Knowledge Check 02 Film Studio, Incorporated has beginning retained earnings of $80,000 and expects to earn net Income of $70,000 during the budget period. What would be the budgeted ending balance in retained earnings of the company declares and pays dividends of $50,000? $80,000 O $100,000 O $150,000 O $200,000
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![Knowledge Check 02
Film Studio, Incorporated has beginning retained earnings of $80,000 and expects to earn net Income of $70,000 during the
budget period. What would be the budgeted ending balance in retained earnings of the company declares and pays
dividends of $50,000?
$80,000
O $100,000
O $150,000
O $200,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc8891ada-72fd-494a-9edf-f8be9bf0632d%2F9497b89a-485f-4da2-8a37-f756b8aebe39%2Fktc35k5_processed.png&w=3840&q=75)
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- QUESTION 29 Top management is trying to determine which would be the best choice of the following investment opportunities: Data of investment choices: 3 Sales $6,000,000 Operating income 300,000 Average operating assets 3,000,000 Required: Compute the Return on investment 12% 11% 10% 8%Question 22 nts -/1 View Policies Current Attempt in Progress ns Drew Enterprises reports all its sales on credit, and pays operating costs in the month incurred. Estimated amounts for the months of June through October are: upport July June September October August $310,000 $330,000 $300,000 $280,000 Budgeted sales $260,000 Budgeted purchases $144,000 $120,000 $128,000 $132,000 $90,000 Customer amounts on account are collected 60% in the month of sale and 40% in the following month. . Cost of goods sold is 45% of sales. . Drew purchases and pays for merchandise 30% in the month of acquisition and 70% in the following month. How much cash is budgeted to be received during August? O $291,000. O $312,000. O $180,000. O $318,000. 8:5 11/2 bp nr ins prt sc delete home & Aock edsypea K ter r P COK aces You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment a. Total value b. Laputa's equity $77 27 50 15 15 S S Year 627 313 2 $ 97 37 60 18 18 3 $ 112 42 70 21 21 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 50% by equity and 50% by debt. Its cost of equity is 14%, its debt yields 10%, and it pays corporate tax at 30%. 4 $ 117 47 a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. 70 21 23
- Problem 10-15 Return on Investment (ROI) and Residual Income [LO10-1, LO10-2] Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Assets Cash Accounts receivable Inventory Plant and equipment, net Investment in Buisson, S.A. Land (undeveloped) Total assets Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity Total liabilities and stockholders' equity Sales Operating expenses Net operating income Interest and taxes: Interest expense Tax expense Net income Joel de Paris, Inc. Income Statement 1. 2. 3. $ 111,000 208,000 $ 4,032,000 3,507,840 524,160 Average operating assets Margin Turnover ROI Residual income 319,000 $ 205,160 Beginning Balance % $ % 127,000 $ 346,000 564,000 863,000 408,000 248,000 $ 2,556,000 The company paid dividends of $101,160 last year. The "Investment in Buisson, S.A.," on the balance sheet represents an investment in the stock of another company. The company's minimum required rate…Problem 18-12 Eagle Products EBITDA is $500, its tax rate is 21%, depreciation is $30, capital expenditures are $80, and the planned increase in net working capital is $10. What is the free cash flow to the firm? (Round your answer to 2 decimal place.) Answer is complete but not entirely correct. $335.00 FCFF-/1 Question 1 rences View Policies borations Current Attempt in Progress PLUS Support Jackson Manufacturing is introducing a new product with a unit selling price of $12.50. The product required an investment of $500,000, and the company requires a 20 % ROI. Projected sales 100,000 units. Compute the target cost per unit. Central e 365 es O $14.50 a O $15.50 O $11.50 O $10 hp noll ins prt sc home delete 4 num backspace
- QUESTION 26 BMI’s East Division has a cost of capital of 20 percent. Selected financial information for the first year of business follows. Sales revenue $ 1,800,000 Income 340,000 Investment (beginning of year) 1,800,000 Current liabilities (beginning of year) 240,000 R&D expendituresa 600,000 a R&D (Research and Development) is assumed to benefit three years. All R&D is spent at the beginning of the year. East Division’s EVA (economic value added) is: A. $356,000 B. $260,000 C. $295,000 D. $108,000 E. $308,000QUESTION 25 Top management is trying to determine which would be the best choice of the following: Data of investment choices: 1 Sales $10,000,000 Operating income 200,000 Average operating assets 2,000,000 Required: Compute the Return on Investment 9% 12% 8% 10%QUESTION 15 The following financial information is available for Beasties upper and lower divisions. Upper Lower Revenues $850,000 $700,000 Operating Expenses 470,000 460,000 Operating Income $380,000 $240,000 Assets Invested $2,000,000 $1,100,000 What is the ROI for the Upper Division? 21.8% 17.9% 19.0% 24.1%
- 21-13 Current Asset Usage Policy Payne Products had $1.6 million in sales revenue in the most recent year and expects sales growth to be 25% this year. Payne would like to determine the effect of various current assets policies on its financial performance. Payne has $1 million of fixed assets and intends to keep its debt ratio at its historical level of 60%. Payne’s debt interest rate is currently 8%. You are to evaluate three different current asset policies:(1) a restricted policy in which current assets are 45% of projected sales, (2) a moderate policy with 50% of sales tied up in current assets, and (3) are relaxed policy requiring current assets of 60% of sales. Earnings before interest and taxes are expected to be 12% of sales. Payne’s tax rate is 40%. a. What is the expected return on equity under each current asset level? b. In this problem, we have assumed that the level of expected sales is independent of current asset policy. Is this valid assumption? Why or why not? c.How…Investment End of Year A B C 1 $ 13,000 $ 18,000 2 13,000 3 13,000 4 13,000 5 13,000 $ 13,000 6 13,000 54,000 7 13,000 8 13,000 9 13,000 10 13,000 18,000 Assuming an annual discount rate of 23 percent, find the present value of each investment. a. What is the present value of investment A at an annual discount rate of 23 percent? b. What is the present value of investment B at an annual discount rate of 23 percent? c. What is the present value of investment C at an annual discount rate of 23 percent?Chapter 12 problem: Use the following information to determine cash flows for Company ABC. After you find the cash flows, also calculate NPV, IRR, and payback period: Equipment Cost Equipment purchase price: $250,000 Changes in net operating working capital Inventories will rise by $25,000 Accounts payable will rise by $5,000 Effect on operations New sales: 100,000 units/year @ $2/unit Variable cost: 75% of sales Life of the project Economic life: 4 years Salvage value: $30,000 WACC: 15% Tax Rate: 25%
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