21. Davis Corporation expects the following first year of operations: Sales (90% collectible in 20X3) Bad debt write-offs .... Disbursements of costs and expenses Disbursements for income taxes. Purchases of fixed assets.... Proceeds from issuance of ordinary shares. Proceeds from short-term borrowings Payments on short-term horrouingo P1,500,000 60,000 1,200,000 90,000 400,000 580,000 100,000 50.000 .....

21. Davis Corporation expects the following first year of operations: Sales (90% collectible in 20X3) Bad debt write-offs .... Disbursements of costs and expenses Disbursements for income taxes. Purchases of fixed assets.... Proceeds from issuance of ordinary shares. Proceeds from short-term borrowings Payments on short-term horrouingo P1,500,000 60,000 1,200,000 90,000 400,000 580,000 100,000 50.000 .....

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Q5. First National Bank has the following balance sheet and faces a required reserve ratio on deposits of 10%: Assets Reserves $50 million Securities $50 million Loans $100 million Liabilities Deposits $150 million Bank capital $50 million 1. This banks earn $10 million as an annual after-tax profit. Calculate ROA (return on asset) and ROE (return on equity) for both banks. 2. Assume that depositors withdraw $60 million and the bank experience a $30 million loans default. How should the bank balance sheet change?
Ee 68.
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Company A unlevered value is $100 million. The tax rate is 30%. The debt cost ofcapital is 3% and the asset cost of capital is 6%.i. What is company A’s value if debt/assets is raised to 25% after aleveraged recapitalization. Assume debt is permanent.