Question
Please send below answer informations; Thank you Q1. A corporation has a dividend payout ratio of 25 percent and a sustainable growth rate of 22
Please send below answer informations;
Thank you
Q1. A corporation has a dividend payout ratio of 25 percent and a sustainable growth rate of 22 percent. What is the company's return on equity (ROE)?
Q2. KokoSports has return on equity of 19 percent, profit margin of 12 percent, sales to assets ratio of 1.18. What is the company's debt to equity ratio?
Q3. Last year, ABC Corporation had net sales of $3,050,000 and cost of goods sold of $1,800,000. Its depreciation charge was $600,000 and selling, general, and administrative expense was $800,000. If the interest charge was $35,000 and the tax rate is 30 percent, what was the operating cash flow? Ignore any carry back or carry forward of loss for tax purposes.
Q4. How many yearswill it take for $1,000 to grow to $6,000 at a rate of 18 percent compounded monthly?
Q5.You are planning to retire in 15 years with $750,000. You can earn 10.0% compounded quarterly. How much do you need to invest today?
Q6.You purchased a car for $40,000 with no down payment. You plan to pay it off with monthly payment $900 in 5 years. What is the effective annual rate of interest on the loan?
Q7. CCZ Sales, Inc. had a net income of $15,000 on sales of $100,000 last year. Its balance sheet shows debt of $20,000 and equity of $68,000. If the total dividend paid was $7,000, what is its sustainable growth rate?
Q8.An investment offers to pay you $21,000 per quarter for the next 10 years (the payments start a quarter after you purchase the investment). If the interest rate is 12%, how much should you pay for this investment?
Q9.The nominal rate of return on a risky security is 7.25 percent, and the rate of return on riskfree securities is 5 percent. What is the inflation rate if the pure rate is 2.5 percent?
Q10.Use the following information to answer this and the following two questions. The SAI Inc. is planning to set up a new store. The startup cost of the store is $400,000. The store will increase revenue by $265,000 each year for the next six years and all costs including costs of merchandise, labor, utilities, and taxes are $130,000 per year. The store will require upgrade to the store front every two years at a cost of $35,000 each time. At the end of the six years, the store inventory will be sold off at a super sale to receive $10,000 after taxes and the company will cease operations. The companys cost of capital is 15 percent. The level of risk of the product sales is the same as the overall risk for the company. What is the NPV of the new store decision?
Q11.What is the IRR of the new store decision?
Q12.What is the profitability index of the new store decision
Use the following information for this and the following six questions.
The balance sheet of XYZ Corporation is shown below.
XYZ Corporation December 31 | |||
ASSETS | LIABILITIES | ||
Accounts Payable | $3,000,000 | ||
Long-term Debt | $6,000,000 | ||
Preferred Stock | $3,000,000 | ||
Common Stock and Retained Earnings | $7,000,000 | ||
Total Assets | $19,000,000 | Total Liabilities and Equity | $19,000,000 |
You are also given the following information:
Expected growth rate of dividends is 5%
XYZs new bonds will have 20-year maturity, a coupon rate of 9% (semiannual coupon payment), and face value of $1,000. Net proceeds from new bonds will be $964.22. The current bond is selling for $975.
The common stock of XYZ is selling for $40.00 per share in the market. New common floatation cost will be 6%
Company recently paid a common stock dividend of $2.50 per share, and 300,000 shares are outstanding.
New preferred stock with a dividend of $7.50 per share will be sold to net $92 per share. XYZs current preferred stock is selling in the market at $85.50 per share, and 30,000 shares are outstanding.
Corporate tax rate is 35%
The company needs to expand assets by $20 million in the coming year. Retained earnings for the year will be $8 million. The company wishes to maintain the present capital structure based on market values.
Note: Some answers are rounded.
Q13.What percent of new expansion of XYZ should be financed by equity?
Q14.What is the cost of retained earnings for XYZ Corporation?
Q15.What is the cost of new common stock sold by XYZ Corporation?
Q16.What is the after-tax cost of debt for new financing by XYZ?
Q17.What is the after-tax cost of the preferred stock for XYZ?
Q18.What is the average cost of equity for XYZ Corporation?
Q19.What is the weighted average cost of capital for XYZ Corporation?
Use the following information to answer this and the following two questions.
You have two mutually exclusive projects X and Y available. The cash flows relating to these projects are given below:
Year | Project X | Project Y |
0 | -14,000 | -14,000 |
1 | 6,000 | 2,000 |
2 | 5,000 | 2,000 |
3 | 4,000 | 3,000 |
4 | 3,000 | 4,000 |
5 | 1,000 | 5,000 |
6 | 1,000 | 7,000 |
Q20.What is the IRR of the Project X?
Q21.What is the NPV of the Project Y at 12 percent required rate of return?
Q22.What is the crossover rate between Project X and Project Y?
Use the following information for this and the next question.
Bonds of Lowell Inc. are selling in the market for $1,169.68. These bonds carry a 9.5 percent coupon paid semiannually, and have 30 years remaining to maturity.
Q23.What is the bonds yield to maturity?
Q24.What is the capital gain yield assuming that the interest rates will remain constant over the year?
Q25.Use the following information for this and the following question. COM-USA Inc. has been maintaining a growth rate of 5.5% in its dividends. This is expected to continue indefinitely. The company just paid a dividend of $2.50 per share and its stock is selling at $28.00 per share. What is the required rate of return for COM-USA?
Q26.What is the dividend yield for COM-USA?
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