Semester 2 2020 Triple Corporation is all equity financed with total assets valued at $1 milion which are assumed constant. The corporation's ordinary shares are valued at $25 each, and the fimm is in the 40 percent tax bracket. The corporation wishes to analyze tive posible Gapital structures-0.15.30, 45, and 60 percent debt-equity ratos Exhibk1 shows the additional data which have been gathered for use in analyzing the two capital structures under consideration Exhibit 1: Triple D Corporation's alternative capital structures Capital structure Interest rate on debt debt equity ratio 0.0% 15 80 10.0 11350 60 17.0 30 25 The company's incomments for the previous three year indicated in Exhibit 2. The balance Set for the same period are shown in Echt ExNb 2 TIUPLE O CORPORATION Income Statement 2017 2018 51.5.000 51.000.000 B5 111720.00 550.000 an 331000 TOXO 170.000 190.000 FOCO 400 140.000 190.000 40 598.692 5101,280 ex 40.000 2019 52430 000 TO) 250.000 To E270 Sonced Cost of goods Grompre Seling and admin Oparating profil Ini per Net income before anus. To Net Income Ehres 185,000 14450 5520.160 OXO 1 $20.000 $29.000 23000 1000 500.00 3000 SO 725000 TATTOO Exhibit Triple D CORPORATION Balance Sheets 2017 Cash $20.000 Market 2005 Accounts receive 150000 Inventory Total Current Assets TO Net Plant and boomer Total Assets 51. X Liabilities Equity Account 310000 Notes paratie! DO Current batetis 2000 Lorgelowe Tors Common 000 400.000 Cataludin se 50 000 100RMI Testy 0.000 Toves and stochod 100 5725 000 SEXO $200 000 TO 500.000 20 1.050 400.000 10.000 oon 50.000 CITO 20 12 The actual sales and purchases for Triple D Corporation for September and October 2019, along with its forecast sales and purchases for the period November 2019 through April 2020 are as follows Exhib & Triple D corporation's Projected sales and purchases Year Morr Sares Purchases September $210000 $120.000 2010 October 10000 2010 November 120.00 2019 Dace 100.000 2000 January 140.000 10.000 February 100.000 . Loch EXOS 10000 200 1 250.000 10 The Firm makes 20 percent of sales for cash and collects on 4 percent of sales in each of the two months to owing the sale. Other chinos are expected to be $12,000 in September and April $15,000 in January and Marchand $27,000 in February. The fim para cash for 10 percent of its purchases. It pays for 50 percent of is purchases in the following month and for 4 percent of its purchases two months Question 3 (30 marks) (a) Determine the total cash receipts for each moth, November through April (9 marks) (b) Determine the total cash payments for each moth, November through April (9 marks) (c) Assuming that the firm has a cash balance of $22,000 at the beginning of November 2019, determine the end-of-month cash balances for each month, November through April. (9 marks) (d) Assuming that the firm wishes to maintain a $15,000 minimum cash balance, determine the monthly total financing requirements or excess cash balances (3 marks) Triple D Corporation is all equity financed with total assets valued at $1 million, which are assumed constant. The corporation's ordinary shares are valued at $25 each, and the firm is in the 40 percent tax bracket. The corporation wishes to analyze five possible capital structures-0, 15, 30, 45, and 60 percent debt-equity ratios. Exhibit 1 shows the additional data which have been gathered for use in analyzing the five capital structures under consideration. Exhibit 1: Triple D Corporation's alternative capital structures Capital structure Interest rate on debt debt-equity ratio 0% 0.0% 15 8.0 30 10.0 45 13.0 60 17.0 The company's income statements for the previous three years are indicated in Exhibit 2. The balance Sheets for the same period are shown in Exhibit 3. Exhibit 2 TRIPLE D CORPORATION Income Statements 2017 Sales (all on credit) $1,500,000 Cost of goods sold.. 950.000 Gross profit.... 550,000 Selling and administrative expense. 380,000 Operating profit.. 170,000 Interest expense. 30.000 Net income before taxes 140,000 Taxes.. 46,120 Net Income $93,880 Shares 40.000 2018 $1,800,000 1,120,000 680,000 490,000 190,000 40.000 150,000 48.720 $101,280 40.000 2019 $2,160,000 1.300.000 860,000 590,000 270,000 85.000 185,000 64.850 $120,150 46.000 1 The firm makes 20 percent of all sales for cash and collects on 40 percent of its sales in each of the two months following the sale. Other cash inflows are expected to be $12,000 in September and April, $15,000 in January and March, and $27,000 in February. The firm pays cash for 10 percent of its purchases. It pays for 50 percent of its purchases in the following month and for 40 percent of its purchases two months later. 2 Wages and salaries amount to 20 percent of the preceding month's sales. Rent of $20,000 per month must be paid. Interest payments of $10,000 are due in January and April. A principal payment of $30,000 is also due in April. The firm expects to pay cash dividends of $20,000 in January and April. Taxes of $80,000 are due in April. The firm also intends to make a $25,000 cash purchase of fixed assets in December. Triple D Corporation is considering to bring out one of two games this season. The Signs Away game has a higher initial cost but also a higher expected return. Monopolistic Competition, the alternative, has a slightly lower initial cost but also lower expected return. The present values and probabilities associated with each game are listed in Exhibit 5: Exhibit 5: Triple D Corporation's investment choices Game Initial Investment Sign Away $140,000 Present value of Probabilities cash inflows 1.00 $320,000 0.30 220,000 0.50 -80,000 0.20 1.00 $120,000 Monopolistic Competition $260,000 200,000 -50,000 0.20 0.45 0.35 Question 3 (30 marks) (a) Determine the total cash receipts for each moth, November through April (9 marks) (b) Determine the total cash payments for each moth, November through April (9 marks) (c) Assuming that the firm has a cash balance of $22,000 at the beginning of November 2019, determine the end-of-month cash balances for each month, November through April. (9 marks) (d) Assuming that the firm wishes to maintain a $15,000 minimum cash balance, determine the monthly total financing requirements or excess cash balances. (3 marks) Semester 2 2020 Triple Corporation is all equity financed with total assets valued at $1 milion which are assumed constant. The corporation's ordinary shares are valued at $25 each, and the fimm is in the 40 percent tax bracket. The corporation wishes to analyze tive posible Gapital structures-0.15.30, 45, and 60 percent debt-equity ratos Exhibk1 shows the additional data which have been gathered for use in analyzing the two capital structures under consideration Exhibit 1: Triple D Corporation's alternative capital structures Capital structure Interest rate on debt debt equity ratio 0.0% 15 80 10.0 11350 60 17.0 30 25 The company's incomments for the previous three year indicated in Exhibit 2. The balance Set for the same period are shown in Echt ExNb 2 TIUPLE O CORPORATION Income Statement 2017 2018 51.5.000 51.000.000 B5 111720.00 550.000 an 331000 TOXO 170.000 190.000 FOCO 400 140.000 190.000 40 598.692 5101,280 ex 40.000 2019 52430 000 TO) 250.000 To E270 Sonced Cost of goods Grompre Seling and admin Oparating profil Ini per Net income before anus. To Net Income Ehres 185,000 14450 5520.160 OXO 1 $20.000 $29.000 23000 1000 500.00 3000 SO 725000 TATTOO Exhibit Triple D CORPORATION Balance Sheets 2017 Cash $20.000 Market 2005 Accounts receive 150000 Inventory Total Current Assets TO Net Plant and boomer Total Assets 51. X Liabilities Equity Account 310000 Notes paratie! DO Current batetis 2000 Lorgelowe Tors Common 000 400.000 Cataludin se 50 000 100RMI Testy 0.000 Toves and stochod 100 5725 000 SEXO $200 000 TO 500.000 20 1.050 400.000 10.000 oon 50.000 CITO 20 12 The actual sales and purchases for Triple D Corporation for September and October 2019, along with its forecast sales and purchases for the period November 2019 through April 2020 are as follows Exhib & Triple D corporation's Projected sales and purchases Year Morr Sares Purchases September $210000 $120.000 2010 October 10000 2010 November 120.00 2019 Dace 100.000 2000 January 140.000 10.000 February 100.000 . Loch EXOS 10000 200 1 250.000 10 The Firm makes 20 percent of sales for cash and collects on 4 percent of sales in each of the two months to owing the sale. Other chinos are expected to be $12,000 in September and April $15,000 in January and Marchand $27,000 in February. The fim para cash for 10 percent of its purchases. It pays for 50 percent of is purchases in the following month and for 4 percent of its purchases two months Question 3 (30 marks) (a) Determine the total cash receipts for each moth, November through April (9 marks) (b) Determine the total cash payments for each moth, November through April (9 marks) (c) Assuming that the firm has a cash balance of $22,000 at the beginning of November 2019, determine the end-of-month cash balances for each month, November through April. (9 marks) (d) Assuming that the firm wishes to maintain a $15,000 minimum cash balance, determine the monthly total financing requirements or excess cash balances (3 marks) Triple D Corporation is all equity financed with total assets valued at $1 million, which are assumed constant. The corporation's ordinary shares are valued at $25 each, and the firm is in the 40 percent tax bracket. The corporation wishes to analyze five possible capital structures-0, 15, 30, 45, and 60 percent debt-equity ratios. Exhibit 1 shows the additional data which have been gathered for use in analyzing the five capital structures under consideration. Exhibit 1: Triple D Corporation's alternative capital structures Capital structure Interest rate on debt debt-equity ratio 0% 0.0% 15 8.0 30 10.0 45 13.0 60 17.0 The company's income statements for the previous three years are indicated in Exhibit 2. The balance Sheets for the same period are shown in Exhibit 3. Exhibit 2 TRIPLE D CORPORATION Income Statements 2017 Sales (all on credit) $1,500,000 Cost of goods sold.. 950.000 Gross profit.... 550,000 Selling and administrative expense. 380,000 Operating profit.. 170,000 Interest expense. 30.000 Net income before taxes 140,000 Taxes.. 46,120 Net Income $93,880 Shares 40.000 2018 $1,800,000 1,120,000 680,000 490,000 190,000 40.000 150,000 48.720 $101,280 40.000 2019 $2,160,000 1.300.000 860,000 590,000 270,000 85.000 185,000 64.850 $120,150 46.000 1 The firm makes 20 percent of all sales for cash and collects on 40 percent of its sales in each of the two months following the sale. Other cash inflows are expected to be $12,000 in September and April, $15,000 in January and March, and $27,000 in February. The firm pays cash for 10 percent of its purchases. It pays for 50 percent of its purchases in the following month and for 40 percent of its purchases two months later. 2 Wages and salaries amount to 20 percent of the preceding month's sales. Rent of $20,000 per month must be paid. Interest payments of $10,000 are due in January and April. A principal payment of $30,000 is also due in April. The firm expects to pay cash dividends of $20,000 in January and April. Taxes of $80,000 are due in April. The firm also intends to make a $25,000 cash purchase of fixed assets in December. Triple D Corporation is considering to bring out one of two games this season. The Signs Away game has a higher initial cost but also a higher expected return. Monopolistic Competition, the alternative, has a slightly lower initial cost but also lower expected return. The present values and probabilities associated with each game are listed in Exhibit 5: Exhibit 5: Triple D Corporation's investment choices Game Initial Investment Sign Away $140,000 Present value of Probabilities cash inflows 1.00 $320,000 0.30 220,000 0.50 -80,000 0.20 1.00 $120,000 Monopolistic Competition $260,000 200,000 -50,000 0.20 0.45 0.35 Question 3 (30 marks) (a) Determine the total cash receipts for each moth, November through April (9 marks) (b) Determine the total cash payments for each moth, November through April (9 marks) (c) Assuming that the firm has a cash balance of $22,000 at the beginning of November 2019, determine the end-of-month cash balances for each month, November through April. (9 marks) (d) Assuming that the firm wishes to maintain a $15,000 minimum cash balance, determine the monthly total financing requirements or excess cash balances