13-2 DSO = 40 days; ADS = $20,000; AR = ? AR = $800,000. $20,000 40 = AR 365 S DSO = AR (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?
Three months later, Lynn sold 3,000 of these shares at $19 per share. If the cost method is used to record treasury stock transactions, to record the sale of the 3,000 treasury shares, Lynn should credit a. Treasury Stock for $57,000. b. Treasury Stock for $30,000 and Paid-in Capital from Treasury Stock for $27,000.
A. Cash sales, $60,000 (Income Statement) B. Employee salary expense, $34,000 (Income Statement) C. Common stock issued for cash, $100,000 (Balance Sheet)
6. a. b. Cost of Equity = 6.25% + 5.5% = 11.75% Expected price at the end of 2003 = ($13.34 * 1.06 * 0.60) / (11.75% - 6%) Expected price at the end of 2003 = $147.54. c. 7. a. 1993 – Total Assets = $25,000 millions ROC = EBIT (1 – tax rate) / Total Assets = 12 % 0.12 * $2,500 million = 0.6 EBIT EBIT = $ 500 million Income statement (in millions) EBIT = 5,000 Interest expenses = 1,400 Earnings Before Taxes = 3,600 Taxes (tc = 40%) = 1,440 Net income = 2,160 FCFE = NI – Net CAPEX * (1 – δ) – (Change in NWC)*(1 – δ) Where δ is
A payment of $3,000 cash was made for Sal. Expenses 10. $300 payment made from accounts payable for utilities (b) Determine how much stockholders’ equity increased for the month. The Stockholder’s equity for the month Issued Stock- 20,000 Service Revenue- 9,500 Dividends- (2,000) Rent- (800) Salaries- (3,000) Utilities-(300) Increases in Stockholder’s Equity- 23,400 (c) Compute the net income for the month. The net income for the month was $5,400 1.
He must declare the sales proceeds. $1,000 gain on sale. Ken's stock sale proceeds | Amount | Sale Proceeds ($32 x 1,000 shares) | $32,000 | Less Selling Expenses | $0 | Amount Realized | $32,000 | Less Tax basis ($31 x 1,000 shares) | $31,000 | Gain on sale | $1,000 | c.) Ken received $25,000 from an annuity he purchased eight years ago. He purchased the annuity, to be paid annually for 20 years for $210,000. Gain of $14,500 Ken's Annuity | Amount | Total investment into annuity | $210,000 | Number of payments | 20 | Return on capital for the payments | $10,500 | Ken's
Commercial Paper Yield Assume an investor purchased six-month commercial paper with a face value of $1 million for $940,000. What is the yield? Yield: (Par value-Purchase value/Purchase Price)*(360/time held) Ycp=((1000000-940000)/940000)*(360/180) Ycp=12.766 % or 12.77% 4. Repurchase Agreement Stanford Corporation arranged a repurchase agreement in which it purchased securities for $4.9 million and will sell the securities back for $5 million in 40 days. What is the yield (or repo rate) to Stanford Corporation?
What are earnings if the owners invest (use their own money) for the $800 needed to start? b. If the firm borrows $400 of the $800 at an interest rate of 10%, what are the firm's net earnings? c. What is the return on the owners' investment in each case? Why do the returns differ?
The depreciation charges start from 2008. WPC make 15% as the hurdle rate for this investment. The treasury bonds yielding 10%, whereas currently yielding is less than 5%. Financial Analysis (1) Shares outstanding: 500 million. Market value per share: $24 So, total equity: 500 million*$24=$12,000 million (2) Total debt= long term debt=$2500 million (3) Proportion of Equity: E(D+E)=$12,000million($2500million+$12,000million)=0.83 Proportion of Debt: D(D+E)=$2500million($2500million+$12,000million)=0.17 (4) Cost of Equity: CAPM: E(Ri)=Rf+βi*(Rm-Rf)= 4.6%+1.10*6%=4.6%+6.6%=11.2% (5) Rate of bank loan payable: 5.38%+1%=6.38%.
2.0 Task 1 In 2012 Inbox Software had 9,000 million shares of common stock authorized,4,260 million in issue, and 3,847 million outstanding (figure rounded to the nearest million). Its equity account was as follows: Common stock $ 213 Additional paid-in capital 5,416 Retained earnings 10,109 Treasury shares 6,851 Currency translation adjustment and contributions to an employee benefit trust have been deducted from retained earnings. 1.1 What was the par value of each share? $213 million4,260 million share = $0.05 per share 1.2 What was the average price at which shares were sold? $213 million+$5416 million4,260 million share= $132 per share 1.3 How many shares had been repurchased?