Question
SHOW WORK FOR CALCULATIONS 1. Complete questions: Define each of the following terms: a. Operating plan; financial plan b. Spontaneous liabilities; profit margin; payout ratio
SHOW WORK FOR CALCULATIONS
1. Complete questions: Define each of the following terms:
a. Operating plan; financial plan
b. Spontaneous liabilities; profit margin; payout ratio
c. Additional funds needed (AFN); AFN equation; capital intensity ratio; self-supporting growth rate
d. Forecasted financial statement approach using percentage of sales e. Excess capacity; lumpy assets; economies of scale
f. Full capacity sales; target fixed assets to sales ratio; required level of fixed assets
2. Complete problem: Premium for Financial Risk XYZ, Inc. has an unlevered beta of 1.0. They are financed with 50% debt and has a levered beta of 1.6. If the risk-free rate is 5.5% and the market risk premium is 6%, how much is the additional premium that XYZ, Inc. shareholders require to be compensated for financial risk? Show your work.
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