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Hello, I believe I have #1-4 done. I am seeking assistance with problem #5. Is this something you can help with? Problem 1 Hologram Corporation
Hello, I believe I have #1-4 done. I am seeking assistance with problem #5. Is this something you can help with?
Problem 1 Hologram Corporation is a holding company with four main subsidiaries. The percentage of its business coming from each of the subsidiaries, and their respective betas, are as follows: Subsidiary Percentage of Business Beta Water Company 60% .70 Cable Company 25% .90 Real estate 10% 1.30 Technology companies 5% 1.50 1 2 What is the company's beta? Assume that the risk-free rate is 6% and that the market risk premium is 5%. What is the holding company's required rate of return? Problem 2 Surf Bicycles Inc. Will manufacture and sell 200,000 units next year. Fixed costs will total $500,000, and variable costs will be 60% of sales. The bicycles will sell for $200 each. The firm wants to achieve a level of earnings before interest and taxes of $250,000. How many units must they sell to achieve that result? Problem 3 Alpha Electronics has the following income statement: Sales 400,000 Total variable costs 240,000 Contribution margin 160,000 Fixed costs 140,000 EBIT 20,000 Calculate the new EBIT and percent change, assuming: 1 Sales increase by 20% 2 Sales decrease by 20% Problem 4 Given the following information: Total asset turnover 2.0 times Accounts receivable turnover 25 times Fixed asset turnover 5 times Inventory turnover (based on cost of goods sold) 5 times Current ratio 2 Sales (all on credit) $5,000,000 Cost of goods sold 70% of sales Debt ratio 60% Calculate: Cash Accounts receivable Inventories Net fixed assets Total assets Current liabilities Long-term debt Total liabilities Common equity Total liabilities and common equity Problem 5 Given the following information: Sales Growth Rate 25% COGS / Sales 65% Operating Expense / Sales 20% Depreciation Expense (000) $40 Interest Expense (000) $10 Tax Rate Dividends (000) 40% $20 Calculate the following information for 20X1: Income Statement (000) 20X0 Sales 1500 Cost of goods sold 975 Gross profit 525 20X1 Operating costs Depreciation expense Net Operating Profit Interest Expense Earnings Before Taxes Taxes 300 40 185 10 175 70 Net Income 105 Dividends $20 Addition to Retained Earnings $85Step by Step Solution
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