Week 4 FA Case

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Ratios and Fixed Assets [LO2] The Maurer Company has a long-term debt ratio of .35 and a current ratio of 1.30. Current liabilities are $955, sales are $7,210, profit margin is 8.3 percent, and ROE is 17.5 percent. What is the amount of the firm's net fixed assets? Profit Margin ILO41 In response to complaints about high prices, a grocery chain

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@ 2 QUESTION 28 Use the following information for the Lowell, Inc. for this and the next seven questions. Sales Debt Dividends Equity Interest rate Net income Tax rate F2 Assume the company has no short-term debt. Also assume that all asset turnover, profit margin, and dividend payout ratios remain constant. What are the company's earnings before interest and taxes (EBIT)? O A. 16,000 OB. 22,587 OC. 29,507 OD. 6,650 OE. 25,432 O F. 18,594 solutions.pdf # 3 $200,000 95,000 5,000 40,000 7% OCT 29 16,000 30% 80 F3 L $ 4 tv DOO 000 F4 do LO ♫ % 5 F5 NAC MacBook Air < 1. 6 F6 & 7 8 aa F7 8 Save All Answers DII F8

MINDTAP Q Search this cou Check My Work еВook The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 18%, its before-tax cost of debt is 8%, and its marginal tax rate is O 25%. Assume that the firm's long-term debt sells at par value. The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1,183. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Assets Liabilities And Equity Cash $ 120 Accounts payable and accruals $ 10 Accounts receivable 240 Short-term debt 43 Inventories 360 Long-term debt 1,140 Plant and equipment, net 2,160 Common equity 1,687 Total assets $2,880 Total liabilities and equity $2,880 Calculate Paulson's WACC using market-value weights. Do not round intermediate calculations. Round your answer to two decimal places. 13.86 % Hide Feedback Incorrect Check My Work O- Icon Key 80 DII DD E3 F4 F6 F7 F10 F12 %23 $ & * 4 5 6 7 8 9 del E R Y { P G H K V B N M -

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Question 5 CCC Corp has $725, 500 of assets and it uses no debt - it is financed only with common equity. The new CFO wants to employ enough debt to raise the total debt to asset ratio to 42 %, using the proceeds from borrowing to buy back common stock at its book value. How much must the firm borrow to achieve the target debt ratio? a. $419,680 b. $ 392, 160 c. $268,320 d. $350, 880 e. $304, 710

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Question 21 Kountry Kitchen has a cost of equity of 12.7 percent, a pretax cost of debt of 5.6 percent, and the tax rate is 23 percent. If the company's WACC is 9.22 percent, what is its debt-equity ratio? O 1.41 O .41 O 1.68 .84 .71

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Question 8 Refer to the data for Pettijohn Inc. What is the firm's profit margin? Pettijohn Inc. The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over. However, the firm has lease payment of $100 million in 2016. Balance Sheet (Millions of S) Assets Cash and securities Accounts receivable Inventories Total current assets Gross fixed assets Subtract: Accum. Depreciation Net fixed assets Total assets Liabilities and Equity Accounts payable Notes payable Accruals Total current liabilities Long-term debt Total liabilities Common stock Retained earnings Total common equity Total liabilities and equity Income Statement (Millions of S) Net sales Operating costs except deprin Depreciation Earnings before int and taxes (EBIT) Subtract: interest expense Earnings before taxes (EBT) Taxes Net income Other data: Shares outstanding…

QUESTION 5 Bruce & Co. expects its EBIT to be $100,000 every year forever. The firm can borrow at 11 percent. Bruce currently has no debt, and its cost of equity is 18 percent. The tax rate is 31 percent. Given the above information;   a) Complete the table given below for varying levels of debt below by using a mix of the given information and using your own computations.   EBIT $100,000       Cost of debt 11%       Cost of equity when unlevered 18%       Tax rate 31%       Debt $0 $10,000 $20,000 $30,000 Cost of Equity when levered         Equity         D/E         Vu         VL         WACC               b) Plot the results from the table into the following two graphs: i) Value of the firm vis-à-vis- Total debt ii) Cost of capital of the firm vis-à-vis D/E ratio. iii) Which MM propositions have you demonstrated?

HW 2 Back to Assignment Attempts: Average: / 1 14. Problem 4.18 (TIE Ratio) eBook MPI Incorporated has $3 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 13%, and its return on assets (ROA) is 3%. What is MPI's times-interest-earned (TIE) ratio? Do not round intermediate calculations. Round your answer to two decimal places.

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Questions 2 Maynard Inc. has no debt outstanding and a total market value of $ 250,000. Earnings before interest ana taxes, EBIT, are projected to be $ 28,000 if economi conditions are normal. If there is strong expansion in the economy, then EBIT will be 30% higher. If there is a recession, then EBIT will be 50% lower. Maynard is considering a $ 90,000 debt issue with a 7% interest rate. The proceeds will be used to repurchase shares of stock. There are currently 5,000 shares outstanding. Ignore taxes for this problem. Suppose the company has a market-to-book ratio 1.0 a. Calculate return of equity (ROE) under each of the three economic scenarios before any debt issued. Also calculate the percentage changes in ROE for economic expansion dan recession, assuming no taxes b. Repeat Part (a) assuming the firm goes through with the proposed recapitalizatio C. Repeat Part (a) and (b) of this problem assuming the firm has a tax rate of 35 percent

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