During 2017, Loda Corporation's long-term investments account (at cost)increased $30,000, which was the net result of purchasing stocks costing S160,000 and selling stocks costing $130,000 at a $12,000 loss. Also, its bondspayable account decreased $80,000, the net result of issuing $200,000 of bondsat $206,000 and retiring bonds with a face value (and book value) of $280,000at an $18,000 gain. Calculate Loda's net cash flow from investing activities for2017. Select one: A. ($ 42,000) B. $160,000 C. ($ 98,000) D. ($ 30,000)

Cash flow from investing activities refers to the inflows and outflows of cash resulting from the…

Answered: During 2017, Loda Corporation's…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Xyz Corporation has $132.000 of debt and $26.000 preferred stock. The corporation’s weighted avarage cost of capital(WACC) is calculated %9. The estimated free cash flows over the next 5 years, 2016 through 2020 are given in the table below. The Corporation expects its free cash flow to grow at a constant rate of %2 after 2020: YEAR FCF 2016 $23,000 2017 $25,000 2018 $35,000 2019 $38,000 2020 $42,000 A. Calculate the entire value of Corporation using the free cash flow valuation model $........................ B. calculate the common stock value of Corporation $................... C. If the Corporation has 10.000 shares of common stock outstanding, calculate the value per share $..................
The Booth Company's sales are forecasted to double from $1,000 in 2016 to $2,000 in 2017. Here is the December 31, 2016, balance sheet: Cash Accounts payable Accounts receivable Notes payable Inventories Accruals Net fixed assets Long-term debt Common stock Retained earnings Total liabilities and equity $50 150 50 400 100 250 Total assets $1000 $1000 Booth's fixed assets were used to only 50% of capacity during 2016, but its current assets were at their proper levels in relation to sales. All assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Booth's after-tax profit margin is forecasted to be 5% and its payout ratio to be 50%. What is Booth's additional funds needed (AFN) for the coming year? Round your answer to the nearest dollar. $ $ 100 200 200 500 360
The Ethereum Imports Company’s EPS in 2011 was $3.00, and in 2006 it was $1.90. The company’s payout ratio is 30%, and the stock is currently valued at $42. Flotation costs for new equity will be 7%. Net income in 2012 is expected to be $15 million. The market-value weights of the firm’s debt and equity are 40% and 60%, respectively.a. Based on the five-year track record, what is Dempere’s EPS growth rate? What will the dividend be in 2012?b. Calculate the firm’s cost of retained earnings and the cost of new common equity.c. Calculate the breakpoint associated with retained earnings.
A company issues $1.1 million of new stock and pays $201,000 in cash dividends during the year. In addition, the company took advantage of falling interest rates to borrow $1.51 million in a new bond issue and paid off existing bonds with a face value of $2.05 million. The company bought 501 of another company's $1,010 bonds at a $101,000 premium. The net cash flow provided by financing activities is: A) An outflow of $201,000. B) An inflow of $359,000. C) An inflow of $540,000. D) An outflow of $101,000
The Booth Company’s sales are forecasted to double from $1,000 in 2010 to $2,000 in 2011. Here is the December 31, 2010, balance sheet:Cash$100 Accounts payable$50 Accounts receivable200Accounts receivable 200 Notes payable150Inventories200Inventories 200 Accruals50Net fixed assets500Net fixed assets 500 Long-term debt400Common stock 100Retained earnings 250Total assets$1,000 Total liabilities and equity$1,000 Booth’s fixed assets were used to only 50% of capacity during 2010, but its currentassets were at their proper levels in relation to sales. All assets except fixed assets mustincrease at the same rate as sales, and fixed assets would also have to increase at thesame rate if the current excess capacity did not exist. Booth’s after-tax profit marginis forecasted to be 5% and its payout ratio to be 60%. What is Booth’s additionalfunds needed (AFN) for the coming year?
In 2016, the Allen corporation had sales of $63 million, total assets of $44 million, and total liabilities of $15 million. The interest rate on the company’s debt is 5.7 percent, and it’s tax rate is 35 percent. The operating profit margin is 14 percent. A. Compute the firm’s 2016 net operating income and net income The firm’s 2016 net operating income is Round to two decimal places.
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…
In 2014, Angela Corporation has a net capital loss of $80,000. Angela Corp. also had net capital gains in the prior years. 2010: net capital gain $30,000 2011: net capital gain $20,000 2012: net capital gain $60,000 2013: net capital gain $10,000 (a) What is the capital loss carryback in 2012? (b) What is the capital loss carryback in 2011?
Café Creations Incorporated has net cash flow from financing activities for the last year of $25 million. The company paid $15 million in dividends last year. During the year, the change in notes payable on the balance sheet was a decrease of $40 million, and change in common and preferred stock was an increase of $50 million. The end of year balance for long-term debt was $40 million. What was their beginning of year balance for long-term debt? Multiple Choice $20 million $30 million $40 million $10 million
Onshore Bank has $31 million in assets, with risk-adjusted assets of $21 million. Core Equity Tier 1 (CET1) capital is $1,050,000, additional Tier I capital is $270,000, and Tier II capital is $422,000. The current value of the CET1 ratio is 5 percent, the Tier I ratio is 6.29 percent, and the total capital ratio is 8.3 percent. Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions. b. The bank issues $3.1 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of 70 percent. d. The bank issues $811,000 in common stock and lends it to help finance a new shopping mall. The developer has an A+ credit rating. f. Homeowners pay back $5.1 million of mortgages with loan-to-value ratios of 50 percent and the bank uses the proceeds to build new ATMs. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E The bank issues $811,000 in common…
In 2017. Blue Bank announced a Returm on Equity (ROE) of 15% and a Returm onAssets (ROA) of 2%. The bank had total equity of £200 million at year-end 2017. Calculatethe 2017 values of total assets, total debt and the leverage ratio (equity multiplier) for BlueBank
HP Inc. (formerly Hewlett-Packard Company) issued zero-coupon notes at the end of its 1997 fiscal year thatmature at the end of its 2017 fiscal year. One billion, eight hundred million dollars face amount of 20-year debtsold for $968 million, a price to yield 3.149%. In fiscal 2002, HP repurchased $257 million in face value of thenotes for a purchase price of $127 million, resulting in a gain on the early extinguishment of debt.Required:1. What journal entry did HP Inc. use to record the sale in 1997?2. Using an electronic spreadsheet, prepare an amortization schedule for the notes. Assume interest is calculatedannually and use numbers expressed in millions of dollars; that is, the face amount is $1,800.3. What was the effect on HP’s earnings in 1998? Explain.4. From the amortization schedule, determine the book value of the debt at the end of 2002.5. What journal entry did HP Inc. use to record the early extinguishment of debt in 2002, assuming the purchasewas made at the end of the…

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