a. What are the mortgage payments under the three alternatives? Mortgage Amount = $250,000 Term = 30years Points = 0 Starting on = December, 2002 Interest Rate = 6% Monthly Payment = $1498.88 Mortgage Payment at the end of 30years = $539,596.80 Mortgage Amount = $250,000 Term = 30years Points = 1.25 Starting on = December, 2002 Interest Rate = 5.875% Monthly Payment = $1478.84 Mortgage Payment at the end of 30years = $532,382.40 + $3125 = $535,507.40 Mortgage Amount = $250,000 Term = 30years Points = 2 Starting on = December,
3. RETURN ON CAPITAL EMPLOYED (ROCE) NET PROFIT/CAPITAL EMPLOYED X 100 = % (NB use net profit figure before tax has been taken out) (For capital employed see Financed By total on Balance Sheet) Leave the formula in. Now add in the figures from the Income Statement or Balance sheet and calculate the ratio. Then describe what this ratio shows and explain what it means. LIQUIDITY 4.
(Points: 5) Accrual of estimated operating expenses Revenue collected in advance Prepaid operating expenses Accumulated depreciation. 3. (TCO 1) For its first year of operations Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $300,000 minus permanent difference 15,000 equals 285000 minus temporay difference 20000 equals taxable income $265000 Tringali's tax rate is 40%. What should Tringali report as its deferred income tax liability as of the end of its first year of operations? (Points: 5) $35,000.
What would be the second year future value? (LG4-3) FV = 750 × (1 + 0.10) (1 + 0.12) 750 × 1.10 × 1.12 Answer: 924.00 4-11 Present Value What is the present value of a $1,500 payment made in six years when the discount rate is 8 percent? (LG4-4) PV = 1500/(1+0.08)6 1500/1.586874323 Answer: 945.25 4-13 Present Value with Different Discount Rates Compute the present value of $1,000 paid in three years using the following discount rates: 6 percent in the first year, 7 percent in the second year, and 8 percent in the third year. (LG4-4) PV = 1000 / ((1 + 0.06) (1 +0.07) (1 + 0.08)) 1000/ (1.06 × 1.07 × 1.08) 1000/1.224936 Answer: 816.37 4-16 Rule of 72 Approximately how many years are needed to double a $500 investment when interest rates are 10 percent per year? (LG4-6) N=72 / 10 Answer: 7.2 4-31 Solving for Time How many years (and months) will it take $2 million to grow to $5 million with an annual interest rate of 7 percent?
The methods used in this assignment are the payback period, NPV, IRR, and describing factors if Caladonia Products were doing a lease versus a buy will also be considered. 12a-12e. Caladonia is considering two additional mutually exclusive projects. The cash flows associated with these projects are as follows: Year Project A Project B 0 -$100,000 -$100,000 1 32,000 0 2 32,000 0 3 32,000 0 4 32,000 0 5 32,000 $200,000 The required rate of return of these projects is 11%. Payback Period Payback period is a capital budgeting criterion measure, which promptly provides the number of years the project will return is original investment (Keown, Martin, Petty, & Scott, 2005, p.292).
CASH FLOW BUDGETING ANALYSIS……………………………………….. 13 2.2. MARGINAL COST STATEMENT ANALYSIS………………………………… 13 3. CRITICAL ANALYSIS OF STATEMENTS BY JOHNSON AND KAPLAN….. 14 CALCULATIONS: 1 Travis Perkins plc | | Vertical Trend Analysis For Comprehensive Income Statement | The Group | 2008(%) | 2007(%) | Revenue | 100 | 100 | Cost of Sales | -65.45 | -65.5 | Gross Profit | 34.55 | 34.5 | Selling & Distribution Costs | -22.91 | -20.37 | Administration Expenses | -5.18 | -4.45 | Other operational income | 0.35 | 0.36 | Share of Results of Associate | -0.04 | 0 | Other | 1.77 | 0 | Operating Profit before exceptional items | 8.54 | 10.04 | Finance Income | | 0.12 | Finance Costs | -2.41 | -1.95 | Profit before tax | 6.37 | 8.2 | Tax | -1.84 | -2.52 | Profit for the year | 4.53 | 5.68 | Exceptional Items | -1.77 | 0 | Operating Profit after exceptional Items | 6.77 | 10.04 | Profit after tax (after exceptional Items) | 3.21 | 5.81 | Horizontal Trend Analysis For Comprehensive Income Statement | The Group | 2008(%) | 2007(%) | Revenue | 99.75 | 100 | Cost of Sales | 99.66 | 100 | Gross Profit | 99.9 | 100 | Selling & Distribution Costs | 112.17 | 100 | Administration Expenses | 116.15 | 100 | Other operational income | 98.25 | 100 | Share of Results of Associate | 0 | 0 | Other | 0 | 0 | Operating Profit before exceptional items | 84.87 | 100 | Finance Income | 208.11 |
During 2007 and 2008 Stator reported Net Income of $25,000 and $15,000 and paid dividends $10,000 and $12,000, respectively. Rotor uses the equity method a. What amount of differential will be amortized annually b. What will be the balance in the investment account on Dec 31, 2007? c. What amount of investment income will be reported by Rotor for the year 2007?
Chapter 3. Measuring Performance: Cash Flow and Net Income Anything marked in [xxx] represents that you must circle one answer in the brackets. In general, any area in red requires a fill in answer or explanation. E3.15 Analyzing Cash Flow Data. The Longo Company’s primary source of cash is its financing activities.
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
1. What are the essential differences between endowments, final-salary definedbenefit (DB) pensions plans, and cash-balance (CB) pension plans? A Cash Balance plan is a defined benefit plan that specifies both the contribution to be counted to each participant and the investment earnings to be counted based on those contributions. Each participant has an account that resembles those in a 401(k) or profit sharing plan. They are based on two ways: 1) The company contribution – a percentage of pay or a flat dollar amount – determined by a specified formula 2) An annual interest credit.