Saheed Olagunju Homework Wk2 FI515 Chapter 3-1 Days Sales Outstanding Greene Sisters has a DSO of 20 days. The company’s average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year. Answer AR= 20x20000=400,000 3-2 Debt Ratio Vigo Vacations has an equity multiplier of 2.5.
For a preferred stock with the dividend amount of $2.00 each quarter, what is the PV of it with an annual discount rate of 8%? If the price of the preferred stock is $80, what is the yield (ROI, APR) of this security? a. $60, 8% b. $80, 8% c. $60, 10% d. $80, 10% e. $100, 10% Answer: e V0 = D/k = 8/0.08 = $100.
3-1 Days Sales Outstanding Greene Sisters has a DSO of 20 days. The company’s average daily sales are $20,000. What is the level of its accounts receivables? Assume there are 365 days in a year. $20,000*20 days outstanding= AR $400,000 3-2 Debt Ratio Vigo Vacations has an equity multiplier of 2.5.
Saheed Olagunju Homework Wk2 FI515 Chapter 3-1 Days Sales Outstanding Greene Sisters has a DSO of 20 days. The company’s average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year. Answer AR= 20x20000=400,000 3-2 Debt Ratio Vigo Vacations has an equity multiplier of 2.5.
cost of equity =I used the 20 year at 5.74%+Geometric mean=5.9%x most recent beta .69=9.81% Cost of Debt I used Yield to maturity to find cost of debt From Exhibit 4 PV= 95.60 N=40 (20years x 2) since its paid semiannually Pmt=-3.375 (6.75/2) FV=-100 Comp I = 3.58% (semiannual) 7.16% (annual) After tax cost of debt = 7.16%(1-38%) = 4.44% E = market value of the firm's equity To find Market value of Equity you multiply share price by amount of shares $42.09x273.3= 11503. D = market value of the firm's debt I valued book value of debt at 1,291 Then divide 11503/(11503+1291)=89.9 so the weight for debt is 10.1 percent When I calculated WACC 4.44%x.101+9.81%x.899= 9.27% Cohen made a few mistakes when she calculated her WACC. First, she used historical data in
Using the 20-year T-Bond yield as the risk-free rate, the average beta of past 6 years, and the geometric mean of historical risk premium in the CAPM model equation to get the cost of equity (see Appendix A 1 for detail). CAPM = Rf + β*RP = 5.74% + 0.8 * 5.90% = 10.46% 3.
4-5 Multiyear Future Value How much would be in your savings account in eight years after depositing $150 today if the bank pays 8 percent per year? (LG4-3) FV8 = 150 × (1 + 0.07)8 150 × 1.71818618 Answer: 257.73 4-7 Compounding with Different Interest Rates A deposit of $350 earns the following interest rates: a. 8 percent in the first year. b. 6 percent in the second year.
During 2007 and 2008, Browser reported net income of $90,000 and $50,000 and paid dividends of $40,000 and $60,000, respectively. Fire wire reported a balance in its investment account of $230,000 on December 31, 2008. It uses the equity method in accounting for this investment. g. What is the annual amount of amortization of differential over the ten year period? h. In 2007, will Fire Wire report and increase or a decrease in the investment account balance?
Fin 410 Exam FIN400 FINAL EXAM 1. You have a portfolio with a beta of 3.1. What will be the new portfolio beta if you keep 85 percent of your money in the old portfolio and 15 percent in a stock with a beta of 4.5? Ans – 3.31 2. PNB Industries has 20 million shares of common stock outstanding with a market price of $18.00 per share.
D/V was calculated by dividing debt of $37.2 million by total liabilities and equity of $55.2 million = 0.67. E/V was calculated by deducting the D/V from 100 to give the remaining 0.33. Wackenhut capital structure consists of 92% equity and 8% debt; $10.6 million divided by $130.4 million. This structure was used in the configuring of the remaining calculations to prove WAAC. Bid Justifications Pinkerton alone is valued itself at a total of $89.7 million according to exhibits 2 and 3, consisting of a 5 year valuation as well as continuing values.