1: In corporate finance, the goal of the firm is to maximize: EPS, Net Income, Operating income, Value of Debt, None of the above Q 4: DuPont. A firm has a net profit margin of 4.5% on sales of $12 million. Suppose the firm's total capital is $8 million of which debt ratio of 60% and interest rate of 8%. Calculate the firm's return on assets (ROA). Hint: Du Pont model. 10.19%, 12.20%, 13.3%, none of the above Q 5: DuPont. A firm has a net profit margin of 4.5% on sales of $12 million. Suppose the firm's total capital is $8 million of which debt ratio of 60% and interest rate of 8%. Calculate the firm's return on equity (ROE). Hint: Du Pont model. 12.5%, 15.458%, 16.875% FINANCIAL STATEMENT. For this and the next 2 questions. Consider the income statement below. Sales 500,000 COGS 325,000 Gross profit 175,000 Depreciation 4,000 Other expenses 31,000 Total operating exp 35,000 EBIT 140,000 Interest charges 7,000 EBT 133,000 Taxes (40%) 53,200 Net income 79,800 Dividend payout ratio 25% Stock price: P0 $12 Shares outstanding: n 10,000 Q 8: Calculate earnings per share. $19.52, $7.98, $7.79, $8.17 Q 9: Suppose depreciation DECREASES by 80%. Calculate NET INCOME and EPS. ($59,850; $8.17), ($81,720; $8.17), ($85,080, $7.79), ($82,520; $7.79) Q 12: The following table shows a condensed income statement and balance sheet for the Rumford Smelting Plant. Calculate the plant's EVA USING a cost of capital of 9%. Income Statement Revenue $56.66 Raw materials cost 18.72 Operating cost 21.09 Depreciation 4.50 Operating income 12.35 Tax at 35% 4.32 Net income 8.03 Assets as of December 31 Net operating working capital 7.08 Investment in plant and equipment 69.33 Less: accumulate depreciation 21.01 Net plant and equipment 48.32 Total assets 55.40 $4.8605, $7.364, $3.0415, none of the above For this and the next 2 questions, please refer to the following Table. Data in millions of dollars. Income statement Year 1 Year 2 sales $ 1,200.00 1000 operating costs excl depreciation 1020 850 depreciation 30 25 EBIT 150 125 Less: interest 21.7 20.2 EBT 128.3 104.8 Taxes (40%) 51.3 41.9 Net income to common 77 62.9 Common dividends 60.5 4.4 Balance sheet cash and equivalents 12 10 short term investments accounts receivable 180 150 inventories 180 200 total current assets 372 360 net plant and equipment 200 250 total assets 672 610 claims accounts payable 108 90 notes payable 67 51.5 accruals 72 60 total current liabilities 247 201.5 long term bonds 150 150 total debt 397 351.5 common stock (50 million shares) 50 50 retained earnings 225 208.5 common equity 275 258.5 total claims 672 610 Q: 14Calculate the net operating working capital for Year 1 $192 million, $150 million, $210 million, None of the above Q: 16 Calculate the total operating capital for Year 1 $492 million, $58 million, None of the above Q: 22 Corporate Valuation. For this and the next 3 questions. In March 2005, General Electric (GE) had a book value of equity of $113 billion, stock price of $36 per share, and 10.6 billion shares outstanding. GE also had cash of $13 billion and total debt of $370 billion. What was GE's market capitalization? $113 billion, $381.6 billion, None of the above Q:23 What was GE's enterprise value? 381.86 billion, 738.60 billion, none of the above, Q:24 What was GE's market-to-book ratio? 3.38, 3.274, none of the above Q: 25 What was GE's debt-to-equity ratio based on book values? 3.38, 3.274, none of the above Corporate Valuation. For this and the next 3 questions: The projected free cash flows (FCF) for a firm are presented below. After Year 3, FCF is expected to grow at a constant rate of 5%. The company's WACC is 12%. Currently, the company has $400,000 of non-operating marketable securities. Its long-term debt is $1.5 million, but the firm has never issued a preferred stock. There are 80,000 shares of stock outstanding. Year FCF 1 220,000 2 250,000 3 300,000 Q: 27 Calculate the value of the firm's operations today $3,415,497.45, $3,015,544.45, $4,500,000.00, $3,812,272.23, none of the above Q 28: Calculate the company's total value $2,712,272.23, $3,015,544.45, $4,212,272,23, $3,812,272.23, none of the above Q:29 Calculate the value of its common equity $2,712,272.23, $3,015,544.45, $4,500,000.00, $3,812,272.23, none of the above Q: 30 Calculate the firm's intrinsic stock price $33.90, $35.01, $50.05, none of the above Q: 31 Corporate Valuation. For this and the next 2: Dozier Corporation is a fast growing supplier of office products. Analysts project the following FCFs (in millions) during the next 3 years: FCF1 = -$20, FCF2 = $30, FCF3 = $40. Free cash flow after year three is expected to grow at a constant rate of 5%. Cost of capital is 13%. Calculate the horizon value of operations (i.e. HV3) $525 million, $500 million, $397.37 million, none of the above Q: 32 Calculate the value of operations today (VOP) $525 million, $500 million, $397.37 million, none of the above Q:35 Corporate Valuation. Tae-Yeong, Inc. forecasts that free cash flow for next year (FCF1) will be -$10 million, but its FCF at t = 2 will be $20 million. After Year 2, FCF is expected to grow at a constant rate of 4%. If the weighted average cost of capital is 14%, what is the firm's value of operations today, in millions? $158, $167, $184, $193, none of the above, Q: 36 For this and the next question: The following financial data are for Oracle Corp (ORCL) published in Yahoo! Finance on 9/17/2010. Calculate the company's market value added to equity (MVAE). Stock price $27.48 Market capitalization $138.12 billion Enterprise value $134.31 billion EBITDA $12.11 billion Operating cash flow $8.68 billion Levered free cash flow $8.57 billion Common stockholder equity $30.8 billion $30.8 billion, $103.51 billion, $107.32 billion, insufficient information to calculate Q: 37 Based on the published data, one can determine that the SUM of the company's net operating profit after taxes (NOPAT) and depreciation charges for the period is called: Free cash flow and is $8.68 billion Operating cash flow and is $12.11 billion Operating cash flow and is $8.68 billion None of the above