QUESTION Grunewald Industries sells on terms of 2/10, net 40. Gross sales last year were $4,562,500, and accounts receivable averaged $437,500. Half of Grunewald”s customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewald”s non discount customers? (Hint: Calculate sales/day based on a 365-day […]
QUESTION What are the advantages of matching the maturities of assets and liabilities? What are the disadvantages? The matching approach for meeting the financing needs of the company states that fluctuating assets should be financed by the short term sources of financing while the long term i.e. fixed assets of the business should be financed […]
QUESTION Buena Terra Corporation is reviewing its capital budget for the upcoming year. It has paid a $3.00 dividend per share (DPS) for the past several years, and its shareholders expect the dividend to remain constant for the next several years. The company”s target capital structure is 60 percent equity and 40 percent debt; it […]
QUESTION The Rogers Company is currently in this situation: (1) EBIT = $4.7 million; (2) tax rate, T = 40%; (3) value of debt, D = $2 million; (4) rd = 10%; (5) rs = 15%; (6) shares of stock outstanding, n0 = 600,000; and stock price, P0 = $30. The firm”s market is stable, […]
QUESTION At year-end 2002, total assets for Bertin Inc. were $1.2 million and accounts payable were $375,000. Sales, which in 2002 were $2.5 million, are expected to increase by 25 percent in2003. Total assets and accounts payable are proportional to sales and that relationship will be maintained. Bertin typically uses no current liabilities other than […]
QUESTION FIN 534 Homework Chapter 14 1. Myron Gordon and John Lintner believe that the required return on equity increases as the dividend payout ratio is decreased. Their argument is based on the assumption that . 2. Which of the following should notinfluence a firms dividend policy decision? 3. Which of the following statements about […]
QUESTION Complete the balance sheet and sales information in the table that follows for Hoffmeister Industries using the following financial data: Debt ratio: 50% Quick ratio: 0.80X Total assets turnover: 1.5X ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
QUESTION The finance department of a large corporation has evaluated a possible capital project using the NPV method, the Payback Method, and the IRR method. The analysts are puzzled, since the NPV indicated rejection, but the IRR and Payback methods both indicated acceptance. Explain why this conflicting situation might occur and what conclusions the analyst […]
QUESTION Mary Jarvis, a single individual, has this situation for the year 2002: salary of $82,000; dividend income of $12,000; interest on Disney bonds of $5,000; interest on state of Florida municipal bonds of $10,000; proceeds of $22,000 from the sale of Disney stock purchased in 1985 at a cost of $9,000; and proceeds of […]
QUESTION Hunt Taxidermy, Inc. is concerned about the taxes paid by the company in 2008. In addition to $33.50 million of taxable income, the firm received $1,850,000 of interest on state-issued bonds and $570,000 of dividends on common stock it owns in Hunt Taxidermy, Inc.(Use Table 2.3) Calculate Hunt Taxidermys tax liability, average tax rate, […]
