[4] Fifth edition of RWJR, #4.5, page 93 Further question: (d) If Ms. Fawn wishes to consume the same quantity in each period, should she borrow or lend in the current period? By how much? 2. A capital investment project is expected to produce an after-tax net cash flow of $1,200 in one year. After-tax net cash flows are then expected to grow at a rate of 4% per year for 7 years, ending 8 years from today.
SciTronics had a total of $ 102,000 (75,000 + 27,000) of capital at year-end 2008 and earned before interest but after taxes (EBIAT) $ 16,120 (avg. tax rate = 38%) during 2008. Its return on capital was 15.8% in 2008 which represented an increase from the 8.7% earned in 2005. 4. SciTronics had $ 75,000 of owners’ equity and earned $ 14,000 after taxes in 2008.
a. Based on this information, the ValueLine 1995 expected dividend, and the annual rate of dividend change for the growth estimate, what is the company’s return on common stock using the constant growth model? What is the expected dividend yield and expected capital gains yield? Explain the difference in the required return estimates from the ValueLine (see question 1a) to the WSJ price data. Return on common stock…D1/Po+g=Expected Return…0.60/27+5.5%= 7.72% Expected dividend yield= D1/P0=2.22% Expected capital gains yield= growth rate, 5.50% Stock Price increased, but expected return decreased.
ACC 305 Week 11 Final Exam Purchase this exam here: http://xondow.com/ACC-305-Week-11-Final-Exam-Strayer-University-NEW-ACC305F.htm TRUE-FALSE—Conceptual 1. Leasing equipment reduces the risk of obsolescence to the lessee, and passes the risk of residual value to the lessor. 2. The FASB agrees with the capitalization approach and requires companies to capitalize all long-term leases. 3.
(3-6 sentences. 2.0 points) compound interest. Over time the compound interest will build up on interest on your interest 4. If you were opening a savings account with compound interest, would you prefer an account that offers annual compounding, quarterly compounding, or daily compounding? Why?
Explain the difference in the required return estimates from the Value Line to the WSJ price data. The company’s return on common stock using the constant growth model is 7.72% Expected dividend yield = .60/27= 2.22% Cap. Gains Yield=5.5% The expected returns decreased from 8.36%to 7.72% which indicates the company is not as risky because the higher the risk the higher the return. B. What is the relationship between dividend yield and capital gains yield over time under constant growth assumptions?
| | | Establishes a market value for the firm. | | | Makes it easier for owner-managers to engage in profitable self-dealings. | 8 points Question 2 Financial Accounting Standards Board (FASB) Statement #13 requires that for an unqualified audit report, financial (or capital) leases must be included in the balance sheet by reporting the Answer | | residual value as a fixed asset. | | | residual value as a liability. | | | present value of future lease payments as an asset and also showing this same amount as an offsetting liability.
Capital Budgeting Measurement Criteria U05a1 Carla Hagood 1. Describe the Net Present Value (NPV) method for determining a capital budgeting project's desirability. What is the acceptance benchmark when using NPV? The NPV determines the monetary increase that can be expected from an investment. It will tell if the return will be above or below the needed amount to complete a project.
From this we know that a) Firm A has a higher profit margin than firm B b) Firm B has a higher profit margin than firm A c) Firm A and B have the same profit margin d) Firm A has a higher equity multiplier than firm B 16. If you deposit $15,000 per year for 9 years (each deposit is made at the beginning of each year) in an account that pays an annual interest rate of 8%, what will your account be worth at the end of 9 years? 17. You plan to accumulate $450,000 over a period of 12 years by making equal annual deposits in an account that pays an annual interest rate of 9% (assume all payments will occur at the beginning of each year). What amount must you deposit each year to reach your
1. Budgets Analyzing and Appropriate Decisions 1.1 Flexible Budgets Based on the figures of assumed monthly budgets for sales and production of the company in 2010, we can calculate figures for the year of 2010: With output level = 100% Production : 1,000 x 12 = 12,000 products Sales : 12,000 x 20.0 = 240,000 (monetary figures in $’000) Direct production costs : 12,000 x 7.5 = 90,000 Variable costs : 12,000 x 2.5 = 30,000 Costs of sales : Direct costs + Variable costs = 120,000 Semi-variable portion : 12,000 x 5.0 = 60,000 Fixed portion : 1,500 x 12 = 18,000 Delivery costs : Semi-variable portion + Fixed portion = 78,000 Staff costs (fixed) : 2,000 x 12 = 24,000 Rental (fixed) : 500 x 12 = 6,000 With