Financial Management: Theory & Practice
16th Edition
ISBN: 9781337909730
Author: Brigham
Publisher: Cengage
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Textbook Question
Chapter 12, Problem 3P
Smiley Corporation’s current sales and partial
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General Finance Question
Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes):
Income Statement
Balance Sheet
Sales
Costs
$ 40,000 Assets
34,160
$26,000
Debt
Equity
$ 7,000
19,000
Net income $ 5,840
Total
$26,000
Total
$26,000
The company has predicted a sales increase of 20 percent. Assume Yoo pays out half of net income in the
form of a cash dividend. Costs and assets vary with sales, but debt and equity do not.
Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate
calculations and round your answers to the nearest whole dollar amount.)
Pro forma income statement
Sales
Costs
$ 48000
40992
Assets
$ 31200
Pro forma balance sheet
Debt
7000
Equity
19000
Net income
$ 7008
Total
$ 31200
Total
30304
What is the external financing needed? (Do not round intermediate calculations. Negative amount
should be indicated by a minus sign.)
External financing needed
$
896
An insurance company has liabilities of £7 million due in 10 years' time and
£9 million due in 17 years' time.
The assets of the company consist of two zero-coupon bonds, one paying
£X million in 7 years' time and the other paying £Y million in 20 years' time.
The current interest rate is 6% per annum effective.
Find the nominal value of X (i.e. the amount, IN MILLIONS, that bond X pays
in 7 year's time) such that the first two conditions for Redington's theory of
immunisation are satisfied.
Express your answer to THREE DECIMAL PLACES.
Chapter 12 Solutions
Financial Management: Theory & Practice
Ch. 12 - Prob. 2QCh. 12 - Prob. 3QCh. 12 - Prob. 4QCh. 12 - What is meant by the term “self-supporting growth...Ch. 12 - Suppose a firm makes the following policy changes...Ch. 12 - Broussard Skateboard’s sales are expected to...Ch. 12 - Berman & Jaccor Corporation’s current sales and...Ch. 12 - Smiley Corporations current sales and partial...Ch. 12 - Maggie’s Muffins Bakery generated $5 million in...Ch. 12 - At year-end 2019, Wallace Landscapings total...
Ch. 12 - The Booth Company’s sales are forecasted to double...Ch. 12 - Upton Computers makes bulk purchases of small...Ch. 12 - Stevens Textile Corporations 2019 financial...Ch. 12 - Hatfield Medical Supplys stock price had been...Ch. 12 - Use the AFN equation to estimate Hatfield’s...Ch. 12 - Prob. 3MC
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