QUESTION Equity Accounts. The authorized share capital of the Alfred Cake Company is 100,000 shares. The equity is currently shown in the companys books as follows: Common stock ($1.00 par value) $ 60,000 Additional paid-in capital 10,000 Retained earnings 30,000 Common equity 100,000 Treasury stock (2,000 shares) 5,000 Net common equity 95,000 a. How many […]
QUESTION Scenario Ana l ysis. The most likely outcomes for a particular project are estimated as follows: Unit price: $50 Variable cost: $30 Fixed cost: $300,000 Expected sales: 30,000 units per year However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 10 […]
QUESTION Calculating W A CC. Find the WACC of William Tell Computers. The total book value of the firms equity is $10 million; book value per share is $20. The stock sells for a price of $30 per share, and the cost of equity is 15 percent. The firms bonds have a par value of […]
QUESTION CAPM and Hu r dle Rates. A project under consideration has an internal rate of return of 14 percent and a beta of .6. The risk-free rate is 5 percent and the expected rate of return on the market portfolio is 14 percent. a. Should the project be accepted? b. Should the project be […]
QUESTION Stock V alues. Integrated Potato Chips paid a $1 per share dividend yeste r da y . You expect the dividend to grow steadily at a rate of 4 percent per year. a. What is the expected dividend in each of the next 3 years? b. If the discount rate for the stock is […]
QUESTION C r edit Decision. The Branding Iron Company sells its irons for $50 apiece wholesale. Pro- duction cost is $40 per iron. There is a 25 percent chance that a prospective customer will go bankrupt within the next half year. The customer orders 1,000 irons and asks for 6 months credit. Should you accept […]
QUESTION Selected financial statement data for Jamestown Resorts for the year ending January 31, 2008, are as follows:JAMESTOWN RESORTS, INC.Balance Sheet (partial)(in millions)End of YearBeginning of YearCash and cash equivalents$331$25Receivables (less allowance of $23 and $17)699722Merchandise inventory888946Prepaid expenses3729Other current assets10291Total current assets$2,057$1,813Total current liabilities$950$951For the year, net sales were $5,634 million, and cost of goods […]
QUESTION Float. General Products writes checks that average $20,000 daily. These checks take an av- erage of 6 days to clear. It receives payments that average $22,000 daily. It takes 3 days be- fore these checks are available to the firm. a. Calculate payment float, availability float, and net float. b. What would be General […]
QUESTION Vertical analysis (common size) percentages for Osborne Hot Dogs sales, cost of goods sold, and expenses are as follows:Vertical Analysis200720062005Sales100.0100.0100.0Cost of goods sold59.262.464.5Expenses25.026.627.5Did Osbornes net income as a percent of sales increase, decrease, or remain unchanged over the three-year period? Provide numerical support for your answer. For making the Vertical Analysis, we have taken […]
QUESTION Real v e r sus Nominal Rates. You will receive $100 from a savings bond in 3 years. The nominal interest rate is 8 percent. a. What is the present value of the proceeds from the bond? b. If the inflation rate over the next few years is expected to be 3 percent, what […]
