The company is planning to invest in a major capital project in 2012. The capital budget for this project is $12.0 Million in 2012. 2011 Net Income = $15,000,000 2012 Net Income = increased by 8% = ($15,000,000) + ($15,000,000 * 8%) = $16,200,000 2012 Target Equity Ratio = 65% 2011 Dividend Payout = $3,000,000 2012 Capital Budget = $12,000,000 1. If Middlesex increases its cash dividends in 2012 at the same rate of growth as its Net Income rate, what will be the total 2012 dividend payout in Dollars? 3,000,000 x (1 + .08) 3,000,000 x 1.08 = $3,240,000 2.
VOP = [FCF x (1+g)] / (WACC-g) = [$400,000 x (1+0.05)] / (0.12-0.05) = [$400,000 x 1.05] / 0.07 = $420,000 / 0.07 = $6,000,000 Problem 13-3: Horizon Value. Current and projected free cash flows for Radell Global Operations are shown below. Growth is expected to be constant after 2012, and the weighted average cost of capital is 11%. What is the horizon (continuing) value at 2012? Actual Projected 2010 2011 2012 2013 Free cash flow (millions of dollars) $606.82 $667.50 $707.55 $750.00 g = ($750.00 - $707.50) / $707.50 = $42.50 / $707.50 = 0.06 VOP = [(FCF x (1+g)] /
| $780 | C. | $990 | D. | $2,430 | E. | $2,640 | | 2 | D | A firm has common stock of $6,200, paid-in surplus of $9,100, total liabilities of $8,400, current assets of $5,900, and fixed assets of $21,200. What is the amount of the shareholders' equity? A. $6,900B. $15,300C.$18,700D $23,700E.
Assume there are 365 days in a year. $20,000/365= 54.79 54.79 x 20 = $1,095.80 3-2 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? Equity ratio = 1/2.5 = .40 Debt ratio + equity ratio = 1 1-equity ratio = debt ratio 1-.40 = .60 or 60% 3-3 Winston Washers’s stock price is $75 per share.
Dividing the present value of future cash flows by the cost of the investment indicates that every dollar invested buys securities worth $1.18. Value is created. Table 1 The appropriate intrinsic value of PacifiCorp Assume: 1. 10-year investment horizon, when you liquidate at “book” or accumulated investment value 2. initial investment is $9.4 billion 3. no dividends are paid, all cash flows are reinvested 4. return on equity = 7.45% 5. cost of equity = 5.72% Year 0 1 2 3 4 5 6 7 8 9 10 Investment or Book Equity Value 9.4 10.1 10.9 11.7 12.5 13.5 14.5 15.5 16.7 17.9 19.3 Market Value (or Intrinsic Value) = Present value @ 5.72% of 19.3 = $11.07 Market/Book = $11.07/9.4 = $1.18 Value created: $1.00 invested becomes $1.18 in market value. Discounted Cash Flow Appendix 1 shows the discounted cash flow for following 15 years.
35300+95500+5000+14400= $150,200 B. What are Anderson Company’s total liabilities? 41000+21200= 62,200 C. What is Anderson Company’s total owners’ equity? 150,200-62,200= 88,000 Assests – Liabilities = owners equity D. What is Anderson Company’s debt to equity ratio? Total liabilities divided by owners’ equity = 62,200/88,000= 0.71 to 1 ratio 5.
Page 49, annual report 2010 1.6 The company's net income increased over the last year by $102,916. Page 50, annual report 2010 Chapter 2 (The numbers are in thousands of U.S dollars) 2.1 For the most recent
Due to an increase in labor rates, the company estimates that variable costs will increase by $3 per skateboard next year. If this change takes place and the selling price per skateboard remains constant at $37.50, what will be the new CM ratio and the new break-even point in skateboards? * 3. Refer to the data in (2) above. If the expected change in variable costs takes place, how many skateboards will have to be sold next year to earn the same net operating income, $120,000, as last year?
See key to HW. 3. See key to HW. 4. |Stock |Value held by fund | |A |$ 7,000,000 | |B |12,000,000 | |C |8,000,000 | |D |15,000,000 | |Total |$42,000,000 | Net asset value = [pic]= $10.49 5.
Winston has $10 billion in total as- sets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt and $6 billion in common equity. It has 800 million shares of common stock outstanding. What is Winston’s market/book ratio? Common equity Book value per share = shares outstanding = 6 billion 800 million = $7.5 Market / Book Ratio: Market price per share Book value per share = 75 = 10 7.5 Problem 3-4: A company has an EPS of $1.50, a cash flow per share of $3.00, and a price/cash flow ratio of 8.0.