Klearcut Forestry Inc generates perpetual annual EBIT of $100 million. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. Assume that all of the perfect market M&M assumptions hold and that the corporate tax rate is 35%. The CFO of […]
Date: September 19th, 2020
Agency costs are fees paid by the management of a corporation to compensate any investor that feels it has suffered a loss due to the agency problem. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
CN is North America’s fifth largest railroad. CN is forecasting its financial statements for Year 7. Selected financial information for Year 6 is provided in the table. What is long term debt (the plug variable) for the forecasted year? To forecast current liabilities payable use the percentage of sales method based on Year 6 figures. […]
Date: September 19th, 2020
Slate Rock and Gravel Co. sets its dividend using the target payout ratio policy. Selected financial data for Slate is available in the table below. What dividend should Slate Rock and Gravel offer for the coming year (Year 2 ) if it uses an adjustment factor of 1.0? Selected Financial Information Slate Rock and Gravel […]
Date: September 19th, 2020
Which of the following are agency costs? I. Forgoing an investment opportunity which would add to the market value of the owner’s equity II. Paying a dividend to each of the existing shareholders III. Purchasing new equipment which increases the value of each share of stock IV. Hiring outside auditors to verify the accuracy of […]
Date: September 19th, 2020
Polaris Industries is forecasting its financial statements for Year 6. Selected financial information for Year 5 is provided in the table. What is Retained Earnings for Year 6? Selected Financial Information Polaris Industries Inc. ($000s) Year 5 Ratios (to Sales) Forecast Year 6 Revenue $1,908,459 $1,803,494 COGS 1,454,374 0.762067 SG&A 213,114 0.111668 Dep. Exp. 28,632 […]
Date: September 19th, 2020
Ripper Filtration Inc. designs domestic water filters that remove fluoride. Selected financial data is provided in the table below. Ripper is trying to set the dividend for the Year 2 using the target payout model. Selected Financial Information Ripper Filtration Inc. Dividend per share (Year 1 ) $0.55 Target payout ratio 20% Earnings per share […]
Date: September 19th, 2020
Agency costs pose the biggest problem for A) insiders. B) shareholders. C) directors. D) agents. E) executives. ANSWER B
Date: September 19th, 2020
Scrumptious Confections plc is a United Kingdom confectionery company. Scrumptious Inc is forecasting its financial statements for Year 2. Selected financial information for Years 1 and 2 is provided in the table. In Year 2 Scrumptious is planning to invest £53 million in CAPEX and forecasted depreciation is £196 million. What is Property, Plant and […]
Date: September 19th, 2020
The ________ is a financial relationship created by a number of institutions with arrangements that allow the suppliers and demanders of long-term funds to make transactions. A) money market B) eurobond market C) bond market D) capital market E) futures market ANSWER D
Date: September 19th, 2020
