The most recent financial statements for Live Co. are shown here: Income Statement Sales Costs Taxable $13,000 income 7,800 Current assets Fixed -assets $5,200 Total Taxes (35%) 1,820 Net income $3,380 Balance Sheet $28,032 Debt $27,628 19,616 Equity $47,648 Total $47,648 20,020 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 32 percent dividend payout ratio. No external equity financing is possible. Required: What is the sustainable growth rate? (Do not round your intermediate calculations.)
Q: Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000…
A: Terminal or Horizon value can be calculated by using below equation Terminal or Horizon value…
Q: Stockinger Corporation has provided the following information concerning a capital budgeting…
A: The cash flows of a project refer to the amount of money that moves in or out of the company because…
Q: Present Value of a Perpetuity What's the present value, when interest rates are 6.70 percent, of a…
A: Perpetuities are often used in financial models to represent long-term cash flows that are expected…
Q: A farmer is currently growing wheat and plans to sell it in September next year. He needs to plan…
A: To lock in the future revenue for selling 2 tons of wheat in September, the farmer can make use of…
Q: Nan and Neal are twins. Nan Invests $5,000 at age 25 while Neal invests the same amount at age 30.…
A: Annual interest rate refers to the minimum return to be earned by the investment on the amount…
Q: Assuming PepsiCola, Atlanta is considering of giving its main rival a strong competition, in the…
A: NPV NPV is a realistic approach to evaluate a capital project, the decision to invest or not should…
Q: Bonita Industries’s degree of operating leverage is 2.0. Warren Corporation’s degree of operating…
A: The degree of operating leverage measures how much the operating income changes in response to a…
Q: If an investor that owns a portfolio with 3 stocks increases their portfolio to 30 stocks, which of…
A: The Sharpe ratio is a measure of a portfolio's risk-adjusted return. It measures the excess return…
Q: Calculate the annual interest (in $) and current yield (as a %) of the bond. (Round your percentage…
A: Bond yield is the income an investor receive from investment in bond. Current yield is the…
Q: You are currently at time period 0, and you will receive the first payment on an annual payment…
A: Annuity is the series of equal cash payments over the period.
Q: A property has a potential gross income of $2,000,000. You estimate that vacancy should be 6% and…
A: OPEX ratio stands for operating expenses to sales ratio that is to be calculated by taking operating…
Q: What is the holding period yield for an investor who pays $1,050 for a three-year bond with a $1,000…
A: A bond is a kind of debt security issued by the government and private companies for raising funds…
Q: You can buy or sell the £ spot at $1.98 to the pound. You can buy or sell the pound one-year forward…
A: Here, Spot price = $1.98 Forward price = $2.01 U.S. Interest rate = 5% To Find: One-year British…
Q: You want to buy a yacht in 4 years and have negotiated a sale price of $300,000. You must save up to…
A: Future value = $120,000 Interest rate = 12% compounded annually Period = 4 years
Q: 4. An employee is paid $3600 for the first month. She is paid an additional 1% at the end of the…
A: Let's call the employee's base salary for the first month "x". We know that x is equal to $3600. At…
Q: uppose that Mr. Dubinski has obtained from Blaine’s banker the quotes (the one in the template,…
A: When a firm has both equity and debt, the overall cost of capital for the company is the weighted…
Q: A stock's beta is 1.6 and the market risk premium is 7.7%. If the risk-free rate is 3.5%, what is…
A: Capital Asset Pricing Model ( CAPM) is an alternative model to find out the required rate of return…
Q: The educational trust fund for your children earns interest at 5.8% compounded monthly. What initial…
A: Understanding the future value of an investment can be an important factor in making investment…
Q: Calculate the accrued interest (in $) and the total purchase price (in $) of the bond purchase.…
A: Data given: Coupon rate=9.7 % Market Price=$79.75 Time Since Last Interest=23 days Commission per…
Q: a) An asset has recorded the following closing prices over a period of 5 days: 100 (day 1), 105 (day…
A: a) (i) The net return at the end of the 5-day period can be calculated as: Net return = (Ending…
Q: 5-56. (Comprehensive present value) You are trying to plan for retirement in 10 years, and currently…
A: The future value represents the expected worth of the present series of cash flows. It is computed…
Q: A European investor can earn a 4.75% annual interest rate in Europe or 2.75% per year in the United…
A: Here, Spot exchange rate = $1.58 per euro Annual interest rate in Europe = 4.75% Annual interest…
Q: table securities, which had reached $137 billion in December 2012 based on its first quarter filing.…
A: ROE is calculated using formula given below. ROE=Net incomeSales×SalesAssets×AssetsEquity
Q: Pecking order hypothesis. Rachel can raise capital from the sources in the popup window: What is…
A: Sources of funds Interest rate Borrowing limit Parents 1% $12,000 Friends 6.50% $3,000 Bank…
Q: Which asset in the following table has the least market risk (also known as systematic or non-…
A: Systematic risk refers to the type of risk which has an impact on the entire market. Also known as…
Q: Exercise Net Present Value Analysis Hermson Company must evaluate two capital expenditure proposals.…
A:
Q: Find the amount of each payment to be made into a sinking fund which earns 8% compounded quarterly…
A: Future value is the estimated value of current assets that is discounted at an assumed rate of…
Q: You bought a 10-year US bullet bond for $990 with a coupon rate of 4.3%/year. A) Is the market rate…
A: A) To determine whether the market rate is higher or lower than the bond's coupon rate of 4.3%, we…
Q: You are considering a purchase of NotSoGreat Company Inc.’s stock, currently available on the NYSE…
A: According to bartleby guidelines, if multiple questions are asked , then 1st question needs to be…
Q: Rob Herndon, an accountant with Southwest Airlines, wants to retire 50% of Southwest Airlines bonds…
A: We need to use Future value of ordinary annuity formula below to calculate required annual payment.…
Q: Too Young, Incorporated, has a bond outstanding with a coupon rate of 7.1 percent and semiannual…
A: The cost of debt is the expected return of the bond. The after-tax cost of debt is the cost of debt…
Q: Six years ago, the Silver Spar Company sold $50,000 par value, noncallable bonds that now have 14…
A: A bond is a kind of debt security issued by the government and private companies to raise public…
Q: A) You bought a 10-year US bullet bond for $990 with a coupon rate of 4.3%/year. A) Is the market…
A: A) Since the bond was purchased at a discount, meaning below the face value, the market rate is…
Q: What is the difference between a normal yield curve and an inverted yield curve In a normal yield…
A: Several options have been given to explain the difference between the normal yield curve and an…
Q: Q2: How do banks make money? By issuing new currencies into the market. By charging interests to…
A: As per the Honor code of Bartleby we are bound to given the answer of first three sub part only,…
Q: All prices and costs are expected to rise at the general inflation rate of 2 percent after 1st year.…
A: Real cash flows are required to be discounted using appropriate real discount rate. Nominal cash…
Q: You should not buy it since the fair return is greater than the actual return.
A: holding period return is actual return 8%
Q: Suppose Micro-Shave growth rate in sales is forecast as 13% rather than 10%. If all ratios stay the…
A: Sales growth rate = 13% s0 = $3000 million A0*/ S0 = 66.666% L0*/ S0 = 6.667% Profit margin (M) =…
Q: You are considering a project that has the following cash flow data. What is the project's payback?…
A: By focusing on the timing of cash flows, the payback period metric or tool highlights the importance…
Q: A company has to choose one of the following two actually exclusive machine. Both the machines have…
A: To calculate the Net Present Value (NPV) of each machine, we need to discount the cash inflows at a…
Q: a. What will be the profit/loss to an investor who buys the call for $4.25 in the following…
A: Call option A call option provides its holder the right to purchase the stock at the pre-specified…
Q: A stock's internal rate of return (IRR) is the discount rate that cause the present value of future…
A: Internal Rate of Return is the rate at which the net present value of the cash flows from an…
Q: 2. Given: Your company is considering purchasing an $80,000 piece of equipment to reduce labor costs…
A: Particulars Option 1 Annual labor costs $ 30,000.00 Interest rate 9.00% Number of years…
Q: Advanced Computing Inc. has sales of $300 million, a net profit margin of 9%, and 10 million…
A: Sales 300 Million net profit 9% 10 million shares share price 32.40
Q: Which of the following two investment opportunities is preferred if you have a discount rate of 14%,…
A: 1. Net present value(NPV) is calculated by deducting initial investment from present value of cash…
Q: Beginning in January, a person plans to deposit $1 at the end of each month into an account earning…
A: The concept of time value of money will be applied here. The deposits of $1 in each month is an…
Q: Company Z forecasts a positive Free Cash Flow for the coming year, with FCF1 = $20,000,000, and it…
A: Free cash flow (FCF 1)=$20,000,000 Growth rate for next two years=20% In year 3, growth rate=5%…
Q: We are examining a new project. We expect to sell 8,800 units per year at $191 net cash flow apiece…
A: a) To calculate the NPV (Net Present Value) of the project and the value of the option to abandon,…
Q: B r i e f l y d e s c r i b e e a c h o f t h e f o l l o w i n g t y p e s o f m e r…
A: Horizontal mergers involve the combination of two companies in the same industry or market, which…
Q: Which of the following is a feature that distinguishes a traditional performance budget from other…
A: Quantitative performance objectives for agencies and departments is a feature that distinguishes a…
Step by step
Solved in 3 steps with 2 images
- The most recent financial statements for live co. Are shown here: income statement: sales $12,000, costs 7,200, taxable income $4,800, taxes(34%) 1,632, net income $3,168, current assets $ 25,876, fixed assets 18,106, total $43,982, debt $ 25,502, equity 18, 480, total $43,982. Assets and cost are proportional to sales. Debt and equity are not. The company maintains a constant 22 percent dividend payout ratio. No external equity financing is possible. What is sustainable growth rate?The most recent financial statements for Assouad, Incorporated, are shown here: Income Statement Balance Sheet $ Sales Costs Current assets $5,100 Current liabilities $ 3,150 10,700 7,600 Fixed assets 10,000 Long-term debt 4,680 Taxable income $3,100 Equity 7,270 Taxes (24%) 744 Total $ 15,100 Total $ 15,100 Net income $ 2,356 Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 44 percent dividend payout ratio. As with every other firm in its industry, next year's sales are projected to increase by exactly 15 percent. What is the external financing needed? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)The most recent financial statements for Anderson Company are shown here: Income Statement Balance Sheet Sales Costs $ 58,800 Current assets $ 28,800 24,800 Fixed assets 123,000 Long-term debt Equity $ 62,600 89,200 Taxable income $ 34,000 Total $151,800 Total $151,800 Taxes (21%) 7,140 Net income $ 26,860 Assets and costs are proportional to sales. Long-term debt and equity are not. The company maintains a constant 30 percent dividend payout ratio and a constant debt- equity ratio. What is the maximum increase in sales that can be sustained assuming no new equity is issued? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Maximum increase in sales
- The most recent financial statements for live co. Are shown here: income statement: sales $3,000, cost 1,980, Taxable income $1,020, Taxes (34%) 347, net income $673, current assets $3,189, fixed assets 7,807, total $10, 996, debt $6,376, equity 4,620, total $10,996. Assets and cost are proportional to sales. Debt and equity are not. The company maintains a constant 20 percent dividend payout ratio. No external equity financing is possible. What is the internal growth rate?The most recent financial statements for Bello Co. are shown here: Income Statement Balance Sheet Sales $13,000 Current assets $28,032 Debt $27,628 Costs 7,800 Fixed assets 19,616 Equity 20,020 Taxable income $5,200 Total $47,648 Total $47,648 Taxes (22%) 1,144 Net income $4,056 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 36 percent dividend payout ratio. What is the sustainable growth rate?Calculating the Average Total Assets and the Return on Assets The income statement, statement of retained earnings, and balance sheet for Santiago Systems are as follows: Santiago Systems Income Statement For the Year Ended December 31, 20X2 Amount Percent Net sales $5,345,000 100.0% Less: Cost of goods sold (3,474,250) 65.0 Gross margin $1,870,750 35.0 Less: Operating expenses (1,140,300) 21.3 Operating income $730,450 13.7 Less: Interest expense (27,000) 0.5 Income before taxes Less: Income taxes (40%)* $703,450 13.2 (281,380) 5.3 Net income $422,070 7.9 * Includes both state and federal taxes.
- The most recent financial statements for WFY, Co., are shown here: INCOME STATEMENT SALES 35250,00 COSTS 24675,00 TAXABLE INCOME 10575,00 TAXES(35%) 3701,25 NET INCOME 4582,20 BALANCE SHEET CURRENT ASSEST 10400 DEBT 17500 FIXED ASSEST 28750 EQUITY 21650 TOTAL 39159 TOTAL 39150 Assets and costs are proportional to sales. Debt and equity are not. The company pays a payout ratio of 60%, and the company wishes to maintain a constant payout ratio. The forecast for next year’s sales is €37500. a) What is the external financing needed? b) Calculate the internal growth rate. How do you interpret it?The most recent financial statements for Assouad, Incorporated, are shown here: Income Statement Sales Costs Taxable income Taxes (24%) Net income $ 3,500 2,500 $1,000 240 $760 Multiple Choice What is the external financing needed $1,730.00 $905.00 Current assets Fixed assets $1,472.50 Total $1,522.50 Balance Sheet Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 40 percent dividend payout ratio. As with every other firm in its industry, next year's sales are projected to increase by exactly 25 percent. $ 3,900 5,300 $ 9,200 Current liabilities Long-term debt Equity Total $ 830 3,620 4,750 $ 9,200 XThe most recent financial statements for Bello Co. are shown here: Income Statement Balance Sheet Sales $ 19,800 Current assets $ 11,880 Debt $ 16,240 Costs 13,500 Fixed assets 30,150 Equity 25,790 Taxable income $ 6,300 Total $ 42,030 Total $ 42,030 Taxes (24%) 1,512 Net income $ 4,788 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 35 percent dividend payout ratio. What is the sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
- The most recent financial statements for Mixton, Incorporated, are shown here: INCOME STATEMENT Sales Costs Taxable income Taxes (22%) Net income $ 52,000 Assets 42,400 $ 9,600 2,112 $ 7,488 Total BALANCE SHEET Debt Equity Total Answer is complete but not entirely correct. External financing needed s 11,990 X $ 115,700 $ 115,700 $ 34,500 81,200 $ 115,700 Assets and costs are proportional to sales. Debt and equity are not. A dividend of $2,900 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be $61,360. What is the external financing needed? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.For the year ending March 31, 2019, Northern Air Cooling Corporation has: Total assets = $109,931,999 ROA = 9.67 % ROE = 11.19 % Net profit margin = 10.59 % Determine the following: Net income: _____________ Sales: _____________ Equity Multiplier: _____________The most recent financial statements for Assouad, Inc., are shown here: Income Statement Balance Sheet Sales $3,500 Current assets $4,000 Current liabilities $970 Costs 2,500 Fixed assets 6,200 Long-term debt 3,500 Taxable income $1,000 Equity 5,730 Taxes (25%) 250 Total $10,200 Total $10,200 Net income $750 Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 50 percent dividend payout ratio. As with every other firm in its industry, next year's sales are projected to increase by exactly 20 percent. What is the external financing needed?