shown here: Income Statement Balance Sheet Sales 14,800 Current assets 6,084 Current Liabilities 1,244 Costs 13,840 Fixed assets 5,183 Long-term debt 2,487 Taxable income 960 Equity 7,036 Taxes (35%) 336 Retained earning 500 Net income 624 Total 11.267 Total 11,267 1. The most recent financial statements for ABC, Inc. are shown here: The company is running at full capacity and the company maintains a constant 50 percent dividend payout ratio. Like every other firm in its industry, next year's sales are projected to increase by exactly 12 percent. What is the external financing needed (EFN) and plug variable options to adjust this EFN? 2. Almarai Company has the following financial information for 2019: Sales = 14,451 M Net Income 1,811 M Addition to retained earning = 1,121 M Total Assets = 33,148 M Total Equity = 14,653 M 1. What is Almarai Company retention ratio? 2. Almarai Company does not want to incur any additional external financing. The dividend payout ratio is constant. What is the firm's maximum rate of growth? If Almarai Company decides to maintain a constant debt- 3 equity ratio, what rate of growth can it maintain assuming ?that no additional external equity financing is available You are considering a new product launch. Thus far, .3 you have determined that an OCF of SAR 1.5 m will result in a zero net present value for the project, which is the minimum requirement for project acceptance. You have computed its fixed costs to be SAR 550 per unit for annual sales of 1,800 units. The price per unit will be $2,400 and variable cost per unit will be $1,200. You feel that it can realistically capture 2.25 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 4. Precision Tool is trying to decide whether to lease or buy some new equipment for its tool and die operations. The equipment costs $1.2 million has a 7-year life, and will be worthless after the 7 years. The pre-tax cost of borrowed funds is 8 percent and the tax rate is 32 percent. The equipment can be leased for $242,500 a year. What is the net advantage to leasing and what will be the decision to buy or lease? shown here: Income Statement Balance Sheet Sales 14,800 Current assets 6,084 Current Liabilities 1,244 Costs 13,840 Fixed assets 5,183 Long-term debt 2,487 Taxable income 960 Equity 7,036 Taxes (35%) 336 Retained earning 500 Net income 624 Total 11.267 Total 11,267 1. The most recent financial statements for ABC, Inc. are shown here: The company is running at full capacity and the company maintains a constant 50 percent dividend payout ratio. Like every other firm in its industry, next year's sales are projected to increase by exactly 12 percent. What is the external financing needed (EFN) and plug variable options to adjust this EFN? 2. Almarai Company has the following financial information for 2019: Sales = 14,451 M Net Income 1,811 M Addition to retained earning = 1,121 M Total Assets = 33,148 M Total Equity = 14,653 M 1. What is Almarai Company retention ratio? 2. Almarai Company does not want to incur any additional external financing. The dividend payout ratio is constant. What is the firm's maximum rate of growth? If Almarai Company decides to maintain a constant debt- 3 equity ratio, what rate of growth can it maintain assuming ?that no additional external equity financing is available You are considering a new product launch. Thus far, .3 you have determined that an OCF of SAR 1.5 m will result in a zero net present value for the project, which is the minimum requirement for project acceptance. You have computed its fixed costs to be SAR 550 per unit for annual sales of 1,800 units. The price per unit will be $2,400 and variable cost per unit will be $1,200. You feel that it can realistically capture 2.25 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 4. Precision Tool is trying to decide whether to lease or buy some new equipment for its tool and die operations. The equipment costs $1.2 million has a 7-year life, and will be worthless after the 7 years. The pre-tax cost of borrowed funds is 8 percent and the tax rate is 32 percent. The equipment can be leased for $242,500 a year. What is the net advantage to leasing and what will be the decision to buy or lease
