Question 1
Sales budget is a schudule showing expected sales in units and dollars for the budget period.
it is prepared by multiplying the estimated sales in unites by the selling price per unit.
Particulars
C
P
Budgeted sales in units (boxes)
500,000
Sal
Calculation of EPS and retained earnings
A. Earning per share:
Net profit before taxes
Less: Taxes at 40%
Net Price after Tax:
Less: Preferred stock dividends
Earning avilable to common
Stockholders:
$436,000
$174,400 (436*.40)
$261,600 436,000-174,400
$6
For this pproblem I used the "Rule of 72". Which means that you divide 72 by the interest rate to get the
number of years it would take to double an initial balance
Case A: 72/12 = 6 years
Case B: 72/6 = 12 years
It takes twice as long to double in value.
Valuation of Assets
Assets
A
B
C
End of Year
1
2
3
Amount
$5,000
$5,000
$5,000
PVIF or PVIFA(k%,n)
Preset Value of Cash Flow
2.174
Calculator Solution:
1/.15
1-(infinity)
1
2
3
4
5
$300
$0
$0
$0
$0
$35,000
D
1,2,3,4,5,
6
$1,500
$8,500
0.476
Calculator sol
Rate of Return
Rt=(Pt-Pt-1 + Ct)/Pt-1
A:
Investment X: Return= ($21,000-$20,000 +$1,500)/$20,000 =12.50%
Investment Y: Return= ($55,000 -$55,000 + $6,800)/$55,000 =12.36%
B:
From this, Investment X should be selected because it has a higher rate of return
Liability Comparisons:
A. From the chapter I learned that if Southerst Devlopment company is a sale proprietor owned by Ms Harper, she would h
B. If there was a 50-50 partnership of Merideth Harper and Christopher Bank, Ms. Harper would still have unlimit
P13-7
A: $4,000/8-6= 2,000 Figures for breakeven
B: 6x1,500= 9,000 4,000-9,000= -3,000
C: 6x1,500=9,000 15,000-4,000-9,000= 2,000
D: 8,000/$2=4,000 figures
E: Rather than charging the same for all figures Molly and Caitlin might want to charge for the cos
P10-2 Payback comparisonsA. Determine the payback period for for each machine.
First Machine= 4.67 years
Second Machine= 5.25 years
B. Comment on the acceptability of the machines, assuming that they are independent projects.
The most acceptable payback p
System Admin
Max Points: 5.0
What role do primary financial markets play in our economy? What role do secondary
markets fill? Describe the relationship that exists between financial institutions and
financial markets and suggest a method in which this rel
Financial Analysis Case Study:
"Assessing a Company's Future Financial Health"
Iliana Gonzalez
Grand Canyon University
FIN-504
Company Overview
Walt Disney World Corporation became a publicly traded company on April 2, 1940.
Since its inception, the happi
The real rate of return is 2.5%
5.5-3.0
a)
b)
c)
2500000/2500
1000
2500000*.07
175000
interest bonds are paid from pre tax funds
Asset
A
EOY
B
C
D
E
Amt
ROR
Value
1 $ 5,000.00
$4,237.29
2 $ 5,000.00
$3,590.92
3 $ 5,000.00
18% $3,043.15
$10,871.36
$
300.00
EBIT
I
EBT
[email protected]%
EAT
PS
EACS
SHARES
EPS
$
$
$
$
$
$
$
$
218,000
218,000
87,200
130,800
32,000
98,800
85000
1.16
Reatined Earnings
$
17,000
a)
All the companies Robert is evaluating are not from the same industry therefore, it is
not wise to compare them t
Breakeven=
install
service/mo
savings/mo
33.3
500
20
35
15
If Paul expects to keep the car for another three years then
he should have the tracker installed because he will have paid
it off in 33 months
Structure A
Debt @16%
$100,000
CS
Total
Shares
4000
A
B
C
D
FV=
PV x (1+r)^n
IR, r
# of
periods, n
2
3
2
4
0.12
0.06
0.09
0.03
1 x (1+.12)^2
1 x (1+.06)^3
1 x (1+.09)^2
1 x (1+.03)^4
FV
1.25
1.19
1.19
1.13
nper
pmt
pv
fv
i
2years and 4 months
100
200
0.12
100
200
0.06
FV=
PV x (1+r)^n
it takes 6.11 years t
a)
Because Ms. Harper is the sole proprietor, she would be responsible/liable
for the entire $60,000 in unpaid debts.
b)
Under a partnership, M. Harper would still be responsible for the full
$60,000 if Mr. Black chooses not to pay his half.
c)
As a corpo
PYMV
X
Y
CF during
20000
55000
CYMV
ROR
1500
21000
6800
55000
Douglas should recommend Investment X because it has a slightly higher ROR
12.50
12.36
Initial Investment
Annual ROR
Pessimistic
Most Likely
Optimistic
Expansion A
Expansion B
12000
12000
16%
2
CF0
ATCF
42000
7000
Payback period
The project is acceptable because it
would payback its initial investment
under the 8years that is acceptable.
6
a)
b)
c)
$2,847.60
($4,500.53)
$2,733.03
Project A
Project B
Initial Invest (CF0)
130000
Year
0
1
2
3
4
5
N
Robert recently inherited a stock portfolio from his uncle. Wishing to learn more about the companies in which he is now
invested, Robert performs a ratio analysis on each one and decides to compare them on each other. Some of his ratios are lis
below.
Is
Financial Analysis of the Manchester United Limited Publicly
Limited Company
Dr. George Olander
FIN 504
April 1, 2016
Ettore Zito
Zito 2
Financial Analysis of the Manchester United Publicly Limited Company
Since professional sport has been introduced, the
Chapter 13 Leverage and Capital Structure
Calculation of Share Value
Estimates Associated with
Alternative capital Structures
Capital Structure
Debt Ratio
0%
10
20
30
40
50
60
Expec stimated
E
Estimated
EPS Required Share Value
# 11.40%
#
1.90 11.80%
#
2.
The Drillago Company
Calculation of the NPV, IRR, and the Payback Period
Facts of case:
maturity (n)
cost-of-capita
Initial outlay
Year
0
1
2
3
4
5
6
7
8
9
10
10
13%
#
years
Excel function
#
Estimated
Trial and error 0.14763097
Cash
NPV Technique
IRR Tech
P1-1
A
B
C
Ms. Harper has unlimited liability, which means creditors can claim against her personal assets
Ms. Harper has unlimited liability, which means creditors can claim against her personal assets
Ms. Harper has limited liability, which guarantees t
ACME Company
Cash Budget July through December 2016
May
June
July August
September ctober ovember
O
N
December
Expected Gross Sales $300.00 $290.00
#
# $600.00 $625.00
#
#
During month 11.64% $34.92 $33.76 $49.47 $58.20 $69.84 $72.75 $75.66 $81.48
1 month
A.
monthly
benefit
$
B.
monthly
Breakeven point in
fixed cost
variable costs
months
35 $
20 $
500
33.3
Paul should have the tracker installed in his car. The geo-tracker's
breakeven point is 33.3 months, so he is plaing have the tracker 3
years(36 months)
A.
B.
after-tax cash
Initial
inflows
Investment
$
42,000 $
7,000
Years
6
The company should accept the project
because the firm has a maximum
acceptable payback period of 8 years but it
is already 6 years.
Case study 5 is given a partial grade
Final grade
X market value
Y market value
X cash flow
Y cash flow
X currrent MV
Y Current MV
$
$
$
$
$
$
20,000
55,000
1,500
6,800
21,000
55,000
B.
Investment X
$
Investment Y
A.
P
P(t-1)
21,000 $
20,000 $
$
55,000 $
55,000 $
C
1,500
r
12.5%
6,800
12.4%
I think, X wi
Data for P6-1
The rate paid
Annualized rate
Real rate of return
5.5%
3.0%
2.5%
A.
Yearly interest
$
B.
7% $
70.00
Total interest expense
$
C.
2,500,000 $ 2,500
2,500 Bonds
$
175,000
Total before tax interest
Interest expense tax savings
$
$
175,000
61,250