Ford has the following information related to 2020: Sales $1,000,000 Current Assets 350,000 Long-Term Assets 650,000 Current Liabilities 120,000 Long-Term Liabilities 280,000 Common Stocks 550,000 Retained Earnings 50,000 Sales are expected to grow by 20% next year with expected Net Profit Margin 20% and Dividends layout 60% Required: How much discretionary Financing needed by Ford in 2021? What are the least expensive sources to get it

Ford has the following information related to 2020: Sales $1,000,000 Current Assets 350,000 Long-Term Assets 650,000 Current Liabilities 120,000 Long-Term Liabilities 280,000 Common Stocks 550,000 Retained Earnings 50,000 Sales are expected to grow by 20% next year with expected Net Profit Margin 20% and Dividends layout 60% Required: How much discretionary Financing needed by Ford in 2021? What are the least expensive sources to get it

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

GlobalShippers Inc. has forecasted earnings of $1,233,600, $1,345,900, and $1,455,650 for the next three years. What is the future value of these earnings if the firm's opportunity cost is 13 percent? (Round to the nearest dollar) $4,362,428 $4,214,360 4,551,701 $3,900,865
The following forecasts were developed at the end of 2022 for Endless Sunny Days (ESD), a company that has a cost of capital for its operations of 8% and a cost of capital for its equity of 12% (amounts are in millions of dollars): Cash flow from operations 2023E 135 95 2024E 215 165 2025E 270 125 Cash investment expenditure At the end of 2022, the book value of equity was $370 and the net financing debt was $360. 1. Forecast Free Cash Flows for 2023, 2024 and 2025. 2. Calculate the present value of Forecast Free Cash Flows for 2023, 2024 and 2025. 3. Using a terminal growth rate in free cash flow after 2025 of 1%, calculate the present value of cash flows to be received in the terminal period. 4. Using your answers to previous questions, estimate the total market value of equity for the firm.
Mortal Inc. expects to have a capital budget of $575,000 next year. The company wants to maintain a target capital structure with 35% debt and 65% equity, and its forecasted net income is $500,000. If the company follows the residual dividend model, how much in dividends, if any, will it pay? a. $111,100 b. $126,250 c. $132,563 d. $118,675 e. $113,625 Portland Plastics Inc. has the following data. If it follows the residual dividend model, what is its forecasted dividend payout ratio? Capital budget $13,500 % Debt 40% Net income (NI) $13,650 a. 42.29% b. 44.73% c. 49.20% d. 40.66% e. 32.53%
Red Bison Petroleum Producers Inc. is expected to generate $240,000,000 in net income over the next year. Red Bison Petroleum Producers’s stockholders expect it to maintain its long-run dividend payout ratio of 20% of earnings. If the firm wants to maintain its current capital structure of 60% debt and 40% equity, what is the maximum capital budget it can support with this year’s expected net income? Red Bison Petroleum Producers is considering using more equity and less debt in its capital structure. Which of these statements best describes how this will affect the firm’s annual dividend, assuming that all other factors are held constant? Red Bison Petroleum Producers will pay a smaller annual dividend if it goes forward with this decision. Red Bison Petroleum Producers’s annual dividend will be greater if it goes forward with this decision. What kind of company is most likely to follow a strict residual distribution policy? A firm with…
Consider again the electric car dealership in Section 22.3. Suppose the current value of a dealership is $5.2 million and the first-year free cash flow is expected to be $520,000 rather than $600,000. What is the beta of a corporation whose only asset is a one-year option to open a dealership? What is the beta if the first year’s cash flows are expected to be $710,000, so a working dealership is worth $7.1 million?
XYZ Corp has a capital budget of $10M for next year. The company has a target capital structure of 65% Equity / 35% Debt. If net income next year is projected to be $9M and the company follows a residual distribution model and pays all distributions as dividends, what will be its payout ratio?
Spellbound Solutions estimated future capital investment needs aré $ 1200m, and the estimated future net income is $1200m. If the company finances itself with 40 percent debt and 60 percent equity, how much in dividends can the company afford to pay? a. $0m b. $420m c. $480m d. $720m e. $900
For the next fiscal year, you forecast net income of $48,700 and ending assets of $506,100. Your firm's payout ratio is 10.1%. Your beginning stockholders' equity is $295,600 and your beginning total liabilities are $119,300. Your non-debt liabilities such as accounts payable are forecasted to increase by $10,500. What is your net new financing needed for next year? The Tax Cuts and Jobs Act of 2017 temporarily allowed 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems. The net financing required will be $ (Round to the nearest dollar.)
Tin Roof's net cash flows for the next three years are projected at $72,000, $78,000, and $84,000, respectively. After that the cash flows are expected to increase by 2.5 percent annually. Recently issued debt carries an interest rate of 7.85%. Tin Roof's marginal tax rate is 21%. The cost of equity is 11.4 percent. a) What is the value of the firm if it is financed with 40 percent debt and 60 percent equity? b) Tin Roof has 20,300 outstanding shares and are currently trading for $29.00 per share. At this price do you believe that Tin Roof shares are over priced, under priced or fairly priced. Please justify your answer. Please show excel formulas, Thank you
United Builders wants to maintain a target capital structure with 30% debt and 70% equity. Its forecasted net income is $550,000, and because of market conditions, the company will not issue any new stock during the coming year. If the firm follows the residual dividend policy, what is the maximum capital budget that is consistent with maintaining the target capital structure? O a. $673,652 O b. $746,429 O c. $709,107 O d. $825,000 O e. $785,714
Consider a simple firm that has the following market-value balance sheet: Assets Liabilities & Equity $1,000 Debt $400 Equity 600 Next year, there are two possible values for its assets, each equally likely: $1,200 and $960. Its debt will be due with 5.0% interest. Because all of the cash flows from the assets must go either to the debt or the equity, if you hold a portfolio of the debt and equity in the same proportions as the firm's capital structure, your portfolio should earn exactly the expected return on the firm's assets. Show that a portfolio invested 40% in the firm's debt and 60% in its equity will have the same expected return as the assets of the firm. That is, show that the firm's WACC is the same as the expected return on its assets. If the assets will be worth $1,200 in one year, the expected return on assets will be %. (Round to one decimal place.) If the assets will be worth $960 in one year, the expected return on assets will be %. (Round to one decimal place.) The…
Petersen Co. has a capital budget of $ 910 . The company wants to maintain a target capital structure that is 65 percent debt and remaining percent is equity. The company forecasts that its net income this year will be $ 809 . If the company follows a residual distribution policy (with all distributions in the form of cash dividends), what will be its payout ratio? Enter your answer to the nearest .1%. Enter your answer as a whole number, thus 25.1% would be 25.1 not .251. Do not use % signs in your answer. Your Answer: Answer