PMT = (.1085/2)*1000=54.25 N = 60 R = 0.09/2=0.045 (or 4.5 for calculator purposes) FV = 1000 PV =? Answer: 1,190.90 b.What is the value of this bond 10 years after it was issued? PMT = (.1085/2)*1000=54.25 N = 40 R = 0.09/2=0.045 (or 4.5 for calculator purposes) FV = 1000 PV =? Answer: 1170.20 The price will decrease as approaching maturity since at maturity (just before expiration) it will be worth the par ($1,000) since this is a premium bond. 2.Suppose your company needs to raise $30 million and you want to issue 30-year bonds for this purpose.
DSO = Receivables / Ave. sales per day Receivables= DSO * Ave. sales per day = 20 * 20,000 Receivables= $400,000 (3-2) Debt Ratio: Vigo Vacations has an equity multiplier of 2.5. The company’s assets are financed with some combination of long-term debt and common equity. What is the company’s debt ratio? Debt ratio = 1 – (1 / Equity multiplier) Debt ratio = 1 – (1/2.5) = 1 - .40 = .60 Debt ratio = 60% (3-3) Market/Book Ratio: Winston Washers’s stock price is $75 per share. Winston has $10 billion in total assets.
Assuming that growth in the CA segment stagnates, and that only heavy CA applicators would be interested in dispensing equipment the total market is still estimated at 19,240 users. About half of these users, i.e. ~10,000 firms have expressed an interest in investing in newer dispensing technology, leading us to believe that the market potential for the product is approximately 10,000 machines on a cautious basis. Assuming the growth projections for cyano-acrylate usage are accurate, the total number of firms purchasing the product in FY 1979 is estimated to be 270,000. Using these figures and assuming that both heavy and medium users (those buying between 1-9 pounds of cyano-acrylates per year) are potential customers; the maximum size of this market is estimated at 81,000 purchases.
c. Internal common equity where the current market price of the common stock is $43.50. The expected dividend this coming year should be $3.25, increasing thereafter at a 7% annual growth rate. The corporation’s tax rate is 34%. d. A preferred stock paying a 10% dividend on a $125 par value. If a new issue is offered, flotation costs will be 12% of the current price of $150.
One account earns 6% interest a year, while a second, riskier account earns 10%. If you want to earn at least $900, how much should you invest in the 5% account? CHAPTER 3 20. The graph of is symmetric with respect to i) the x-axis ii) the y-axis iii) the origin iv) the line y = x 21. Which of the following functions is even?
Question 1. a) How many parts should you purchase each time you place an order? R=800- ORDERING COST Annual carrying cost of capital= 20% .20 lost per dollar R= 50000 H= .80 r= .20 cost per dollar C= unit cost H=rC Qo= √2RS/H= √(2(50,000)(800)/.8) = 10,000 10,000 parts should be purchased each time an order is placed. (b) To satisfy annual demand, how many times per year will you place orders for this part? R/Qo= 50,000/10,000= 5 times per year Question 2: (a) Determine BIM’s total annual cost of production and inventory control. Q= 4 weeks supply = 1600 units R= 400 units a week= 20000 units/ year C= purchase cost per unit= $1250 X (1-.20)= 1,000 H= holding cost= rC= $200 per unit / year S= setup cost= 2000 + 93.75 = $2,093.75 Setups per year= R/Q= 20000/1600= 12.5 Annual setup cost= (R/Q)(S)=12.5X $2,093.75= $26,172 Annual Holding cost= (q/2)(H)= (1600 /2)X $200= $160,000 Total Annual Cost= Annual Setup Cost+ Annual Holding Cost Total Annual Cost= 26,172+160,000 BIM’S Total Annual Cost= $186,172 (b) Compute the economic batch size and the resulting cost savings.
Cost, Volume, and Profit Formulas There are five components of CVP (cost-volume-profit) analysis; 1. volume or level of activity 2. unit selling prices 3. variable cost per unit 4. total fixed costs 5. sales mix Each component are import to the CVP, volume or level of activity can be explain as sales of a product or the number of units sold. Unit selling prices is the amount the product is sold. An example of this is a department store is selling two ties for $20 dollars, then the unit price of each tie is $10 dollars. The variable cost per unit is how much does it really take to make a product. Such as the tie is selling for ten dollars per unit but it only cost two dollars in materials to make.
| 0.75 | | | | | General Feedback: | Expected return | 40.0% | Standard deviation | 30.0% | Coefficient of variation = std dev / expected return = | 0.75 | | | | Score: | 0/10 | | 2. Chapter 8 - Risk and Rates of Return Question MC #119 Bill Dukes has $100,000 invested in a 2-stock portfolio.
$1,500,000/$12,000,000 = 0.125 or 12.5% Each dollar of revenue produces 12.5% of net income or profit. Cash flow= cash generated during the year The rough estimation of cash flow = net income + non -cash expenses, in this case, $1,500,000 + $1,500,000 = 3,000,000 C. Now, suppose the company changed its depreciation calculation procedures (still within GAAP) such that its depreciation expense doubled. How would this change affect Brandywine’s net income, total profit margin, and cash flow? Brandywine Homecare Income statement with double depreciation expense: Month ending December 31, 2007 Revenue $12,000,000 Total revenue $12,000,000 Expenses: Depreciation $ 1,500,000x2= 3,000,000 Other 12,000,000 x 75/100 = 9,000,000 Total expenses= Depreciation + Other expenses= 1,500,000x2+ 9,000,000= $12,000,000 Total revenue – total expenses = Net income or Profit - 12,000,000- 12,000,000= 0 What
Cost and Revenue A manufacturer sells a product at $8.35 per unit, selling all produced. The fixed cost is $2116 and the variable cost is $7.20 per unit. At what level of production will a) there be a profit of $4600? b) there be a loss of $1150? c) the break even point occur?