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Fin650_fcordero-Week5

# Fin650_fcordero-Week5 - Chapter 14 Problems 1 2 3 4 5 and 6...

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(3000000/5000000)1000000-(500000/5000000)1000000-.05(6000000)(1-.7) 410000 Chapter 14 – Problems 1, 2, 3, 4, 5, and 6; Chapter 15 – Problems 11 (from the Web site, download a

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and use FM12 Ch 15 P11 Build a Model.xls Excel template to solve this problem)
Chapter 14 – Problems 1, 2, 3, 4, 5, and 6; Chapter 15 – Problems 11 (from the Web site, download a

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Chapter 14 – Problems 1, 2, 3, 4, 5, and 6; Chapter 15 – Problems 11 (from the Web site, download a

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Bannister Legal Services generated \$2.0 million in sales during 2007, and its yearend total assets were \$1.5 million. Also, at year-end 2007, 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 2008, the company estimates that its assets must increase by 75 cents for every \$1 increase in sales. Bannister’s profit margin is 5%, and its payout ratio is 60%. How large a sales increase can the company achieve without having to raise funds externally? (1500000/2000000)*(2000000)-((200000+100000)/2000000)*(2000000)-(0.05*(1-0.6)) ### Chapter 14 – Problems 1, 2, 3, 4, 5, and 6; Chapter 15 – Problems 11 (from the Web site, download a

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At year-end 2007, total assets for Bertin Inc. were \$1.2 million and accounts payable were \$375,000. Sales, which in 2007 were \$2.5 million, are expected to increase by 25% in 2008. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Bertin typically uses no current liabilities other than accounts payable. Common stock amounted to \$425,000 in 2007, and retained earnings were \$295,000. Bertin plans to sell new common stock in the amount of \$75,000. The firm’s profit margin on sales is 6%; 40% of earnings will be paid out as dividends. a. What was Bertin’s total debt in 2007? b. How much new, long-term debt financing will be needed in 2008? (Hint: AFN New stock New long-term debt.) Do not consider any financing feedback effects.

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Fin650_fcordero-Week5 - Chapter 14 Problems 1 2 3 4 5 and 6...

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