leverage Max Small has outstanding school loans that require a monthly payment of 1,000. He needs to purchase a new car for work and estimates that this will add 350 per month to his existing monthly obligations. Max will have 3,000 available after meeting all of his monthly living operating expenses. This amount could vary by plus or minus 10 . a. In order to assess the potential impact of the additional borrowing on his financial leverage, calculate the DFL in tabular form for both...

## Suarez Manufacturing Risky Investment 2007

Given that Craft is expected to pay a dividend of 3.68 next year, determine the maximum cash price that Hamlin should pay for each share of Craft. b. Discuss the use of the CAPM for estimating the value of common stock, and describe the effect on the resulting value of Craft of 1 A decrease in its dividend growth rate of 2 from that exhibited over the 2004-2009 period. 2 A decrease in its beta to 1. Pra IETHICS PROBLEM Melissa is trying to value Generic Utility, Inc.'s stock, which 4 is...

## Npv For Varying Costs Of Capital Dane Cosmetics Is Evaluating A New Fragrance-mixing Machine. The Machine Requires An

After estimating the relevant cash flows, the financial manager must apply appropriate decision techniques to assess whether the project creates value. Net present value NPV and internal rate of return IRR are the generally preferred capital budgeting techniques. Both use the cost of capital as the required return. The appeal of NPV and IRR stems from the fact that both indicate whether a proposed investment creates or destroys shareholder value. NPV clearly indicates the expected dollar amount...

## Zach Industries Ratio Analysis

35.8 days 1.09 0.300 12.3 0-102 0.135 0.091 0.099 0.167 3.10 Based on a 365-day year and on end-of-year figures. Financial statement analysis The financial statements of Zach Industries for the year ended December 31, 2009, follow. v ' v - 'y . f - n y . J. i1 . L- - ' -. ,-' . '. ' , , gt for the Year Ended December 31,2009 Less Cost of goods sold 106,000 Gross profits 54,000 Less Operating expenses General and administrative expenses 10,000 Total operating expense 37,000 Net profits before...

## You Have Been Assigned The Task Of Putting Together A Statement For The Acme Company That Shows Its Expected Inflows

You have been assigned the task of putting together a statement for the ACME Company that shows its expected inflows and outflows of cash over the months of July 2010 through December 2010. You have been given the following data for ACME Company 1. Expected gross sales for May through December, respectively, are 300,000, 290,000, 425,000, 500,000, 600,000, 625,000, 650,000, and 700,000. 2. 12 of the sales in any given month are collected during that month. However the firm has a credit policy...

## C. What Effect Would An Increase In The Rate You Can Earn Both During And Prior To

Future value of an annuity For each case in the accompanying table, answer the questions that follow. r.y J a. Calculate the future value of the annuity assuming that it is b. Compare your findings in parts a l and a 2 . All else being identical, which type of annuity ordinary or annuity due is preferable Explain why. P4-19 Present value of an annuity Consider the following cases. a. Calculate the present value of the annuity assuming that it is b. Compare your findings in parts a l and a 2 ....

## You Have Decided To Endow Your Favorite University

Creating a retirement fund To supplement your planned retirement in exactly 42 years, you estimate that you need to accumulate 220,000 by the end of 42 years from today. You plan to make equal, annual, end-of-year deposits into an account paying 8 annual interest. a. How large must the annual deposits be to create the 220,000 fund by the end of 42 years b. If you can afford to deposit only 600 per year into the account, how much will you have accumulated by the end of the forty-second year...

## Calculate The Following Debt And Coverage Ratios For Pelican Paper And Timberland Forest Inc 1. Debt Ratio 2. Times

Calculate the following debt and coverage ratios for the two companies. Discuss their financial risk and ability to cover the costs in relation to each other. 2 Times interest earned ratio b. Calculate the following profitability ratios for the two companies. Discuss their profitability relative to each other c. In what way has the larger debt of Timberland Forest made it more profitable than Pelican Paper What are the risks that Timberland's investors undertake when they choose to purchase...

## WarmUp Exercises a blue box indicates

Exercises available in rcyfiaancelab r El 1 1 Weekend Warriors, Inc., has 35 debt and 65 equity in its capital structure. Wj The firm's estimated after-tax cost of debt is 8 and its estimated cost of equity is 13 . Determine the firm's weighted average cost of capital WACC . fPSj QH3 A firm raises capital by selling 20,000 worth of debt with flotation costs equal to Zj 2 of its par value. If the debt matures in 10 years and has a coupon interest rate of J a ET1-3 Your firm, People's Consulting...