please show all working so that i can see how you arrive at your answers.

Question 1 Suppose that you own 1,700 shares of Nocash Corp. and the company is about to pay a 25% stock dividend. The stock currently sells at $120 per share. a. What will be the number of shares that you hold after the stock dividend is paid? (Do not round intermediate calculations.) Number of shares b. What will be the total value of your equity position after the stock dividend is paid? (Do not round intermediate calculations.) Total value $ c. What will be the number of shares that you hold if the firm splits five for four instead of paying the stock dividend? Number of shares hold Question 2 Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 2.2 million shares that are outstanding. Shareholders require a 8% rate of return from Consolidated stock. a. What is the price of Consolidated stock? Stock price $ b. What is the total market value of its equity? (Enter your answer in millions.) Market value of equity $ million Consolidated now decides to increase next year's dividend to $20 a share, without changing its investment or borrowing plans. Thereafter the company will revert to its policy of distributing $10 million a year. c. How much new equity capital will the company need to raise to finance the extra dividend payment? (Enter your answer in millions.) New equity $ million d. What will be the total present value of dividends paid each year on the new shares that the company will need to issue? (Enter your answer in millions.) Present value $ million e. What will be the transfer of value from the old shareholders to the new shareholders? (Enter your answer in millions.) Transfer of value $ million f. Is this figure more than, less than, or the same as the extra dividend that the old shareholders will receive? More than Less than The same Question 3 The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Stock A B C Expected Dividend $ 0 6 11 Expected Capital Gain $ 11 6 0 a. If each stock is priced at $100, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 45% (The effective tax rate on dividends received by corporations is 10.5%), and (iii) an individual with an effective tax rate of 10% on dividends and 5% on capital gains? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Stock Pension A Investor Corporation Individual % % % % C % % B % % % b. Suppose that investors pay 40% tax on dividends and 10% tax on capital gains. If stocks are priced to yield an aftertax return of 10%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Stock A Price $ B C $ $ Question 4 The following is the financial statement of Executive Fruit Company for the year ended December 2014. INCOME STATEMENT, 2014 (Figures in $ Thousands) Revenue $ Cost of goods sold EBIT $ Interest Earnings before taxes $ State and federal tax Net income $ Dividends Additions to retained $ earnings 6,000 5,400 600 120 480 192 288 192 96 BALANCE SHEET (YearEnd, 2014) (Figures in $ Thousands) Assets Net working capital Fixed assets Total assets $ $ Liabilities and shareholders' equity Longterm debt Shareholders' equity Total liabilities and shareholders' equity 600 2,400 3,000 $ $ 1,200 1,800 3,000 The following are the first stage and second stage pro forma financial statements of Executive Fruit Company for the year ended December 2015. First stage pro forma statements: PRO FORMA INCOME STATEMENT, 2015 (Figures in $ Thousands) Revenue $ Cost of goods sold 6,600 5,940 EBIT Interest Earnings before taxes State and federal tax Net income Dividends Additions to retained earnings $ $ $ $ 660 120 540 216 324 216 108 PRO FORMA BALANCE SHEET (YearEnd, 2015) (Figures in $ Thousands) Assets Net working capital $ Fixed assets Total assets $ Liabilities and shareholders' equity Longterm debt Shareholders' equity Total liabilities and shareholders' equity $ $ Required external financing 660 2,640 3,300 1,200 1,908 3,108 $ 192 Second stage pro forma balance sheet: PRO FORMA BALANCE SHEET (YearEnd, 2015) (Figures in $ Thousands) Assets Net working capital $ Fixed assets Total assets $ Liabilities and shareholders' equity Longterm debt Shareholders' equity Total liabilities and shareholders' equity 660 2,640 3,300 $ $ 1,392 1,908 3,300 How would Executive Fruit's financial model change if the dividend payout ratio were cut to 1/3? Use the revised model to generate a new financial plan for 2015 assuming that debt is the balancing item. What would be the required external financing? (Do not round intermediate calculations.) Dividends fall by $ . Therefore, the requirement for external financing falls from $ . On the other hand, shareholders' equity will be increased by $ . The righthand side of the balance sheet becomes (Do not round intermediate calculations. Enter your answers in thousands.): Longterm debt $ Shareholders' equity Total $ to $ Question 5 Find the sustainable and internal growth rates for a firm with the following ratios: asset turnover = 1.80; profit margin = 4%; payout ratio = 20%; equity/assets = .50. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Sustainable growth rate Internal growth rate % % Hints References question 6 Executive Fruit's financial manager believes that sales in 2015 could rise by as much as 20% or by as little as 10%. Assets and costs change in proportion to sales, debt remains constant, and no new equity financing occurs. a. Recalculate the firststage pro forma financial statements under these two growth assumptions and calculate the required external financing (All figures are in thousands). (Enter your answers in thousands.) Base Case 20% Growth 10% Growth INCOME STATEMENT Revenue $ 5,500 Cost of goods sold 4,950 $ $ 550 Interest 110 $ $ 440 State and federal tax 176 $ $ 264 Dividends 176 $ $ 88 $ $ $ $ 550 Fixed assets 2,200 $ Net working capital Retained earnings $ Net income Earnings before taxes $ EBIT Assets BALANCE SHEET Total assets $ 2,750 $ $ $ $ Liabilities and shareholders' equity Longterm debt $ 1,100 Shareholders' equity 1,650 $ $ 2,750 $ Required external financing $ Total liabilities and shareholders' equity $ $ $ b. Assume any required external funds will be raised by issuing longterm debt and that any surplus funds will be used to retire such debt. Prepare the completed (secondstage) pro forma balance sheet. (Enter your answers in thousands.) Assets BALANCE SHEET Base Case Net working capital $ 550 Fixed assets 2,200 20% Growth $ 10% Growth $ Total assets $ 2,750 $ Longterm debt $ 1,100 Shareholders' equity 1,650 $ $ 2,750 $ Total liabilities and shareholders' equity Liabilities and shareholders' equity $ $ $ Question 7 Plank's Plants had net income of $10,000 on sales of $100,000 last year. The firm paid a dividend of $400. Total assets were $600,000, of which $300,000 was financed by debt. a. What is the firm's sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) Sustainable growth rate % b. If the firm grows at its sustainable growth rate, how much debt will be issued next year? (Do not round intermediate calculations.) New debt $ c. What would be the maximum possible growth rate if the firm did not issue any debt next year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Maximum growth rate Question 8 % An allequityfinanced firm plans to grow at an annual rate of at least 17%. Its return on equity is 30%. What is the maximum possible dividend payout rate the firm can maintain without resorting to additional equity issues? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) Maximum dividend payout ratio % Question 9 The 2015 financial statements for Growth Industries are presented below: Sales Costs EBIT Interest expense Taxable income Taxes (at 35%) Net income INCOME STATEMENT, 2015 $ 14,300 14,300 210,000 155,000 $ 55,000 11,000 $ 44,000 15,400 $ 28,600 Dividends Addition to retained earnings $ Assets Current assets Cash Accounts receivable Inventories Total current assets Net plant and equipment Total assets $ $ BALANCE SHEET, YEAREND, 2015 Liabilities Current liabilities 4,000 Accounts payable 9,000 Total current liabilities 27,000 Longterm debt 40,000 Stockholders' equity $ 11,000 $ 11,000 110,000 150,000 Common stock plus additional paidin capital 15,000 Retained earnings 190,000 Total liabilities and stockholders' equity 54,000 $ 190,000 $ Sales and costs in 2016 are projected to be 20% higher than in 2015. Both current assets and accounts payable are projected to rise in proportion to sales. The fixed assets of Growth Industries are operating at only 75% of capacity. Interest expense in 2016 will equal 10% of longterm debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of .50. What is the required external financing over the next year? Even if sales increase by 20%, the firm still has more than enough fixed assets to meet production. Only working capital will increase. Net working capital of the firm in 2015 was $ . The increase in net working capital will be $ , which is less than the increase in the retained earnings. Thus required external financing is $ . A negative external financing value indicates the firm will generate more cash than it needs to finance the projected growth. This extra cash can be used to reduce debt, repurchase shares, increase cash reserves, or fund future growth. This extra cash was primarily due to the firm's excess production capacity