Acme Widget Company

1	The Acme Widget Company has total sales of $5,591. Given the following ratios, fill in the balance sheet. (All figures in $millions).
	Total Assets Turnover			1.313	Times
	Fixed Asset Turnover Ratio			5.723	Times
	Cash to Total Assets			10.9%
	Accounts Reeivable Turnover			7.80	Times
	Inventory Turnover			11.03	Times
	Current Ratio			0.852
	Debt to Total Assets			54.3%								-
	Quick Ratio			0.503
	Common Stock			$ 1.21	Par Value /Share
	ACME WIDGET COMPANY
		ASSETS				LIABILITIES & SHAREHOLDER'S EQUITY
	Cash						Accts Payable
	Accounts Receivable						Short Term Portion
	Inventory						Long Term Debt
	Total Current Assets						Total Current Liabilities
	Property, Plant & Eqt						Long-term Debt
	Goodwill, Other Intangibles						Other Liabiities
							Common Stock
							Retained Earnings			$ 2,031
							Treasury Stock			$ (2,036)
	TOTAL ASSETS						TOTAL LIAB & SH EQUITY
2	The Income Statement Acme Widget is as follows (figures in $millions). Please prepare a 5-year forecast bsed on the assumptions provided:
						2012	2013	2014	2015	2016	2017	2018	2019
	Sales (20,000 units at $60 each)					$ 5,468	$ 5,623	$ 5,591
	COGS (Variable Cost at $30 each)					$ 3,164	$ 3,211	$ 3,231
	Gross Profit					$ 2,304	$ 2,412	$ 2,360	$ -	$ -	$ -	$ -	$ -
	Operating Expenses
	Research & Development					$ 121	$ 130	$ 125
	Selling, Gen & Admin Costs					$ 1,280	$ 1,307	$ 1,269
	Total Operating Expenses					$ 1,401	$ 1,437	$ 1,394
	Gross Operating Income					$ 903	$ 975	$ 966	$ -	$ -	$ -	$ -	$ -
	Other Income (Loss)					$ 13	$ -	$ (2)
	EBITA					$ 916	$ 975	$ 964	$ -	$ -	$ -	$ -	$ -
	Interest Expense					$ 125	$ 122	$ 103
	Income Tax Expense					$ 248	$ 279	$ 299
	NOPAT					$ 543	$ 574	$ 562	$ -	$ -	$ -	$ -	$ -
	Shares Outstanding (in 1,000s)					132,310	132,969	131,742
	EPS
	Terminal Value
3	Note the following informatin for the corporation in Problem 1:
	b:	0.59
	Exp Mkt R:	9.50%
	Rf	3.50%
	LONG-TERM DEBT:				Current Price	% of Total Debt
	5% Sub Notes due 1/15				$ 1,095.24	26.4%
	3.55% Senior Debentures Due 11/15				$ 934.21	13.7%
	5.95% Senior Debs Due 10/17				$ 1,202.02	18.8%
	3.80% Senior Notes Due 11/21				$ 962.03	13.6%
	3.05% Senior Debentures Due 9/22				$ 938.46	27.5%
						100.0%
	The corporation's WACC is:
4	What is the corportion'scurrent ROE?
5	What is your estimate of the corporation's current stock price? It's P/E ratio?
	Stock Price:			P/E Ratio:
	Briefly exlain how you reached your conclusion.
6	ONE LAST QUESTION!
	Suppose Acme Widgets decides to issue another $250 million in subordinated notes, due 12/19, at a rate of 5.5%. Management will use the proceeds to buy back stock. If the stock is trading at $100/share, what effect will this have on the company's WACC? What will the new WACC if it is different?
	New WACC