Finance3

You are given the following information on Kaleb's Kickboxing: Profit margin 6.5 % Capital intensity ratio 0.74 Debt-equity ratio 0.8 Net income $78,000 Dividends $16,000 Calculate the sustainable growth rate.

14.36

Northern Gas recently paid a $2.80 annual dividend on its common stock. This dividend increases at an average rate of 3.8 percent per year. The stock is currently selling for $26.91 a share. What is the market rate of return?

14.60% (Exam 2)

Big Guy Subs has net income of $150,980, a price-earnings ratio of 12.8, and earnings per share of $0.87. How many shares of stock are outstanding?

173,540 (Exam I)

Blackwell bonds have a face value of $1,000 and are currently quoted at 98.4. The bonds have a 5 percent coupon rate. What is the current yield on these bonds?

5.08% (Exam 2)

Today, you borrowed $6,200 on your credit card to purchase some furniture. The interest rate is 14.9 percent, compounded monthly. How long will it take you to pay off this debt assuming that you do not charge anything else and make regular monthly payments of $120?

6.93 years

Major Manuscripts, Inc. 2012 Income Statement Net Sales $17,100 Cost of goods sold 11,200 Depreciation 1,650= Earnings before interest and taxes 4,250 Interest paid 350= Taxable income 3,900 Tax 1,300= Net Income 2,600== Dividends $950 Major Manuscripts, Inc. 2012 Cash $1,040 Accounts Rec. 700 Inventory 7,500= Total 9,240 Net fixed assets 11,400= Total assets 20,640== 2012 Accounts payable $3,350 Long-term debt 2,780 Common stock 10,000 Retained Earnings 4,510= Total liabilities & equity $20,640== Major Manuscripts, Inc., does not want to incur any additional external financing. The dividend payout ratio is constant. What is the firm's maximum rate of growth?

8.69 (Exam 1)

Collingwood Homes has a bond issue outstanding that pays an 8.5 percent coupon and matures in 16.5 years. The bonds have a par value of $1,000 and a market price of $944.30. Interest is paid semiannually. What is the yield to maturity?

9.16% (Exam 2)

You are considering a project which will provide annual cash inflows of $4,500, $5,700, and $8,000 at the end of each year for the next three years, respectively. What is the present value of these cash flows, given a 9 percent discount rate?

$15,103

Nadine is retiring at age 62 and expects to live to age 85. On the day she retires, she has $402,000 in her retirement savings account. She is somewhat conservative with her money and expects to earn 6% during her retirement years. How much can she withdraw from her retirement savings each month if she plans to spend her last penny on the morning of her death?

$2,688.77 (Exam 2)

You would like to give your daughter $75,000 towards her college education 17 years from now. How much money must you set aside today for this purpose if you can earn 8% on your investments?

$20,270.17 (Exam 1)

Free Motion Enterprises paid a $2.20 per share annual dividend last week. Dividends are expected to increase by 3.75 percent annually. What is one share of this stock worth to you today if your required rate of return is 15 percent?

$20.29 (Exam 2)

Crafter's Supply purchased some fixed assets 2 years ago at a cost of $38,700. It no longer needs these assets so it is going to sell them today for $25,000. The assets are classified as 5-year property for MACRS. What is the net cash flow from this sale if the firm's tax rate is 30 percent? MACRS 5-year property Year Rate 1 20.00% 2 32.00% 3 19.20% 4 11.52% 5 11.52% 6 5.76%

$23,072.80 (Exam 3)

You own a classic automobile that is currently valued at $150,000. If the value increases by 6.5% annually, how much will the automobile be worth 10 years from now?

$281,570.62 (Exam 1)

Fake Stone, Inc. Income Statement Net Sales $23,600 Cost of goods sold 14,870 Depreciation 2,800= Earnings before interest and taxes 5,930 Interest paid 670= Taxable income 5,260 Tax 1,840= Net Income 3,420== Dividends $1,368 Fake Stone, Inc. Balance Sheet Cash $930 Accounts Rec. 1,720 Inventory 3,210= Total 5,860 Net fixed assets 19,600= Total assets 25,460== Accounts payable $2,470 Long-term debt 8,800 Common stock 10,000 Retained Earnings 4,190= Total liabilities & equity $25,460== Assume that Fake Stone, Inc., is operating at full capacity. Also assume that assets, costs, and current liabilities vary directly with sales. The dividend payout ratio is constant. What is the external financing need if sales increase by 12%.

$460.56 (Exam 1)

What is the net present value of a project with the following cash flows if the required rate of return is 9 percent? Year Cash Flow 0 -$42,398 1 18,201 2 21,219 3 17,800

$5,904.65 (Exam 3)

Roadside Markets has a 6.75 percent coupon bond outstanding that matures in 10.5 years. The bond pays interest semiannually. What is the market price per bond if the face value is $1,000 and the yield to maturity is 7.2 percent?

$967.24 (Exam 2)

Champion Bakers uses specialized ovens to bake its bread. One oven costs $689,000 and lasts about 4 years before it needs to be replaced. The annual OCF per oven is -$41,000. What is the equivalent annual cost of an oven if the required rate of return is 13 percent?

-$272,638 (Exam 3)

Diamond Eyes, Inc., has sales of $28 million, total assets of $26.5 million, and total debt of $7.3 million. Assume the profit margin is 7%. What is Net Income? What is ROA? What is ROE?

Net Income: $1,960,000 ROA: 7.40% ROE: 10.21%

Based on the profitability index rule, should a project with the following cash flows be accepted if the discount rate is 14 percent? Why or why not? Year Cash Flow 0 -$32,100 1 $11,800 2 $0 3 $22,600

No; The PI is 0.80 (Exam 3)

If Roten Rooters, Inc., has an equity multiplier of 1.63, total asset turnover of 2.50, and a profit margin of 4.3 %, what is its ROE?

ROE: 17.52%