After-tax net cash flows are then expected to grow at a rate of 4% per year for 7 years, ending 8 years from today. In each year after that in perpetuity, after-tax net cash flows are expected to grow at a more sustainable rate of 2% per year. The project’s cost of capital is 15%. (a) [2] What is the terminal value of the project at the end of year 8? Terminal value at the end of year 8 is the value at that time of the after-tax net cash flows that the project is expected to provide after that date.
The internal auditors questioned why the two shipments were done before December 31, since the requested dates were in the following year. The shipments had a total value of $150,000.00. Another concern for the internal auditors was that there was no written agreement with United Thermostatic Controls to accept the early shipments and pay for them before they actually needed the merchandise. The internal auditors also discovered that Frank Campbell put pressure on the accountants to record the shipments to show the sales. Their concerns were discussed with
Module 4 - BEATRICE PEABODY – Questions Alexandria Wiles 1. According to ValueLine estimates in Figure 1, James River’s expected annual dividend growth rate from the 91–93 to 97–99 period is 5.50%, and the next dividend (1995) is expected to be $0.60. Assume that the required return for James River was 8.36% on January 1 1995 and that the 5.50% growth rate was expected to continue indefinitely. a. Based on the Constant Growth Rate or Gordon Model, what was James River’s price at the beginning of 1995?
(3-6 sentences. 2.0 points) compound interest. Over time the compound interest will build up on interest on your interest 4. If you were opening a savings account with compound interest, would you prefer an account that offers annual compounding, quarterly compounding, or daily compounding? Why?
Stock Number Annual $ Volue J24 12,500 R26 9,000 L02 3,200 M12 1,550 P33 620 T72 65 S67 53 Q47 32 V20 30 What are the appropriate ABC groups of inventory items? (4 points) Stock Number Annual $ Volume % of Annual Volume % of Total Class: J24 12,500 46.21 79.48 A R26 9,000 33.27 L02 3,200 11.83 19.85 B M12 1,550 5.73 P33 620 2.29 T72 65 0.24 0.67 C S67 53 0.20 Q47 32 0.12 V20 30 0.11 Total Annual Volume 27,050 Problem 2: Assume you have a product with the following parameters: Holding cost per per unit Order per order What is the EOQ? What is the total cost for the inventory policy used? (4 points) Problem 3: Assume that our firm produces type C fire extinguishers. We make 30,000 of these fire extinguishers per year.
Income Statement and Related Footnotes a. Is the general format of the income statement closer to single-step or multiple-step? The general format of the income statement is closer to multiple-step. b. Income Statement figures for the most recent fiscal year Cost of goods sold Amount | Percentage of total revenue | $47,860,000,000 | 68.50% ($47,860,000,000/$69,865,000,000) | Reference: Consolidated Statements of Operations, Form 10-K, Page 31.
Each of three vice presidents has rendered a separate and distinct strategic initiative, and they are “Introduce a new product”, “Increase promotion”, and “Raise prices and cut costs” respectively. However, only one of these alternatives can be implemented next year because of issue of management time. As a financial analyst, I will analyze quantitative and qualitative factors of the three alternatives and compare pros and cons among them. “Introduce a new product”
In this case is positive, which indicates that the probability of inventory levels in the subsequent years will continue to rise without considering any additional factors that may influence the business. The Table 1 shows the inventory data for the last four years and the Figure 1, shows the trend line. Table 1.
Professor …, You asked me to research whether Jettison Manufacturing can reclassify the short-term debt into long-term debt before preparing year 2’s financial statements. Given my understanding of Jettison Manufacturing financial situation, I assume that the National Bank let the company not to repay the debt within six months. As the company has been able to correct the debt agreement violation and restore the current ratio to 2:2:1, which is acceptable to National, it can not to repay the debt yearly. The company has already reclassified the long-term debt into a short one, and now it wants to reclassify the debt again from the current liability to a long-term one. The key words of the search are “liabilities” and “debt”.
Case Study Tottenham Hotspur Question 1 a] DCF Analysis A discounted cash flow analysis is a method of valuing a project, company or asset using the concepts of the time value of money. All future cash flows are estimated and discounted with an appropriate discount rate, to give their present values (PV’s). The sum of all future cash flows, both incoming and outgoing, is the net present value (NPV), which is taken as the value or price of the cash flows in question. To perform a DCF analysis we have made a set of assumptions. The assumptions are listed below: Capital expenditure is £3.3m in 2007 and grows and 4% per year after 2009 Depreciation is £2.2m and grows at 4% per year after 2009 Risk free rate (rf) is 4.57% Tottenham’s equity beta is 1.29 The tax rate is 35% The market premium is 4% (based on a mature market, as shown in the slides) Tottenham’s debt rate 5.25%% [2.26/43.08] We assume the default rate of Tottenham is 0 (zero) The company’s long term growth rate is 4% The cost of equity (Re) is 9.73% (4.57% + 1.29 * 4%) The cost of debt is 3.41% [5.25% * (1 - 0.35)] The appropriate WACC is 8.14% [9.73% * (128.2/(128.2 + 43.08)) + 3.41 * (43.08/(128.2 + 43.08))] We assumed the items property plant equipment, intangible assets, accounts receivable, inventory, investments and cash as a percentage of revenues.