Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

This question utilizes the information for Iris Inc. found on ACORN. For the company, answer each of the following: . The firm's forecasted cash receipts

image text in transcribed
image text in transcribed
image text in transcribed
This question utilizes the information for Iris Inc. found on ACORN. For the company, answer each of the following: . The firm's forecasted cash receipts for May are $ min The firm's forecasted cash disbursements for May are $ min. min. Assume . For the month of May, Iris Inc will have of $ that you start the month of May with the minimum cash balance. Cafe Corp. has 250,000 shares outstanding and 10,000 coupon bonds. The shares are currently priced at $72.00 each and have a beta of 0.85. The firm's bonds have a coupon rate of 4.5% (paid semi-annually) and 7 years to maturity. The YTM on the bonds is currently 4.5%. The expected return on the S&P TSX Composite Index is 8.5% and the risk-free rate is 1.75%. Assume Cafe Corp.'s marginal tax rate is 25%. The firm's WACC is percent on Consider the following information for Iris Inc.: . . The firm's sales in January, February and March were $1.25 min, $2.25 min and $3.75 mln, respectively. The firm's Cost of Goods Sold is 55% of sales. Management estimate that Mom sales will increase by 15% and 65% in April and May, respectively. The firm's customers typically pay as follows: 35% in cash, 50% in one-month and 12% in two-months. The remainder is written off as bad debt. Iris Inc. pays suppliers as follows: 15% in cash and the remainder in one-month. The firm's salary and wages have a fixed component of $0.55 min and a variable component of 15% of prior months sales. The firm has additional fixed costs of $0.35 mln per month and the firm owes $0.15 min in taxes to CRA, payable in April. Iris Inc. has 15,000 bonds outstanding. The bonds have a coupon rate of 8%, paid April 30th and October 31st of each year. The bonds mature in six years and have a face value of $1,000. Management anticipates declaring a dividend of $0.35 per share in April, payable in May. The firm's current market capitalization is $19.75 mln with a share price of $23.25. The firm owns 500,000 shares of Demeter Corp. stock. Demeter Corp. management announced a dividend of $1.50 per share in March, payable in April. As of March 31st the firm had a cash balance of $0.85 mln and requires a minimum cash balance of $0.65 mln

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance And Economics Discussion Series Should Risky Firms Offer Risk Free DB Pensions

Authors: United States Federal Reserve Board, David A. Love

1st Edition

128870500X, 9781288705009

More Books

Students also viewed these Finance questions

Question

the memory address of the first byte in an on - chip SRAM

Answered: 1 week ago