Business Finance
Georgia State University Bullock Gold Mining Corporate Finance Homework

Corporate Finance

Georgia State University

Question Description

Please see attachments for my question. Thank you

answer. Question A has 2 parts and Question B has 3 parts. (use excel to complete the assignment but submit in a word document)

Use the “Assignment 3 – Submit” link under the “Assignments” tab to submit a file (Word,) with your answers.

Round all answers to 2 decimals and all intermediate work to 4 decimals.

Showing your work on your answer file may get you partial credit if your answer is incorrect

For all questions of the assignment you are to use solely and exclusively the information presented on the next page of this document. Please do not use any other source of information.

Unformatted Attachment Preview

Assignment 3 Below you will find background information for this assignment and two multi-part questions that you will have to answer. Question A has 2 parts and Question B has 3 parts. Use the “Assignment 3 – Submit” link under the “Assignments” tab to submit a file (Word,) with your answers. Round all answers to 2 decimals and all intermediate work to 4 decimals. Showing your work on your answer file may get you partial credit if your answer is incorrect For all questions of the assignment you are to use solely and exclusively the information presented on the next page of this document. Please do not use any other source of information. QUESTION A 12.00% QUESTION B ...
Purchase answer to see full attachment

Final Answer

Hello, your assignment is complete. Thank you

Running head: CORPORATE FINANCE

1

Corporate Finance

Course Name

Professor Name

Your Name

Date

CORPORATE FINANCE

2

QUESTION A
year

cash flow

Cumulative Cash inflow

-

(600,000,000.00)

600,000,000.00

1.00

75,000,000.00

75,000,000.00

2.00

120,000,000.00

195,000,000.00

3.00

160,000,000.00

355,000,000.00

4.00

130,000,000.00

485,000,000.00

5.00

240,000,000.00

6.00

180,000,000.00

7.00

210,000,000.00

8.00

90,000,000.00

9.00

(95,000,000.00)

We see that the initial cost is recovered sometime between Year 5 and 6.

Remaining cost

Thus, the payback period is

1
1
5
0
0
0
0
0
0.
0
0
4.
4
8

Internal Rate of Return (IRR)
The IRR is the rate of return when the present value of all the cash flows equals to zero.
8
From execel formula, IRR =
%
Net Present Value (NPV)
NPV is the sum of present values of all the cash flows discounted at the required return of the investor.
($
3,
5
4

CORPORATE FINANCE

3
7,
6
4
4.
8
4)

The company should NOT open the mine because
1. It's IRR = 8% < Required return =12%
2.It has a Negative NPV
QUESTION B

S&s Air, Inc.
2012 Income Statement
Sales

$
30,499,420
22224580

Cost of goods sold
Other expenses

3867500

Depreciation

1366680

EBIT

$
3,040,660

Interest
Taxable income

478240
$
2,562,420

Taxes (40%)

1024968

Net income

$
1,537,452
$
560,000

Dividends
Add to retained earnings

977452
S&s Air, Inc.
2012 Income Statement

Assets
Current assets
Cash
Accounts receivable
Inventory
Total current assets

$441000
508400
1237120
$2186520

Liabilities and Equity
Current liabilities
Accounts payable
$689000
Notes payable
2230000
Total Current liabilities
$2919000
Long-term debt
$5320000

CORPORATE FINANCE
Fixed assets
Net plant and equipment

Total assets

4

$16122400

$18308920

Shareholder equity
Common stock
Retained earnings
Total equity
Total Liabilities and Equity

$350000
9719920
$10069920
$18308920

Part 1
Internal Growth Rate=( ROA*retention Ratio)/(1-( ROA*retention Ratio)
Return On Assets(ROA)=Net Income/Total Assets

8%

Retention Ratio= 1-(Dividend Payout/Net Income)

64%

Internal Growth Rate

6%

Sustainable-growth rate = ROE*(1 - dividend-payout ratio)
ROE=Return On Equity= Net Income/Total Equity

15%

Dividend-pay-out ratio

36%

Sustainable-growth rate

10%

Internal Growth rate is the optim...

markjunior209 (5539)
New York University

Anonymous
Thanks for the help.

Anonymous
Outstanding. Studypool always delivers quality work.

Anonymous
Tutor was very helpful and took the time to explain concepts to me. Very responsive, managed to get replies within the hour.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4
Similar Questions
Related Tags

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors