CHAPTER 8
STOCK VALUATION AT RAGAN, INC.
1.
The total dividends paid by the company were $126,000. Since there are 100,000 shares
outstanding, the total earnings for the company were:
Total earnings = 100,000($4.54) = $454,000
This means the payout ratio
CHAPTER 7
FINANCING S&S AIRS EXPANSION
PLANS WITH A BOND ISSUE
A rule of thumb with bond provisions is to determine who benefits by the provision. If the company
benefits, the bond will have a higher coupon rate. If the bondholders benefit, the bond will
CHAPTER 4
PLANNING FOR GROWTH AT S&S
AIR
1.
To calculate the internal growth rate, we first need to find the ROA and the retention ratio,
so:
ROA = NI / TA
ROA = $1,537,452 / $18,309,920
ROA = .0840 or 8.40%
b = Addition to RE / NI
b = $977,452 / $1,537,4
CHAPTER 3
RATIOS ANALYSIS AT S&S AIR
1.
The calculations for the ratios listed are:
Current ratio = $2,186,520 / $2,919,000
Current ratio = 0.75 times
Quick ratio = ($2,186,250 1,037,120) / $2,919,000
Quick ratio = 0.39 times
Cash ratio = $441,000 / $2,91
CHAPTER 2
CASH FLOWS AND FINANCIAL
STATEMENTS AT SUNSET BOARDS
Below are the financial statements that you are asked to prepare.
1.
The income statement for each year will look like this:
Income statement
2008
2009
$247,259
126,038
24,787
35,581
$60,853
7
CHAPTER 6
THE MBA DECISION
1.
Age is obviously an important factor. The younger an individual is, the more time there is
for the (hopefully) increased salary to offset the cost of the decision to return to school for an
MBA. The cost includes both the exp
CHAPTER 12
A JOB AT S&S AIR
1.
The biggest advantage the mutual funds have is instant diversification. The mutual funds have a
number of assets in the portfolio.
2.
Both the APR and EAR are infinite. The match is instantaneous, so the number of periods in
CHAPTER 11
CONCH REPUBLIC ELECTRONICS,
PART 2
1.
Here we want to examine the sensitivity of NPV to changes in the price of the new PDA.
The calculations for sensitivity to changes in price are similar to the original cash flows. The
only difference is tha
CHAPTER 10
CONCH REPUBLIC ELECTRONICS,
PART 1
This is an in-depth capital budgeting problem. The initial cash outlay at Time 0 is simply the
cost of the new equipment, $21,500,000. The sales each year are a combination of the sales
of the new PDA, the los
CHAPTER 9
BULLOCK GOLD MINING
1.
An example spreadsheet is:
Note, there is no Excel function to directly calculate the payback period. We used If statements in
our spreadsheet. The IF statement we used is:
=IF(-D8>(D9+D10+D11+D12+D13+D14),"Greater than 6