Income Statement) Pearson Brothers recently reported an EBITDA of $7.5 Million and net income of $1.8 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization?

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Income Statement)

Pearson Brothers recently reported an EBITDA of $7.5 Million and net income of $1.8 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization?

2-7 – (Corporate Tax Liability)

The Talley Corporation had a taxable income of $365,000 from operations after all operating costs but before (1) interest charge of $50,000, (2) dividends received of $15,000, (3) dividends paid of $25,000, and (4) income taxes. What are the company’s marginal and average tax rates on taxable income?

3-8 – (Profit Margin and Debt Ratio)

Assume you are given the following relationships for the Clayton Corporation: Sales/total assets 1.5 Return on assets (ROA) 3% Return on equity (ROE) 5% Calculate Clayton’s profit margin and debt ratio.

3-10 – (Times-interest-earned ratio)

The Manor Corporation has $500,000 of debt outstanding, and it pays an interest rate of 10% annually: Manor’s annual sales are $2 million, its average tax rate is 30%, and its net profit margin on sales is 5%. If the company does not maintain a TIE ratio of at least 5 to 1, then its bank will refuse to renew the loan and bankruptcy will result. What is Manor’s TIE ratio?

12.1 – (AFN Equation)

Baxter Video Product’s sales are expected to increase by 20% from $5 million in 2010 to $6 million in 2011. Its assets totaled $3 million at the end of 2010. Baxter is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2010, current liabilities were$1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accruals. The after-tax profit margin is forecasted to be 5%, and the forecasted payout ratio is 70%. Use the AFN equation to forecast Baxter’s additional funds needed for the coming year.

12-4 – (Sales Increase)

Bannister Legal Services generated $2,000,000 in sales during 2010, and its year-end total assets were $1,500,000. Also, at year-end 2010, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accruals. Looking ahead to 2011, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 5%, and its payout ratio will be 60%. How large a sales increase can the company achieve without having to raise funds externally; that is, what is its self-supporting growth rate?

13-6:

Brooks Enterprises has never paid a dividend. Free cash flow is projected to be
$80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 8%. The company’s weighted average cost of capital is 12%.
a. What is the terminal, or horizon, value of operations? (Hint: Find the value of all free cash flows beyond Year 2 discounted back to Year 2.)
b. Calculate the value of Brooks’s operations.

13- 7

Dozier Corporation is a fast growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 7% rate. Dozier’s weighted average cost of capital is WACC = 13%.

YEAR
1 2 3
Free Cash Flow ($millions) -$20 $30 $40
a.) What is Dozier’s terminal, or horizon, value? (Hint: Find the value of all free cash flows beyond year 3 discounted back to Year 3.)
b.) What is the current value of operations for Dozier?
c.) Suppose Dozier has $10 million in marketable securities, $100 million in debt, and 10 million shares of stock. What is the intrinsic price per share?

13.8

The balance sheet of Hutter Amalgamated is shown below. If the 12/31/2010 value of operations is $756 million, what is the 12/31/2010 intrinsic market value of equity?

Assets Liabilities and Equity

Cash $20.0 Accounts Payable $19.0
Marketable securities 77.0 Notes Payable 151.0
Accounts receivable 100.0 Accruals 51.0
Inventories 200.0 Total current liabilities $221.0
Total current assets $397.0 Long term bonds 190.0
Net Plant and equipment 279.0 Preferred stock 76.0
Common stock
(par plus PIC) 100.0
Retained earnings 89.0
Common equity $189.0
Total Assets $676.0 Total liabilities $676.0

1. Bosio Inc.’s perpetual preferred stock sells for $97.50 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company’s cost of preferred stock for use in calculating the WACC?

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1. Bosio Inc.’s perpetual preferred stock sells for $97.50 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company’s cost of preferred stock for use in calculating the WACC?

2. Assume that you are on the financial staff of Vanderheiden Inc., and you have collected the following data: The yield on the company’s outstanding bonds is 7.75%; its tax rate is 40%; the next expected dividend is $0.65 a share; the dividend is expected to grow at a constant rate of 6.00% a year; the price of the stock is $15.00 per share; the flotation cost for selling new shares is F = 10%; and the target capital structure is 45% debt and 55% common equity. What is the firm’s WACC, assuming it must issue new stock to finance its capital budget?

What is the international capital market? Why would an international business make use of an international capital market?

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What is the international capital market? Why would an international business make use of an international capital market?
Describe the important features of the foreign exchange market. Why is this market critical for international businesses? What risks does this market impose on international business? What factors drive changes in exchange rates within this market?
Write your response in 400 words . Apply current APA standards for writing style to your work. All written assignments and responses should follow APA rules for attributing sources.

A large publically traded company will receive a major financial benefit from the sell of its stock ________

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A large publically traded company will receive a major financial benefit from the sell of its stock ________ .Select one:a. each time a shareholder buys or sells the stock b. when the stock is traded on the New York Stock Exchange c. at the initial public offering

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Although money has no intrinsic value, it is demanded throughout society. Among the reasons that money is demanded are:Select one:a. It is not easy to counterfeit.b. It is divisible c. it stores value.

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Bank Of The North (B of N) gave out large loans to many of their customers. After reviewing the bank’s records, B of N sees that the bank is now below the Federal Reserve’s minimum reserve requirement. A member bank, Helper Bank, has excess reserves. B Of N borrows enough money from Helper Bank to reach their reserve requirement. The rate of interest that B of N will pay to Helper Bank for the loan is the ________ rate.Select one:a. intrabank b. institutional c. federal funds

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Bonds are:Select one:a. A partial ownership in a companyb. a way to raise capital that does not need to be repaidc. a formal contract to repay borrowed money with interest at fixed intervals.

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Historically many methods and markets were used to raise capital, but the primary methods that have evolved in modern times are the:Select one:a. land markets and housing markets b. Over the counter markets c. bond markets and stock markets

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If the federal government wanted to find out how much M1 money is in circulation in the US, it would look at which of the following?Select one:a. Savings accounts b. Money market mutual funds c. Demand deposits and other checking accounts

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If you were given the task of totalling all the M2 money in circulation in the US, which of the following would you include in your calculations?Select one:a. 1.Demand deposits and other checking accounts b. Currency c. 2.Savings accounts

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One of the ways the Federal Reserve System seeks to stabilize prices is by:Select one:a. controlling the price of goods b. engaging in trade treaties c. regulation of interest rates

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Stocks or equity securities are:Select one:a. Debt to the company b. Managed by your local commercial bank c. financial instruments that may include share of a company’s future profits.

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The Federal Reserve lowers the reserve requirement from 7 percent to 6 percent. Consequently banks must set aside less money to meet the reserve requirement. They have more money to lend to their customers and are able to lower the rate of interest they charge. These conditions make it less expensive for people and businesses to borrow money. Because they can borrow more, they can spend more. If people are spending more, prices go up. With this action, the Fed has lessened the likelihood of ________.Select one:a. inflation b. free market c. recession

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The Federal Reserve raises the reserve requirement from 7 percent to 8 percent. Consequently banks must set aside more money and consequently have less money to lend. The result is that the banks will raise the interest rate they charge to their customers. These conditions make it harder and more expensive for people and businesses to borrow money. Because they can’t borrow as much, they can’t spend as much. If people aren’t spending as much, prices don’t go up. With this action, the Fed has lessened the likelihood of ________.Select one:a. recession b. free market c. inflation

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The Queen of England says by royal decree that the British Pound will be the currency of the land and it will be backed by the government as legal tender for all debts public and private. The British Pound is an example of:Select one:a. Commodity money b. Virtual money c. Fiat money

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What are Bonds?Select one:a. a partial ownership in a company b. profit c. debt

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What government entity is responsible for monitoring the U.S. money supply?Select one:a. Federal Trade Commission b. Federal Labor Relations Authority c. Federal Reserve

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What is a reason someone might consider trying Bitcoin?Select one:a. The value of my Bitcoins can vary widely based on supply and demand. b. There is a possibility of fraud or theft. c. One would not have to pay high transaction costs associated with transferring funds through a bank.

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What is a reason you might be hesitant to use Bitcoin?Select one: a. It is less expensive to accumulate than other types of currency. b. I would not need to have a bank account. c. The value of my Bitcoins can vary widely based on supply and demand.

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What is the biggest advantage of borrowing money, such as a loan or a bond, instead of issuing stock in order to raise capital?Select one:a. The interest rate is usually less b. The business owner does not have to worry about legal liability c. The current business owner retains complete ownership of the business

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Why don’t we use the barter system today:Select one:a. Of specialization theory promoted by Adam Smith b. Of the role of commercial banks. c. It is difficult to find two parties that have something they both want to trade.

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You pay your neighbor $100 in exchange for the used washing machine she is selling. Your neighbor puts that $100 into her pocket and takes her family out to the movies and a nice dinner at the end of the week. She still has $20 left after this outing and decides to put the remaining $20 into her savings account. This is an example of:Select one:a. Exchange rate b. Time value of money c. Store of value

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Your large business just issued bonds for $10 million. You are excited about utilizing the new funds to expand. As you create your budgets for the upcoming years you need to keep in mind that your company will need to ________.Select one:a. Find someone who would like to pay $10 million for your bond. b. Pay the interest and a portion of the principal balance to the bank each month for the duration of the bond term. c. Pay interest payments annually and repay the entire $10 million at the end of the bond term.

You are a data analyst with John and Sons Company. The company has a large number of manufacturing plants in the United States

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You are a data analyst with John and Sons Company. The company has a large number of manufacturing plants in the United States and overseas. The company plans to open a new manufacturing plant. It has to decide whether to open this plant in the United States or overseas.

What is an appropriate null hypothesis to compare the quality of the product manufactured in the overseas plants and the U.S. plants? Why? How would you choose an appropriate level of significance for your statistical test? What are the possible outcomes and limitations of your statistical test?

Baldwin’s turnover rate for this year is 6.29%. This rate is projected to remain the same next year and no further downsizing will occur from automating. Baldwin plans to spend an additional $500 beyond the extra amount above the $1000 recruiting base it spent this year. The goal of this additional investment is to improve the quality of applicants. What would the total recruiting cost be for Baldwin next year?

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Baldwin’s turnover rate for this year is 6.29%. This rate is projected to remain the same next year and no further downsizing will occur from automating. Baldwin plans to spend an additional $500 beyond the extra amount above the $1000 recruiting base it spent this year. The goal of this additional investment is to improve the quality of applicants. What would the total recruiting cost be for Baldwin next year?
Select: 1

$168,535

$202,242

$185,389

$219,096

Next year Baldwin plans to include an additional performance bonus of 0.25% in its compensation plan. This incentive will be provided in addition to the annual raise, if productivity goals are reached. Assuming the goals are reached, how much will Baldwin pay its employees per hour?
Select: 1

$28.22

$29.63

$31.04

$28.15

Andrews Corp. ended the year carrying $80,392,000 worth of inventory. Had they sold their entire inventory at their current prices, how many more dollars of contribution margin would it have brought to Andrews Corp.?
Select: 1

$128,965,000

$80,392,000

$46,302,000

$158,626,950

Which description best fits Digby? For clarity:

– A differentiator competes through good designs, high awareness, and easy accessibility.
– A cost leader competes on price by reducing costs and passing the savings to customers.
– A broad player competes in all parts of the market.
– A niche player competes in selected parts of the market.

Which of these four statements best describes this competitor?
Select: 1

Digby is a broad cost leader

Digby is a niche cost leader

Digby is a niche differentiator

Digby is a broad differentiator

The statement of cash flows for Baldwin Company shows what happens in the Cash account during the year. It can be seen as a summary of the sources and uses of cash (sources of cash are added, uses of cash are subtracted). Please answer which of the following is true if Baldwin issues bonds:
Select: 1

It is a source of cash and will be shown in the financing section as an addition.

It is a source of cash, and will be shown in the investing section as an addition.

It is a use of cash, and will be shown in the financing section as a subtraction

It is a use of cash, and will be shown in the investing section as a subtraction

This year Baldwin achieved an ROE of 5.1%. Suppose management takes measures that decrease Asset turnover (Sales/Total Assets) next year. Assuming Sales, Profits, and financial leverage remain the same, what effect would you expect this action to have on Baldwin’s ROE?
Select: 1

Baldwin ROE will remain the same

Baldwin ROE will increase

Baldwin ROE will decrease

On the income statement, which of the following would be classified as a variable cost?
Select: 1

Inventory Carry Expense

R&D Expense

Depreciation Expense

Promotion Expense

It is January 2nd and senior management of Baldwin meets to determine their investment plan for the year. They decide to fully fund a plant and equipment purchase by issuing 75,000 shares of stock plus a new bond issue. Assume the stock can be issued at yesterday’s stock price ($40.86) and leverage changes to 2.7. Which of the following statements are true? Select all that apply.
Select: 3

Total assets will rise to $235,152,272

Baldwin will issue stock totaling $3,064,500

Working capital will remain the same at $16,424,173

The total investment for Baldwin will be $26,272,303

Total liabilities will be 147,968,084