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AFN equation
Broussard Skateboard's sales are expected to increase by 20% from $7.8 million in 2016 to $9.36 million in 2017. Its assets totaled $4 million at the end of 2016. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 4%, and the forecasted payout ratio is 75%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. . Do not round intermediate calculations. $
Hubbard Industries is an? all-equity firm whose shares have an expected return of 9.4 %. Hubbard does a leveraged? recapitalization, issuing debt and repurchasing? stock, until its? debt-equity ratio is 0.49. Due to the increased? risk, shareholders ..
A 6%, 3-year bond yields 12% and a 10%, 3-year bond yields 8%. Calculate the 3-year spot rate. Assume annual coupon payments.
You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 12 percent, –9 percent, 20 percent, 17 percent, and 10 percent. What was the average real risk-free rate over this time period?
Green Manufacturing, Inc., plans to announce that it will issue $1.91 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a coupon rate of 7 percent. Green is currently an all-equity firm worth $..
What is an IPO, and what role does an investment banker play in the process? Suppose you own a security that you know can be easily sold in the secondary market, but the security will sell at a lower price than you paid for it. What would this mean f..
Payback period Jordan Enterprises is considering a capital expenditure. Determine the payback period for this project. Should the company accept the project? Why or why not?
Consider an asset that costs $664,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $178,000. If the relevant tax rate is 35..
How can you estimate the impact of the policy change? What is the name for this type of estimation?- What are the assumptions you have to make for this to be a valid estimate of the impact of the policy change?
Badlands, Inc. reports the following information for the year ended December 31: Units sold 640 units Sales price $120 per unit Direct materials $28 per unit Direct labor $9 per unit Variable manufacturing overhead $15 per unit Fixed manufacturing ov..
Corporate income tax/ Meyer Inc has taxable income (earnings before taxes) of 300,000. Calcualte Meyer's federal income tax liability using the tax table . What are the firm's average and marginal taxes?
A firm’s profit margin is 5 percent, its debt/assets ratio is 56 percent, and its dividend payout ratio is 40 percent. If the firm is operating at less than full capacity. Then sales could increase to some extent without the need for external funds, ..
You have finally saved $10,000 and are ready to make your first investment. You have the three following alternatives for investing that money: Calculate the value of each investment based on you required rates of return. Which investment would you s..
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