MGMT310_lecture4_5_problems

MGMT310_lecture4_5_problems - should it issue? 2. If the...

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nother pro forma example… Another pro forma example… Recent (Actual) Financial Statements: Income statement Balance sheet Sales $2,000 CA $250 CL $100 CoGS/other exp. 860 FA 550 LTD 200 Depreciation 55 Equity 500 IT 085 tal 800 tal 800 EBIT 1,085 Total $800 Total $800 Interest 20 Taxable Income 1,065.00 Taxes (35%) 372.75 et Income 692 25 Note: For simplicity, let’s assume interest free debt Net Income $ 692.25 Sales are projected to rise by 10%. Let’s assume non depreciation costs, current assets, and fixed assets grow at the same rate as sales, the depreciation expense is ways 0 f xed sets terest xpense 0 f e mount f ng rm ebt always 10% of fixed assets, interest expense is 10% of the amount of long term debt, and that the dividend payout ratio is 90%. 1. If the firm’s only possible source of external financing is through equity, how much
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Unformatted text preview: should it issue? 2. If the firms only possible source of external financing is through long term debt, how much LTD should it issue? In each case above, what would be CF from assets? CF to shareholders? To creditors? ractice problems Practice problems hapter 4: Chapter 4: 16, 17, 18 , 25 r # 8 addition to info provided in problem For # 18 , in addition to info provided in problem, assume Percentage of Sales Approach, and also ssume at you cannot issue equity assume that you cannot issue equity hapter 5 Chapter 5 8, 9, 17, 18...
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This note was uploaded on 02/05/2011 for the course MGMT 310 taught by Professor Matthewjamesbarcaskey during the Fall '08 term at Purdue University-West Lafayette.

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MGMT310_lecture4_5_problems - should it issue? 2. If the...

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