Suppose that Wind Em Corp. currently has the balance sheet shown below, and that sales for the year justended were $7 million. The firm also has a profit margin of 27 percent, a retention ratio of 20 percent, andexpects sales of $8 million next year.AssetsCurrent assetsFixed assetsTotal assetsLiabilities and EquityAdditional funds needed$2,000,000 Current liabilitiesLong-term debt5,000,000Equity$7,000,000 Total liabilities and equity$2,500,0001,500,0003,000,000$7,000,000If all assets and current liabilities are expected to grow with sales, what amount of additional funds willWind Em need from external sources to fund the expected growth? (Enter your answer in dollars not inmillions.)

Retained earnings refer to the percentage of profit retained or withheld by the company for further…

Suppose that Wind Em Corp. currently has the balance sheet shown below, and that sales for the year just ended were $7 million. The firm also has a profit margin of 27 percent, a retention ratio of 20 percent, and expects sales of $8 million next year. Assets Current assets Fixed assets Total assets Liabilities and Equity Additional funds needed Current liabilities $2,000,000 5,000,000 Long-term debt Equity $7,000,000 Total liabilities and equity $2,500,000 1,500,000 3,000,000 $7,000,000 If all assets and current liabilities are expected to grow with sales, what amount of additional funds will Wind Em need from external sources to fund the expected growth? (Enter your answer in dollars not in millions.)

Suppose that Wind Em Corp. currently has the balance sheet shown below, and that sales for the year just ended were $7 million. The firm also has a profit margin of 27 percent, a retention ratio of 20 percent, and expects sales of $8 million next year. Assets Current assets Fixed assets Total assets Liabilities and Equity Additional funds needed Current liabilities $2,000,000 5,000,000 Long-term debt Equity $7,000,000 Total liabilities and equity $2,500,000 1,500,000 3,000,000 $7,000,000 If all assets and current liabilities are expected to grow with sales, what amount of additional funds will Wind Em need from external sources to fund the expected growth? (Enter your answer in dollars not in millions.)

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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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
What is the weighted average cost of capital for a corporation that finances an expansion project using 40% retained earnings and the rest as debt capital? Assume the interest rates are 13% for equity financing and 27% for debt financing. The rate of return per quarter is __ % The rate of return per year is __%
HCB, Inc.free cash flows for next year (FCF1) are expected to be $5 million. Free cash flows are expected to grow at a rate of 6% forever. It also has the following financial information: Market value of HCB Debt = $70 million Short-term investments = $15 million Book value of equity = $60 million Total Assets = $80 million Shares outstanding = 2.5 million Required return on stock = 11% WACC = 9% Calculate HCB's intrinsic value per share. $30.51 $33.56 $36.91 $40.61 $44.67 - the correct answer Do not use Excel!
Mars Corporation is interested in estimating the expected rate of sales growth sustainability and additional financing needed to support improvements fast sales next year. Last year, revenue was $5.5 million; net profit is $500,000; investment in assets is $2,500,000; payables and accruals are $1,000,000; and shareholder equity at the end of the year is $1,500,000 (that is, the equity at the beginning of the year of $1,000,000 plus retained earnings of $500,000). The business does not pay dividends and does not expect to pay dividends in the future. a.Compute forecasted sales and changes in sales first. What is your estimate of the funds additions needed next year to support the upgrade sales by 20 percent? Also include the interpretation of the results of the calculations
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Company JA Prestwood had a net income of $1,000,000 this year. Next year's total capital budget is $2,600,000. If the target capital structure is 47% debt and the rest equity, what will be this year's dividend payout ratio?
A company is projected to generate revenues of $336 million and $406 million over the next two years. After that, the company is assumed to enter its terminal phase with steady growth. Given the following information, how much is each share worth today? Answer in dollars rounded to one decimal place. Forecasted operating margin: 35.4%. Forecasted tax rate: 22.2%. Forecasted reinvestment rate: 30%. Forecasted steady growth rate of free cash flow: 1.3% per year. Cost of capital: 13.2%. Debt: $40 million. Cash: $35 million. Shares outstanding: 12 million.
i need the answer quickly
Notes for 2024: Sales are estimated to be $85,000 in 2024 Assume the following: COGS are Variable $2000 of the Operating Expenses are Fixed Depreciation and the Remainder of the Operating Expenses are Fixed The firm will maintain its dividend payout ratio this year Cash, Accounts Receivable, Inventories, Net Plant, Accounts Payable and Accrued Payables are Spontaneous Market Securities, Bonds Payable and Common Stock are Discretionary $500 of Bonds Payable are Current and Will be Repaid at the Beginning of the Year Below is the 2023 Income Statement and Balance Sheet data you will be using to complete your forecast. Income Statement For the Year Ended December 31, 2023 Sales 70,000 COGS 45,000 Gross Profit 25,000 Operating Expenses 8,000 Depreciation 5,000 13,000 EBIT 12, 000 Interest Expense 1,300 EBT 10, 700 Tax Expense 2, 247 Earning After Taxes 8, 453 Dividends 3,000 Addition to Retained Earnings 5, 453 Balance Sheet December 31, 2023 Cash 8, 100 Marketable Securities 2,000…
Derry Corporation is expected to have an EBIT of $21 million next year. Increases in depreciation, the increase in net working capital, and capital spending are expected to be $165,000, $80,000, and $120,000, respectively. All are expected to grow at 18 percent per year for four years. The company currently has $10.4 million in debt and 750,000 shares outstanding. You believe that in Year 5 sales will be $23.7 million and the appropriate price-sales ratio is 2.9. The company's WACC is 8.5 percent and the tax rate is 21 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price
You are valuing Soda City Inc. It has $129 million of debt, $79 million of cash, and 179 million shares outstanding. You estimate its cost of capital is 10.1%. You forecast that it will generate revenues of $723 million and $777 million over the next two years, after which it will grow at a stable rate in perpetuity. Projected operating profit margin is 31%, tax rate is 24%, reinvestment rate is 43%, and terminal EV/FCFF exit multiple at the end of year 2 is 11. What is your estimate of its share value? Round to one decimal place.

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