1209 Words5 Pages

.Which of the following statements is NOT correct?
èThe corporate valuation model discounts free cash flows by the required return on equity.
2. Which of the following statements is correct?)
If a project with normal cash flows has an IRR greater than the WACC, the project must also have a positive NPV.
3. The Ackert Company's last dividend was $1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever. The firm's required return (rs) is 12.0%. What is the best estimate of the current stock price?
a. $37.05
Calculations:
Year 1 dividend 1.55*1.015= 1.57325
Year 2 dvidend 1.57325 *1.015= 1.5968
Stock price after year 2 1.5968*1.08/(.12-.08)= 43.11.
So current stock price will be these amounts discounted back to the present at the 0.12 rate of return.
1.57325/1.12 +1.5968/1.12^2 +43.11/1.12^2= 37.05
4. (TCO G) The Chadmark Corporation's budgeted monthly sales are $3,000. In the first month, 40% of its customers pay and take the 2% discount.
The remaining 60% pay in the month following the sale and don't receive a discount.
Chadmark's bad debts are very small and are excluded from this analysis. Purchases for next month's sales are constant each month at $1,500.
Other payments for wages, rent, and taxes are constant at $700 per month. Construct a single month's cash budget with the information given.
What is the average cash gain or (loss) during a typical month for the Chadmark Corporation?
Current month sales collected: 3000 x 40% x (100%-2%) = $1176
ADD: Prior month sales collected: 3000 x 60% = $1800
LESS: purchases $1500
LESS: other expenses $700
= $776 average cash gain during a typical month.
5. (TCO G) Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants you to forecast the

Related

## Fin515 Week 4 Homework Solutions

1112 Words | 5 PagesValuing this dividend as a perpetuity: P = $2.00 / 0.15 = $13.33 9-6 Value of Operations of Constant Growth Summit Systems will pay a dividend of $1.50 this year. If you expect Summit’s dividend to grow by 6% per year, what is its price per share if its equity cost of capital is 11%? Answer: Price per share = 1.50 / (11% – 6%) = $30

## Fin 515 Week 3

714 Words | 3 Pages80*7.1607+1000*.3555 = $928 • 5-2 Yield to Maturity for Annual payments Wilson Wonders’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $850. What is their yield to maturity? 100+1000-850/12/1000+850/2 = 112.5/925 = .1216 or 12.16% • 5-6 Maturity Risk Premium The real risk-free rate is 3%, and inflation is expected to be 3% for the next 2 years.

## Finance Essay

620 Words | 3 Pages(7–2) Constant GrowthValuation Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e., D1 = $1.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 15%. What is the value per share of Boehm’s stock? Answer Price = $1.50 / (0.15 - 0.07) = $18.75 I'm doing this chapter right now, and this problem was in this week's homework.

## Fin 819 Quiz

1882 Words | 8 PagesThe constant dividend growth formula P0 = D1/(r-g) assumes: A) The dividends are growing at a constant rate g forever. B) r > g C) g is never negative. D) Both A and B E) None of the above Answer: D 4. Casino Co. is expected to pay a dividend of $6 per share at the end of year one and these dividends are expected to grow at a constant rate of 8% per year forever. If the required rate of return on the stock is 20%, what is the current value of the stock today?

## Payroll Case Study

449 Words | 2 PagesWhat should the employee’s wages be on the 9/30/12 payroll? The PT-salaried employee would be paid for $999.96 on the 9/30/12 pay date. (40,000/1560=$25.64*(65*60%=39) =$999.96 6*260=1,560 4. A FT-salaried employee has a termination date of 9/26/12. The employee is paid semi-monthly with an annual salary of $52,000.

## Toy World Inc

9199 Words | 37 PagesThe holiday season is when the company earns the most gains compared to months outside of the holiday season. Grace Jones, the treasurer of Toy World, describes the purpose of the report as performing cash budgeting analysis of the company to offer recommendations in the company’s financial situation. Section II contains the monthly cash budget as prepared. Grace expects that a $500,000 line of credit will be sufficient to cover any cash shortfalls. After reviewing the monthly cash budget, it appears that this line of credit will suffice to adequately cover the cash shortfalls predicted to occur in May and June of $48,035 and $480,035, respectively.

## Acc 291 Final Exam Question Answers

2435 Words | 10 Pages• debit to Allowance for Doubtful Accounts for $3,300. Multiple Choice Question 182 The financial statements of the Melton Manufacturing Company reports net sales of $300,000 and accounts receivable of $50,000 and $30,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days? • 60.8 • 96.1 • 36.5 • 48.7 Find the final exam answers here ACC 291 Final Exam Answers Multiple Choice Question 119 Stine Company purchased machinery with a list price of $64,000. They were given a 10% discount by the manufacturer.

## Db123 Personal Finance

1148 Words | 5 PagesIf Casper decided to take out a loan that charges 20% APR over one year for the amount of £2000 over 12 months he would expect to pay £183 per month for 12 months with interest of £205. (candid money calculator accessed 28/7/11) If Casper makes the decision to use his credit card and he borrowed £2000 over 2 years at 15% APR his total monthly payments would be £96.08 per month, the interest would calculate to £306 this would be a total repayment of £2306 over 2 years. (candid money calculator accessed 28/7/11) Comparing the ‘loan’ to the credit card loan, Casper would pay his debt back quicker but at nearly double the price of the credit card loan, the advantage the credit card loan has, his monthly installments will be half of what the ‘loan’ but at 2 years rather than 1 year. Question 2 In question 2 of this essay I shall attempt to answer questions on expenditure and budgeting, giving a brief example from the study of the personal finance course book DB123 and the transcript of the dvd accessed on the Open University website.

## Finance on Salco

511 Words | 3 PagesDONNA URCHAK The annual sales for Salco Inc. were $4.5 million last year. The firm’s end-of-year balance sheet was as follows: Current assets $500,000 Liabilities $1,000,000 Net fixed assets $1,500,000 Owners’ equity $1,000,000 $2,000,000 $2,000,000 The firm’s income statement for the year was as follows: Sales $ 4,500,000 Less cost of goods sold (3,500,000) Gross profit $ 1,000,000 Less operating expenses (500,000) Operating income $ 500,000 Less interest expense (100,000) Earnings before taxes $ 400,000 Less taxes (50%) (200,000) Net income $ 200,000 a. Calculate Salco’s total asset turnover, operating profit margin, and operating return on assets. b. Salco plans to renovate one of its plants, which will require an added investment in plant and equipment of $1 million. The firm will maintain its present debt ratio of .5 when financing the new investment and expects sales to remain constant.

## Corporate Finance Quiz 9 Solution

1068 Words | 5 PagesWhich of the following statements is not correct? a. The corporate valuation model can be used even for a company that does not pay dividends. b. The corporate valuation model discounts free cash flows by the required return on equity.

### Fin515 Week 4 Homework Solutions

1112 Words | 5 Pages### Fin 515 Week 3

714 Words | 3 Pages### Finance Essay

620 Words | 3 Pages### Fin 819 Quiz

1882 Words | 8 Pages### Payroll Case Study

449 Words | 2 Pages### Toy World Inc

9199 Words | 37 Pages### Acc 291 Final Exam Question Answers

2435 Words | 10 Pages### Db123 Personal Finance

1148 Words | 5 Pages### Finance on Salco

511 Words | 3 Pages### Corporate Finance Quiz 9 Solution

1068 Words | 5 Pages