Home Assignment # 2 FIN 415 (05 marks) Note: Answers must be handwritten and the submission deadline through LMS is 4/10/2020. 1. What is the amount of external financing needed, assuming the company is operating at full capacity? Assume Sales grow at 15% and Dividend Payout Rate = 50%. Tasha's Toy Emporium Income Statement, 2009 Current Pro Forma 5.000 -3,000 2.000 Sales Less: costs EBT Less: taxes (40% of EBT) Net Income Dividends Add. To RE -800 1,200 600 600 Tasha's Toy Emporium - Balance Sheet Current Pro Forma Current Pro Forma Liabilities & ASSETS Owners' Equity Current Current Assets Liabilities Cash $500 AP $900 AR 2.000 NP 2.500 Inventory 3.000 Total 3,400 Total 5.500 LT Debt 2.000 Fixed Assets Owners' Equity Net PP&E 4,000 CS & APIC 2.000 Total Assets 9,500 RE 2.100 Total 4.100 Total L & OE 9.500 EFN Plug Variable Chapter 11 1. Cantor's has been busy analyzing a new product. Thus far, management has determined that an OCF of $218,200 will result in a zero net present value for the project, which is the minimum requirement for project acceptance. The fixed costs are $329,000 and the contribution margin per unit is $216.40. The company feels that it can realistically capture 2.5 percent of the 110,000 unit market for this product. The tax rate is 34 percent and the required rate of return is 11 percent. Should the company develop the new product? Why or why not? Chapter 15 1. A company wants to raise $20 million. The subscription price is $40, and the current stock price is $50. The firm currently has 5,000,000 shares outstanding. How many shares must be issued? How many rights will it take to purchase one share? What is the value of a right? Home Assignment # 2 FIN 415 (05 marks) Note: Answers must be handwritten and the submission deadline through LMS is 4/10/2020. 1. What is the amount of external financing needed, assuming the company is operating at full capacity? Assume Sales grow at 15% and Dividend Payout Rate = 50%. Tasha's Toy Emporium Income Statement, 2009 Current Pro Forma 5.000 -3,000 2.000 Sales Less: costs EBT Less: taxes (40% of EBT) Net Income Dividends Add. To RE -800 1,200 600 600 Tasha's Toy Emporium - Balance Sheet Current Pro Forma Current Pro Forma Liabilities & ASSETS Owners' Equity Current Current Assets Liabilities Cash $500 AP $900 AR 2.000 NP 2.500 Inventory 3.000 Total 3,400 Total 5.500 LT Debt 2.000 Fixed Assets Owners' Equity Net PP&E 4,000 CS & APIC 2.000 Total Assets 9,500 RE 2.100 Total 4.100 Total L & OE 9.500 EFN Plug Variable Chapter 11 1. Cantor's has been busy analyzing a new product. Thus far, management has determined that an OCF of $218,200 will result in a zero net present value for the project, which is the minimum requirement for project acceptance. The fixed costs are $329,000 and the contribution margin per unit is $216.40. The company feels that it can realistically capture 2.5 percent of the 110,000 unit market for this product. The tax rate is 34 percent and the required rate of return is 11 percent. Should the company develop the new product? Why or why not? Chapter 15 1. A company wants to raise $20 million. The subscription price is $40, and the current stock price is $50. The firm currently has 5,000,000 shares outstanding. How many shares must be issued? How many rights will it take to purchase one share? What is the value of a right
