Financial Analysis * The tax rate is approximately 30% 5.618.8=29.79% 5.418.1=29.83% 5.418=30% * Based on the industry average, a sports store of similar size should be making around $21000 or 67% more profitable than Rhodes’ store. * Assuming the lots are of the same size and bear the same tax burden, if the unused lot is sold off property taxes would be reduced by $6000 at the 2008 rate. All else being equal, this would increase net profit by 6000×0.30=$1800, for a total of $14400. Profit as a percentage of sales would increase from 2.1% to 2.4%. * Of the $18400 Rhodes made in mortgage payments last year, $8000 was interest.
Store Sensitivities Even if this store has 18.1% lower sales than the forecasted level by R&P, it can achieve the accepted NPV of prototype, besides, construction cost can increase to near $10 million and still the project can achieve the expected NPV of the P04. If the stores sales decline by 10%, the project’s NPV will decrease by almost $4 millions which provides an accepted NPV of 13,340 K$ which is still above the accepted NPV of P04. Variance to prototype The Store NPV of $17,046K is $7,326K above Prototypical Store NPV. Mainly Cost of Land ($3,675K) and sales (3,603K) followed by positive benefits from real state tax are contributing to this positive variation form P04
VOP = [FCF x (1+g)] / (WACC-g) = [$400,000 x (1+0.05)] / (0.12-0.05) = [$400,000 x 1.05] / 0.07 = $420,000 / 0.07 = $6,000,000 Problem 13-3: Horizon Value. Current and projected free cash flows for Radell Global Operations are shown below. Growth is expected to be constant after 2012, and the weighted average cost of capital is 11%. What is the horizon (continuing) value at 2012? Actual Projected 2010 2011 2012 2013 Free cash flow (millions of dollars) $606.82 $667.50 $707.55 $750.00 g = ($750.00 - $707.50) / $707.50 = $42.50 / $707.50 = 0.06 VOP = [(FCF x (1+g)] /
The asset turnover will increase when their profit margin increases, the high profit margin is because they are currently expanding . 2. To a certain extent, the high level of popularity was from their effective market analysis. In 2012 superstyles spent 20% of their profits on marketing. Compared to the industry average superstyles spends 50% more on marketing, however I think it is very useful as they are expanding and don’t have the brand image and reputation yet.
Weakness Innovation – Labatt has one of the strongest R&D facilities especially since they are funded by Anheuser-Busch InBev N.V. Even though they are the best, they lack in producing new types of beer instead of focusing on one type of beer which is made by grain. This is a weakness because many of its competitors are increasing production on new taste of beer. Production Cost – The production cost for Labatt is very high because they have different production line for Ontario and Quebec. In Quebec the Labatt Bleue is only 4.9% while the Beer in rest of Canada is 5% for Labatt Blue.
If the sales outlook for the coming three years was only 20,000,000 and B.E. continued producing at the rate of 30,000,000 units, a total of 10,000,000 units would be dumped into ending inventory at the end of each year once again reducing costs of goods sold and falsely increasing income. By the end of year 2013, B.E. Company would have 35,000,000 units sitting in ending inventory taking up space and costing money to store. Once again if the president’s bonus is based off of net income, this situation is the most favorable for a high paying bonus and encourages stockpiling inventory to inflate net income.
According to economic experts, if fully implemented, the Bush tax cut would increase stock values immediately by 5% to 15% and would reduce the cost of capital for businesses by 10% to 30%, depending on the industry. To maximize the positive job and wealth-creating impact of the Bush tax plan, it should not be shrunk, as some in the House suggest, it should be expanded to perhaps twice the size that the White House has
You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? (Points : 6) $2,697.93 $2775.79 $2,921.86 $3,075.64 $3,237.52 BEGIN Mode N 3 I/YR 5.5% PMT $1,000 FV $0.00 PV Therefore, to receive $1,000 at the beginning of each year for 3 years at 5.5%, the fair value you should pay is $2,697.93 HP 12C Suppose that you are offered an investment that will pay you $1,000 per year for 10 years. If you can earn a rate of 9% per year on similar investments, how much should you be willing to pay for this annuity? In this case we need to solve for the present value of this annuity since that is the amount that you would be willing to pay today.
,Sarah L. G January 6, 2013 Written Assignment #1 1. A) $1,000 with 5% interest after 10 years gives you $1,628. Therefore, you would gain $628 in interest. B) If the interest is withdrawn each year, a total of $500 would be earned because the $1,000 investment would earn $50 of simple interest each year. C) The answers are different because if the interest is left untouched, it makes the principal amount higher each year, giving more money after 10 years.
• NPAT* excluding sass & bide put option revaluation $129 million, down 5.1% • Strong cash flow supports final dividend of 8 cps, full year dividend 18 cps, fully franked “Continued execution of five-point plan” * Excludes sass & bide put option revaluation: FY2012 ($3.0 million gain) and FY2013 ($2.2 million expense) Image: TBC (TBC) Image: Orla Kiely DELIVERING OUR PLAN / 3 Full year highlights • Sales and gross profit growth in key categories • Myer Exclusive Brands now 20.0% of sales mix • sass & bide double-digit sales and profit growth • Increased recognition of our customer service journey • Ongoing investment: new stores, refurbishments, brands, online • MYER one strengthened with Platinum tier, app launched • Online sales, page views and average monthly visits doubled • Net debt down 11.2%, lending facilities refinanced Image: sass & bide OVERVIEW / 4 12 September 2013 2 MYER Full Year Results 2013 • • • • • Overview Financial update Delivering our five-point plan Investing for the future Outlook Image: Wayne by Wayne Cooper (Myer Exclusive Brand) Financial