Ch4 HW - B = .8 IGR% = 2805/42300 * .8 = 5.6022% 1-...

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Francis Roman Ch.4 12/15/2008 1. Given: sales = 19,000 assets = 9900 debt = 5100 costs = 13500 equity = 4800 net income = 5500 predict increase by 10% find the plug in variable Equiation: actual * 1.1 = 10% increase net income yr 2 - (equity yr 1 - equity yr 2) = plug Solution: sales = 20900 assets = 10890 debt = 5610 costs = 14850 equity = 5280 net income = 6050 plug = -5570 2. Given: solution from problem 1 half net income paid as dividends debt = 5100 equity = 4800 assets = 10890 Equiation: ARE = 1/2 net income debt + equity + ARE = total plug = total - assets Solution: .5 * net income = 3025 total = 12925 plug = -2035 6. Given: sales = 15180 assets = 11500 debt = 24900 costs = 10505 fixed = 3800 equity = 17400 taxable = 4675 total = 42300 total = 42300 taxes = (40%) 1870 net income = 2805 assets ans costs porportional to sales, debt + equity are not 20% dividend payout ratio no external financing, find IGR% Equiation: IGR% = ROA x B = (net income / assets) x B 1- (ROA x B) 1- (net income / assets) x B B = 1- dividend payout ratio Solution:
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Unformatted text preview: B = .8 IGR% = 2805/42300 * .8 = 5.6022% 1- (2805/42300 * .8) 8. Given: sales = 46000 assets = 24000 long term debt = 51000 costs = 29500 fixed = 92000 equity = 65000 taxable = 16500 total = 116000 total = 116000 taxes = (34%) 5610 net income = 10890 assets and costs are porportional to sales 30% dividend payout ratio constant debt-equity ratio find SGR% without new equity Equiation: SGR% = ROE x B = (net income / equity) x B 1- (ROE x B) 1- (net income / equity) x B B = 1- dividend payout ratio Solution: B = .7 SGR% = 10890/65000 * .7 = 13.2858% 1- (10890/65000 * .7) 14. Given: profit margin = 8.9% capital intensity ratio = .75 debt-equity ratio = .60 net income = 34000 dividends = 16000 Equiation: ARE = net income - dividends B = ARE /net income %ROE = PM *1/CIR * (1+debt-equity ratio) %SGR = ROE * B 1 - (ROE * B) Solution: ARE = 18000 B = .5294 %ROE = 18.987% %SGR = .18987 * .5294 = 11.1751% 1- (.18987 * .5294)...
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This note was uploaded on 04/03/2008 for the course FIN 100 taught by Professor Staff during the Spring '08 term at Pennsylvania State University, University Park.

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Ch4 HW - B = .8 IGR% = 2805/42300 * .8 = 5.6022% 1-...

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