Colter Steel has $4,200,000 in assets. The temporary current assets are in place for nine months and reduce to zero for three months.Temporary current assetsPermanent current assetsCapital assetsTotal assets$1,000,0002,000,0001,200,000$4,200,000Short-term rates are 8 percent. Long-term rates are 13 percent. (Note that long-term rates imply a return to any equity). Earnings beforeinterest and taxes are $996,000. The tax rate is 30 percent.If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing,what will earnings after taxes be? For an example of perfectly hedged plans, see Figure 6-8Earning after taxesChec

Interest expense is the cost incurred for borrowing the fund. Interest is calculated on the…

Answered: Colter Steel has $4,200,000 in assets.…

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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Stephens, Inc. (SI) reported net income of $120,000 for the fiscal year that just ended and expects net income to grow at 5% per year indefinitely. SI also reported current assets of $700,000, net fixed assets of $220,000 and total assets of $920,00 for most recent fiscal year. SI’s current liabilities of $100,000 and long-term debt of $540,000. Assuming that retained earnings is the only other equity account, then what did SI report for owner’s equity in the most recent fiscal year? Select one: a. $232,000 b. $280,000 c. $380,000 d. Cannot be determined with the information given. e. None of the above.
a. What amount could be withdrawn at t=10? b. What uniform annual series deposits (n=10) would result in the same accumulated balance at the end of year 10?
At last year’s end, total assets for Roberts Inc. were $1.2 million and accounts payable were $375,000. Sales, which last year were $2.5 million, are expected to increase by 25 percent this year. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Robert Inc. typically uses no current liabilities other than accounts payable. Common stock amounted to $425,000 last year, and retained earnings were $295,000. Roberts Inc. plans to sell new common stock in the amount of $75,000. The Firm’s profit margin on sales is 6 percent; and 60 percent of earnings will be retained. Set up Roberts Inc.’s last year balance sheet, to the extent possible, based on the information provided in this problem. Based on the balance sheet setup in Part a above, determine how much was Roberts Inc.’s long-term debt last year? Perform financial forecasting using percent of sales method (i.e., constant ratio method; do not use the AFN Equation) to determine how much…
The Roxxon Energy Corporation has a current debt of $33,000 that generates interest at a rate of 3.4% compounded semi-annually. Suppose they are going to repay this debt by making equal payments in 15 months and 18 months. Determine the size of these payments. $0.00 Round to the nearest cent
Regular investments made at the beginning of each quarter earn 7.6% compounded quarterly. How many more $1,900 investments than $2,100 investments will it take to accumulate $109,000? (Do not round intermediate calculations and round up the number of investments.) more payments. It will take
Colter Steel has $4,550,000 in assets. Temporary current assets $ 1,100,000 Permanent current assets 1,505,000 Fixed assets 1,945,000 Total assets $ 4,550,000 Assume the term structure of interest rates becomes inverted, with short-term rates going to 13 percent and long-term rates 2 percentage points lower than short-term rates. Earnings before interest and taxes are $970,000. The tax rate is 20 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be?
Culver Corporation, having recently issued a $20,062,200, 15-year bond issue, is committed to make annual sinking fund deposits of $620,000. The deposits are made on the last day of each year and yield a return of 10%. Click here to view factor tables Determine the amount of deficiency. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Deficiency $
King Lyon has the following assets: Current assets Capital assets Total assets $3,280,000 8,150,000 $11,430,000 During 4 months of the year, current assets drop to $1,650,000 (total assets will then be $9,800,000). Its operating profit (EBIT) is expected to be $499,500. Its tax rate is 30 percent. Shares are valued at $20. Its capital structure is short-term financing at 3 percent and long-term financing of 30 percent equity, 70 percent debt at 4 percent. a. Calculate expected EPS if the firm is perfectly hedged. (Do not round intermediate calculations and round your final answer to 2 decimal places.) EPS $
what will be the balance of an investment after a period of 9 years assuming an initial deposit of $2300, annual investment returns of 4.0% during the first 5 years, followed by annual returns of 3.1% for the remainder of the period? Consider no additional annual withdrawals or deposits during the period
On September 30, an inn invested $21,750 in a short-term investment of 207 days. An investment of this length earns 1,3% p.a How much will the investment be worth at maturity? The investment be worth $ at maturity (Round to the nearest cent as needed)

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