Homework Problems Week 1

Homework Problems Week 1 - Problem 2-1 Frantic Fast Foods...

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Unformatted text preview: Problem 2-1 Frantic Fast Foods had earnings after taxes of $390,000 in the year 2009 with 300,000 shares outstanding. On January 1, 2010, the firm issued 25,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 20 percent. Question 1 1 / 1 point a.) Compute earnings per share for the year 2009. Round your answer to 2 decimal places. Omit the "$" in your response. Answer: 1.3 Questio n 2 1 / 1 point b.) Compute earnings per share for the year 2010. Round your answer to 2 decimal places. Omit the "$" sign in your response. Answer: 1.44 Information Problem 2-2 Bettis Bus Company had earnings after taxes of $600,000 in the year 2009 with 300,000 shares of stock outstanding. On January 1, 2010, the firm issued 40,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 25 percent. Question 3 1 / 1 point a.) Compute earnings per share for the year 2009. Round your answer to 2 decimal places. Omit the "$" sign in your response. Answer: 2 Questio n 4 1 / 1 point b.) Compute earnings per share for the year 2010. Round your answer to 2 decimal places. Omit the "$" sign in your response. Answer: 2.21 Information Problem 2-22 Coastal Pipeline, Inc., anticipated cash flow from operating activities of $8 million in 2010. It will need to spend $1.5 million on capital investments in order to remain competitive within the industry. Common stock dividends are projected at $.6 million and preferred stock dividends at $.25 million. Question 5 0 / 1 point a.) What is the firms projected free cash flow for the year 2010? Round your answer to the nearest whole dollar. Omit the "$" sign in your response. Answer: $5,650,000 Question 6 1 / 1 point b.) What does the concept of free cash flow represent? Question options: A) Free cash flow represents the funds that are available for special financing activities, such as a leveraged buyout. B) Free cash flow represents the funds that are available for special financial activities, such as a revenue split. a revenue split....
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Homework Problems Week 1 - Problem 2-1 Frantic Fast Foods...

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