What does the $2.55 billion increase in Berkshire Hathaway’s market value represent? 2. Choice of valuation methods: What do you think PacifiCorp is worth on its own before its acquisition by Berkshire? Which valuation method should you use to value PacifiCorp and why? Show clearly the steps to arrive at the following estimates in Exhibit 10: Enterprise Value as Multiple of: Revenue EBIT EBITDA Net Income 6,252 8,775 9,023 7,596 6,584 9,289 9,076 7,553 MV Equity as Multiple of: EPS Book Value 4,277 5,904 4,308 5,678 Median Mean If you need to use a discount rate to discount cash flows then an appropriate discount rate estimate for PacifiCorp is approximately 9%.
Discuss how Hincapie should report the proposed preferred stock issue. * General Disclosure- either on the face of the financial statement by means of parenthetical disclosure, or in the Notes of the financial statements "o 505-10-50-2: If both financial position and results of operations are presented, disclosure of changes in the separate accounts comprising shareholders’ equity (in addition to retained earnings) and of the changes in the number of shares of equity securities during at least the most recent annual fiscal period and any subsequent interim period presented is required to make the financial statements sufficiently informative. Disclosure of such changes may take the form of separate statements or may be made in the basic financial statements or notes thereto " "o 505-10-50-3: An entity shall explain, in summary form within its financial statements, the pertinent rights and privileges of the various securities outstanding. Examples of information that shall be disclosed
1. For the year-end December 31, 2007, financial statement, what amount should M record as a liability? According to FASB 450-20-25-1, when a loss contingency exists, the likelihood that the future event or events will confirm the loss or impairment of an asset or the incurrence of a liability can range from probable to remote. An estimated loss from a loss contingency shall be accrued by a charge to income if both of the following conditions are met a. Information available before the financial statements are issued or are available to be issued indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statement.
A. 10,000 B. 7,000 C. 8,000 D. 25,000 2. Based on the preceding information, what was Conservative's book value of assets transferred to Spin Company? A.
The Allowance for Bad Debts was adjusted to equal 3% of the balance in Accounts Receivable at the end of the yea Questions: 1. Analyze the effect of each of these transactions in terms of its effect on Account Receivable, Allowance for Doubtful may be involved, and prepare necessary journal entries. 2. Give the correct totals for Accounts Receivable and the Allowance for Doubtful Accounts as of December 31, 2006, had been recorded. 3.
1-15 (b) Total assets $7,891.6; total liabilities $3,109.9. 1-16 (c) Dividends $40,000. (f) Total revenues $125,000. P1-3A Net income $3,300, Retained earnings $1,300, Total assets, $40,000 P1-4A Net cash provided by operating activities $24,000 P1-5A (b) Total assets $79,000 P1-3B Net income $3,500, Retained earnings $1,800, Total assets $77,200 P1-4B Net cash provided by operating activities $24,000 P1-5B (b) Net income $40,000 BYP 1-1 (e) Decrease in net income $14,294,000 BYP 1-2 Hershey’s net income $214,154; Tootsie Roll’s net income $51,625 BYP 1-7 Total assets $39,000 Chapter 2 Exer. No.
You may use the forms below. (40 points) Sanborn Corporation Comparative Income Statements For the Years Ended December 31, 20x8 and 20x7 (in thousands of dollars) 20x8 20x7 Increase or Decrease Amount Percentage Net sales $3,276,800 $3,146,400 130,400 4.14% Cost of goods sold 2,088,800 2,008,400 80,400 4.00% Gross margin $1,188,000 $1,138,000 50,000 4.39% Operating expenses Selling expenses $ 476,800 $ 518,000 (41,200) -7.95% Administrative expenses 447,200 423,200 24,000 5.67% Total operating expenses $ 924,000 $ 941,200 (17,200) -1.83% Income from operations $ 264,000 $ 196,800 67,200 34.15% Interest expense 65,600 39,200 26,400 67.35% Income before income taxes $ 198,400 $ 157,600 40,800 25.89% Income taxes expense 62,400 56,800 5,600 9.86% Net income $ 136,000 $ 100,800 35,200 34.92% Earnings per share $3.40 $2.52 0.88 34.92% Sanborn Corporation Comparative Balance Sheets December 31, 20x8 and 20x7 20x8 20x7 Increase or Decrease Amount Percentage Assets Cash $ 81,200 $ 40,800 40,400 99.02% Accounts receivable (net) 235,600 229,200 6,400 2.79% Inventory 574,800 594,800 (20,000) -3.36% Property, plant, and equipment (net) 750,000 720,000 30,000 4.17% Total assets $1,641,600 $1,584,800 56,800 3.58% Liabilities and Stockholders' Equity
Support your answer with appropriate statistics. Satcom Division Capital Budgeting Analysis | | | Install Cost | $750 | Work. Cap. | $75 | Initial Outlay | $825 | | WACC = | 14% | Tax Rate = | 35% | Sensitivity | 0.00% | | | | | | | | | | | Table 1 | | | | | DEPRECIATION SCHEDULE FOR NEW MACHINE | | | YEAR | MACRS | COST | ADC | ACDEP | BV | | | 1 | 0.2000 | 750 | 150.00 | 150.00 | 600.00 | | | 2 | 0.3200 | 750 | 240.00 | 390.00 | 360.00 | | | 3 | 0.1920 | 750 | 144.00 | 534.00 | 216.00 | | | 4 | 0.1152 | 750 | 86.40 | 620.40 | 129.60 | | | 5 | 0.1152 | 750 | 86.40 | 706.81 | 43.19 | | | 6 | 0.0576 | 750 | 43.20 | 750.00 | - | | | | | | | | | | | | | | | | | | | | | | | | | | | Table2 | AFTER-TAX CASH FLOW TABLE | YEAR | 1 | 2 | 3 | 4 | 5 | 6 | 7 | EBDT | 121.00 | 132.00 | 192.50 | 275.00 | 412.50 | 495.00 | 605.00 | DEPR | 150.00 | 240.00 | 144.00 | 86.40 | 86.40 | 43.20 | 0.00 | EBT | -29.00 | -108.00 | 48.50 | 188.60 | 326.10 | 451.80 | 605.00 | TAX | -10.15 | -37.80 | 16.98 | 66.01 | 114.14 | 158.13 | 211.75 | EAT | -18.85 | -70.20 | 31.53 | 122.59 | 211.97 | 293.67 | 393.25 | DEPR | 150.00 | 240.00 | 144.00 | 86.40 | 86.40 | 43.20 | - | ATCF | 131.15 | 169.80 | 175.53 | 208.99 | 298.37 | 336.87 | 393.25 | WC recoup | | | | | | | 25.0 | Sale | | | | | | |
APV vs. WACC Problem Given the following information, answer questions 1 and 2 below. Company and market data: Rf = 4% Rm = 10% βu = 0.9 D/V (target) = 40% RD = 4% Tc = 30% Project CFs: I0 = 1000, CF1 = 300, CF2 = 400, CF3 = 500 1) Calculate the project’s value using WACC 2) Calculate the project’s value using APV -Oops, we can’t until we know the financing (debt) pattern over time. (a) OK, assume the project is financed with 60% debt which is paid off in three equal, annual installments. (b) Now assume instead of (a) that the debt is rebalanced to be consistent with the firm’s target debt ratio (i.e. D/V = 40%).
What would be the impact on monthly sales cost, and income? Regular Selling Price Impact: Price $4,350 Quantity $3,000 Revenue $13,050,000 Variable Manufacturing Costs ($5,385,000) Variable Marketing Costs ($825,000) Contribution Margin $6,840,000 *Fixed Manufacturing Costs ($1,980,000) *Fixed Marketing Costs ($2,310,000) Income $2,550,000 Using the regular selling price Income = Revenues – Total costs = $13,050,000 - $10,500,000 = $2,550,000 * Continue to the next page New Selling Price Impact: Price $3,850 Quantity $3,500 Revenue $13,475,000 Variable Manufacturing Costs ($6,282,500) Variable Marketing Costs ($962,500) Contribution Margin $6,230,000 Fixed Manufacturing Costs ($1,980,000) Fixed Marketing Costs ($2,310,000) Income $1,940,000 2) After price reduction, income = $13,475,000 - $11,535,000 =