Hi guys having some real struggles with some assignment questions! Please help! The questions are attached

1. We have the following information for Athabasca Inc. (10 marks) Athabasca, Inc. 2010 Income Statement ($ in millions) Net Sales Less: Cost of Goods Sold Less: Depreciation Earnings before interest and taxes Less: Interest paid Taxable Income Less: Taxes Net Income Addition to retained earnings Cash dividends paid Cash A/R Inventory Total CA Net fixed assets Total assets $1,384 1660.80 605 726 180 180 599 754.8 80 80 519 674.8 156 156 $ 363 518.8 $ 254 2009 $ 100 350 440 $ 890 1,556 $2,446 109 Athabasca, Inc. 12/31/09 and 12/31/10 Balance Sheet ($ in millions) 2010 2009 $ 121 Accounts payable $ 400 425 Notes payable 390 410 Total CL $ 790 $ 956 Longterm debt 500 1,704 Owner's equity Common stock 600 Retained Earnings 556 $2,660 Total liabilities $2,446 2010 $ 350 370 $ 720 550 580 810 $2,660 The firm has 180 million common shares outstanding. Calculate the following: a. Earnings retention ratio for 2010. b. The dividend to be paid (in dollars) in 2011. Assume Athabasca is projecting a 20% increase in sales for the coming year, and that cost of goods sold and general/administrative expenses remain a constant percentage of sales. Also assume that depreciation, interest paid, and the firm's tax rate remain unchanged and that the firm's dividend payout is 40%. c. Capital intensity ratio based on the 2010 results. d. Full capacity sales if Athabasca is currently operating at 70% capacity. e. External financing needed (EFN) for 2011 if Athabasca is projecting a 20% increase in sales for the coming year. Assume that assets, all costs, and current liabilities are proportional to sales but that longterm debt is not proportional to sales. Also assume that the firm's tax rate remains unchanged and the dividend payout is 40%. f. External financing needed (EFN) for 2011 if Athabasca is projecting a 20% increase in sales for the coming year, with current assets, all costs, and current liabilities proportional to sales. Longterm debt is not proportional to sales. Assume the firm's tax rate remains unchanged, the dividend payout is 40%, and Athabasca is operating at 70% capacity. g. Internal growth rate for 2010 (assume the dividend payout ratio is fixed at 40%). 2. Suppose your firm is planning to invest in a project that will generate the following income stream: a negative flow $300,000 per year for 5 years, a positive flow of $450,000 in the sixth year, and a positive flow of $650,000 per year in years 7 through 9. What is the present value of this income stream if the appropriate discount rate is 10% for the first 3 years and 13% thereafter? (6 marks) 3. Annuity A makes annual yearend payments of $976.50 for each of the next 10 years, while investment B makes annual yearend payments of $600 per year forever. Show your work for the following two questions: (6 marks) a. b. 7. At what interest rate would you be indifferent between the two investments? At interest rates above/below this breakeven rate, which investment would you choose and why? A friend who owns a perpetuity that promises to pay $1,000 at the end of each year, forever, comes to you and offers to sell you all of the payments to be received after the 25 th year for a price of $1,000. Assume an interest rate of 10%. Be sure to show your work. (5 marks) a. b. What value would you be willing to pay? c. 8. Should you pay the $1,000 today to receive payments from the end of year 26 and onwards? What does this suggest to you about the value of perpetual payments? Rob and Laura wish to buy a new home. The price is $300,000 and they plan to put 25% down. New Rochelle Savings and Loan will lend them the remainder at 8% per annum, compounded semi annually for a 25year term. The monthly payments are to begin in one month. (10 marks) a. How much will their monthly payments be? b. Assuming they pay off the loan over the 25year period as planned, what will be the total cost (principal + interest + down payment) of the house? c. What will the outstanding balance of the loan be after 10 years, assuming they make the first 120 payments on time? d. Suppose they want to pay off the loan in 15 years. How much extra must they pay each month to do so? e. Show the first six months in the amortization table for the 25year mortgage