What is the practical limit based on liquidity

Assignment Help Financial Management
Reference no: EM131336275

Planetary Travel Co. has $165,000,000 in stockholders’ equity. Common stock is $60,000,000 and the balance is retained earnings. The firm has $255,000,000 in total assets and 5 percent of this value is in cash. Earnings for the year are $27,000,000 and are included in retained earnings.

a. What is the legal limit on current dividends? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g., $1,234,000).)

b. What is the practical limit based on liquidity? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g., $1,234,000).)

Reference no: EM131336275

Questions Cloud

Create a table similar to the sample : Create a table similar to the sample above, or use another method to list the risk, the likelihood of occurrence, and the overall severity of impact if it occurs
Relate the strategic management theory : Relate the strategic management theory to a practical situation; for example, apply the ideas and knowledge discussed in the coursework to the practical situation at hand in the case study.
What is percentage change in price of bond : Both bond A and bond B have 7 percent coupons and are priced at par value. Bond A has 5 years to maturity, while bond B has 16 years to maturity. If interest rates suddenly rise by 1.4 percent, what is the percentage change in price of bond A and bon..
Describing the issues facing ports in the future : Create a reflection post describing the issues facing ports in the future. Provide a summation of how you will use these lessons in the future.
What is the practical limit based on liquidity : Planetary Travel Co. has $165,000,000 in stockholders’ equity. Common stock is $60,000,000 and the balance is retained earnings. The firm has $255,000,000 in total assets and 5 percent of this value is in cash. Earnings for the year are $27,000,000 a..
Appropriate critical elements : How do you think the use of JIT and/or automation in the successful companies has addressed the 12 critical elements identified in Chapter 1, Key Elements of Total Quality? Be specific when referring to the appropriate critical elements and give e..
How talent management strategy can proactively attract work : Considering the vast number of diverse groups represented in the workforce, create a brief research agenda that addresses how talent management strategy can proactively attract a diverse workforce.The course has covered a wide variety of talent m..
What must expected return on the market be : A stock has an expected return of 11.6 percent, its beta is .91, and the risk-free rate is 5.8 percent. What must the expected return on the market be?
Best for promoting continual improvement : What approach do you think is best for promoting continual improvement, and why? Be as specific as possible in explaining your choice of approach and include relevant theory, and/or examples, as appropriate.

Reviews

Write a Review

 

Financial Management Questions & Answers

  Debt outstanding-expected to grow at constant rate

Marie Corp. has $1400 in debt outstanding (market value) and $2900 in common stock. Its marginal tax rate is 35%. Marie's semi-annual bonds have a YTM of 8.6%. The current stock price is $47. Next year's dividend is expected to be $2.50, and it is ex..

  Percentage of company capital structure consists of debt

Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 8%, and its common stock currently pays a $3.50 dividend per share (D0 = $3.50). The stock's price is currently $29.50, its dividend is expected t..

  Cost of research is incremental cash flow

You must evaluate a proposal to buy a new milling machine. The base price is $167,000, and shipping and installation costs would add another $9,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $100,200. The c..

  Developing drugs for neurological diseases

A young listed company developing drugs for neurological diseases. So far the company has not shown any sales due to the typically long lead times to produce medicines. The market now is on is volatile, its beta value = 2 , the access to capital is u..

  Collingwood homes has a bond issue outstanding

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?

  Recommendation on the net present value of the outlay

Cautionary? Tales, Inc., is considering the acquisition of Danger Corp. at its asking price of ?$160,000. Cautionary would immediately sell some of? Danger's assets for ?$16,000 if it makes the acquisition. Danger has a cash balance of ?$1,600 at the..

  Design a crisis management system for bridgestone

Even though its name sounds decidedly Western, Bridgestone Corporation, one of the world's largest tire manufacturers, is a Japanese company through and through. What went wrong? Imagine that it is a few years ago, before there was any trouble, and y..

  Save money for a down payment on the new house

You plan to buy a house in 10 years. You want to save money for a down payment on the new house. You are able to place $406 every month at the end of the month into a savings account at an annual rate of 7.07 percent, compounded monthly. How much mon..

  What is your return rate in one year

Last year, you purchased a $1,000 par value bond with a 7.5% annual coupon and a 20-year maturity. At the time of the purchase, it had an expected YTM of 8%. After receiving the coupon, you sold the bond today for $930. What is your return rate in on..

  What is proper cash flow amount to use as initial investment

Kenny, Inc., is looking at setting up a new manufacturing plant in South Park. The company bought some land six years ago for $7.7 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent fac..

  Market returns do not resemble single-index structure

Assume that stock market returns do not resemble a single-index structure. (a) Assume that stock market returns do not resemble a single-index structure. An investment fund analyzes 2,000 stocks in order to construct a mean-variance efficient portfol..

  What was the net income after-tax

Delta Ray Brands Corp. just completed their latest fiscal year. The firm had sales of $16,589,900. Depreciation and amortization was $817,800, interest expense for the year was $836,900, and selling general and administrative expenses totaled $1,590,..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd