FInancial management
Anonymous

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I need help with the following questions please.  I need the work to be shown so I can understand how to do it.  Thank you.

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2-4) Talbot Enterprises recently reported an EBITDA of \$8 million and net income of \$2.4 million. It had \$ 2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization? 3-11) Complete the balance sheet and sales information in the table that follows for J. White Industries using the following financial data: Total assets turnover: 1.5 Gross profit margin on sales: (sales – Cost of goods sold) / Sales = 25% Total liabilities-to-assets ratio: 40% Quick ratio: 0.80 Days sales outstanding (based on 365-day year): 36.5 days Inventory turnover ratio: 3.75 Partial Income Statement information Sales ? Cost of goods Sold ? Balance Income Cash ? Accounts Payable Accounts receivable ? Long-term debt Inventories ? Common Stock Fixed assets ? Retained earnings Total assets \$400,000 ? \$50,000 ? ? Total Liabilities and equity ??? 4-8) You want to buy a car, and a local bank will lend you \$20,000. The loan would be fully amortized over 5 years (60 months), and the nominal interest rate would be 12%, with interest paid monthly. What is the monthly loan payment? What is the loan’s EFF%? 5-9) The Garraty Company has two bond issues outstanding. Both bonds pay \$100 annual interest plus \$1000 at maturity. Bond 1, has a maturity of 15 years, and Bond S has a maturity of 1 year. a) What will the value be of each of these bonds when the going rate of interest is (1) 5%, (2) 8%, (3) 12%? Assume that there is only one more interest payment to be made on Bond S. b) Why does the longer-term (15 year) bond fluctuate more when interest rates change than does the shorter-term bond (1 year)? 6-6) The market and Stock J have the following probability distributions: Probability Rm Rj 0.3 15% 20% 0.4 9 5 0.3 18 12 a) Calculate the expected rates of return for the market and Stock J. b) Calculate the standard deviations for the market and Stock J. 6-8) As an equity analyst you are concerned with what will happen to the required return to Universal Toddle Industries’s stock as market conditions change. Suppose rrf = 5%, rm = 12 % and B UTI = 1.4 a. Under current conditions, what is r uti, the required rate of return on UTI stock? b. Now suppose rrf (1) increases to 6% or (2) decreases to 4%. The slope of the SML remains constant. How would this affect rm and r uti? c. Now assume rrf remains at 5% but rm (1) increases to 14% or (2) falls to 11%. The slope of the SML does not remain constant. How would these changes affect R uti? 7-17) Kendra Enterprises has never paid a dividend. Free cash flow is projected to be \$80,000 and \$100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 8%. The company’s weighted average cost of capital is 12%. a. What is the terminal, or horizon, value of operations? (Hint: find the value of all free cash flows beyond year 2 discounted back to year 2). b. Calculate the value of Kendra’s operations. 8-3) Assume that you have been given the following information on Purcell Industries: Current stock price = \$ 15 Time to maturity of option = 6 months Strike price of option = \$15 Risk-free rate = 6% Variance of stock return = 0.12 d1 = 0.24495 N(d1) = 0.59675 d2 = 0.00000 N(d2) = 0.50000 According to the Black-Scholes option pricing model, what is the option’s values? 9-7) Shi Importers’s balance sheet shows \$300 million in debt, \$50 million in preferred stock, and \$250 million in total common equity. Shi’s tax rate is 40%, rd = 6%, r ps = 5.8%, and rs = 12%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? 9-11) Radon Homes’s current EPS is \$6.50. It was \$4.42, 5 years ago. The company pays out 40% of its earnings as dividends, and the stock sells for \$36.00. a) Calculate the historical growth rate in earnings. (hint: this is a 5-year growth period). b) Calculate the next expected dividend per share, D1. (hint: D0 = 0.4(\$6.50 = \$2.60). Assume that the past growth rate will continue. c) What is Radon’s cost of equity, rs? 12-2) Refer to problem 12-1. What would be the additional funds needed if the company’s year end 2013 assets had been \$7 million? Assume that all other numbers, including sales, are the same as in Problem 12-1 and that the company is operating at full capacity. Why is the AFN different from the one you found in Problem 12-1? Is the company’s “capital intensity” ratio the same or different? ...
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Mercury_H (8396)
Carnegie Mellon University
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