12-1 AFN Equation
Baxter Video Products’s sales are expected to increase by 20% from $5 million in 2010 to $6 million in 2011. Its assets totaled $3 million at the end of 2010. Baxter is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2010, current liabilities were $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accruals. The after tax profit margin is forecasted to be 5%, and the forecasted payout ratio is 70%. Use the AFN equation to forecast Baxter’s additional funds needed for the coming year.

Problems (pp. 549-550)
13-2 Value of Operations of Constant Growth Firm
13-3 Horizon Value
13-4 EROIC and MVA of Constant Growth Fir

Value of Operations of Constant Growth Firm
EMC Corporation has never paid a dividend. Its current free cash flow of $400,000 is expected to grow at a constant rate of 5%. The weighted average cost of capital is WACC = 12%. Calculate EMC’s value of operations. FCF = $400,000

g = 5%
WACC = 12%
Vop = PV of expected future free cash flow
Vop = = = $6,000,000

(13-3)
Horizon Value
Current and projected free cash flows for Radell Global Operations are shown below. Growth is expected to be constant after 2012, and the weighted average cost of capital is 11%. What is the horizon (continuing) value at 2012?

...to investment banks, which would bundle them into packages and then use these packages as collateral for bonds that could be sold to pension funds, insurance companies, and other institutional investors.
2-6 Statement of Retained Earnings
In its most recent financial statements, Newhouse Inc. reported $50 million of net income and $810 million of retained earnings. The previous retained earnings were $780 million. How much in dividends was paid to shareholders during the year>
$20,000,000.
2-7 Corporate Tax Liability
The Talley Corporation had a taxable income of $365,000 from operations after all operating costs but before (1) interest charges of $50,000, (2) dividends received of $15,000, (3) dividends paid of $25,000, and (4) income taxes. What are the firm’s income tax liability and its after-tax income? What are the company’s marginal and average tax rates on taxable income?
Tax = $107,855;
NI = $222,145;
Marginal tax rate = 39%;
Average tax rate = 33.8%.
2-9 Corporate After-Tax Yield
The Shrieves Corporation has $10,000 that it plans to invest in marketable securities. It is choosing among AT&T bonds, which yield 7.5%, state of Florida muni bonds, which yield 5% (but are not taxable), and AT&T preferred stock, with a dividend yield of 6%. Shrieves’s corporate tax rate is 35%, and 70% of the dividends received are tax exempt. Find the after-tax rates of return on all three securities.
AT&T bond = 4.875%;
AT&T...

...The financial statements of Lioi Steel Fabricators are shown below, with the actual results for 2010 and the projections for 2011. Free cash flow is expected to grow at a 6 percent rate after 2005. The weighted average cost of capital is 11%.
Income Statement for the Year Ending December 31
(Millions of Dollars Except for Per Share Data)
Actual Projected
2010 2011
Net sales $500.0 $530.0
Costs (except depreciation) 360.0 381.6
Depreciation 37.5 39.8
Total Operating Costs $397.5 $421.4
EBIT $102.5 $108.6
Less Interest 13.9 16.0
Earnings before Taxes $ 88.6 $ 92.6
Taxes (40%) 35.4 37.0
Net Income before preferred dividends $ 53.2 $ 55.6
Preferred dividends 6.0 7.4
Net income available for common dividends $ 47.2 $ 48.2
Common Dividends $ 40.8 $ 29.7
Addition to retained earnings $ 6.4 $ 18.5
Number of Shares 10 10
Dividends per share $ 4.08 $ 2.97
Balance Sheet for December 31 (Millions of Dollars)
Actual Projected
Assets 2010 2011
Cash $ 5.3 $ 5.6
Marketable Securities 49.9 51.9
Accounts Receivables 53.0 56.2
Inventories 106.0 112.4
Total Current Assets $214.2 $226.1
Net Plant and Equipment 375.0 397.5
Total Assets $589.2 $623.6...

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MAT 540 Week6Homework
Complete the following problems from Chapter 2:
1. Problems 2, 6, 7, 12, 16, 20
2. Chapter 2
2. A company produces two products that are processed on two assembly lines. Assembly line 1 has 100 available hours, and assembly line 2 has 42 available hours. Each product requires 10 hours of processing time on line 1, while on line 2 product 1 requires 7 hours and product 2 requires 3 hours. The profit for product 1 is $6 per unit, and the profit for product 2 is $4 per unit.
a. Formulate a linear programming model for this problem.
b. Solve the model by using graphical analysis.
6. The Pinewood Furniture Company produces chairs and tables from two resources – labor and wood. The company has 80 hours of labor and 36 board-ft. of wood available each day. Demand for chairs is limited to 6 per day. Each chair requires 8 hours of labor and 2 board-ft. of wood, whereas a table requires 10 hours of labor and 6 board-ft. of wood. The profit derived from each chair is $400 and from each table, $100. The company wants to determine the number of chairs and tables to produce each day in order to maximize profit. Formulate a linear programming model for this problem.
a. Formulate a linear programming model for this problem.
b. Solve the model by using graphical analysis. ...

...TCO 1) What is the purpose behind the five primary activities in the value chain?
First, info flow diagrams and flowcharts argon the two most much utilize development and musical accompaniment tools employ today. Second, since systems developme nt is super complex, DFDs and flowcharts ar! e tools that are used to fix order from sanatorium and complexity.Â (Ch 3, p. 50)| | | Â | Points Received:| 4 of 5| Â | Comments:| First, data flow diagrams and flowcharts are the two most frequently used development and documentation tools used today. Second, since systems development is extremely complex, DFDs and flowcharts are tools that are used to create order from chaos and complexity.| |
TCO 1) Name two reasons why it is important to have a working knowledge of DFDs and flowcharting. (Points TCO 1) Name two reasons why it is important to have a working knowledge of DFDs and flowcharting. (Points
The flow diagram and the flowcharts are the two more common systems use. Also when it comes to the system development they can get very complex meaning that the DFD and the flowchart are tools that can be used to create order form chaos and complexity.
TCO 1) What is the purpose behind the five primary activities in the value chain?
First, info flow diagrams and flowcharts argon the two most much utilize development and musical accompaniment tools employ today. Second, since systems developme nt is super complex, DFDs and flowcharts ar! e tools that are used to fix order from...

...FIN 515WEEK 4 HOMEWORK ASSIGNMENT
(7–2)
Constant Growth Valuation
Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e., D1 = $1.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 15%. What is the value per share of Boehm’s stock?
For this problem we can use the formula from the book P=d1(R-G) to find the price. We just need to plug in the values... so, 1.5/(8% [15-7]). The value is 18.75.
(7–4)
Preferred Stock Valuation
Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the end of each year. The preferred sells for $50 a share. What is the stock’s required rate of return?
From the book we discover that we simply need to plug into the formula, r=5/50. The required rate of return should be 10 percent.
(7–5)
Nonconstant Growth Valuation
A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the company’s dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 7% thereafter. The company’s stock has a beta of 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock’s current price?
I used the financial calculator online for this problem, but we can find it manually...
To solve this problem we need to first calculate the required rate of...

...Running head: Week 1 Assignment
Week 1 Assignment:
Mini Case (p.45)
Problems (p.79)
Alisha Clarke
Managerial Finance
Week 1 Assignment
Professor Gaggar
September 9, 2012
a) Why is corporate finance important to all managers?
Corporate finance is important because it enables managers to have an understanding of what funds would be necessary for upcoming projects and projects of their company as well as allowing them to plan ahead.
b) Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form.
When a company is evolving from a start up to a major corporation, it will probably have to grow through the stages of sole proprietorship, partnership, and then a corporation. A sole proprietorship has advantages such as being easily and inexpensively formed and has to deal with less regulation by the government. Some of the disadvantages of a sole proprietorship include difficulties with obtaining capital to enable. The life of a cole proprietorship is limited to the life of the owner Some of the advantages to a partnership are similar to that of a sole proprietorship, however there is more of a liability placed on partnerships because they are responsible for the company’s debt. When it comes to a corporation, the advantages included the unlimited life of the company despite the death of the owners. Also,...

...
This archive file of FIN 515Week6 Problems Solutions contains:
Prob 16-1
Prob 16-2
Prob 16-3
Prob 16-4
Prob 16-5
Business - General Business
1. (TCO A) Which of the following does NOT always increase a company's market value? (Points : 5)
Increasing the expected growth rate of sales
Increasing the expected operating profitability (NOPAT/Sales)
Decreasing the capital requirements (Capital/Sales)
Decreasing the weighted average cost of capital
Increasing the expected rate of return on invested capital
2. (TCO F) Which of the following statements is correct? (Points : 5)
The NPV, IRR, MIRR, and discounted payback (using a payback requirement of 3 years or less) methods always lead to the same accept/reject decisions for independent projects.
For mutually exclusive projects with normal cash flows, the NPV and MIRR methods can never conflict, but their results could conflict with the discounted payback and the regular IRR methods.
Multiple IRRs can exist, but not multiple MIRRs. This is one reason some people favor the MIRR over the regular IRR.
If a firm uses the discounted payback method with a required payback of 4 years, then it will accept more projects than if it used a regular payback of 4 years.
The percentage difference between the MIRR and the IRR is equal to the project’s WACC....

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MAT540 Week 3 Homework
Chapter 14
1. The Hoylake Rescue Squad receives an emergency call every 1, 2, 3, 4, 5, or 6 hours, according to the following probability distribution. The squad is on duty 24 hours per day, 7 days per week:
Time Between
Emergency Calls (hr.)
Probability
1
0.05
2
0.10
3
0.30
4
0.30
5
0.20
6
0.05
1.00
a. Simulate the emergency calls for 3 days (note that this will require a “running”, or cumulative, hourly clock), using the random number table.
b. Compute the average time between calls and compare this value with the expected value of the time between calls from the probability distribution. Why are the results different?
2. The time between arrivals of cars at the Petroco Service Station is defined by the following probability distribution:
Time Between
Arrivals (min.)
Probability
1
0.15
2
0.30
3
0.40
4
0.15
1.00
a. Simulate the arrival of cars at the service station for 20 arrivals and compute the average time between arrivals.
b. Simulate the arrival of cars at the service station for 1 hour, using a different stream of random numbers from those used in (a) and compute the average time between arrivals.
c. Compare the results obtained in (a) and (b).
3. The Dynaco Manufacturing Company produces a product in a process consisting of operations of five machines. The probability...