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Part One: External Funding Requirement
Your company, Martin Industries, Inc., has experienced a higher than expected demand for its new product line. The company plans to expand its operation by 25% by spending $5,000,000 for an additional building.
The firm would like to maintain its 40% debt to total asset ratio in its capital structure and its dividend payout ratio of 50% of net income. Last year, net income was $2,500,000.
Required
Part Two: The Degree of Leverage
Assume that two companies, Brake, Inc. and Carbo, Inc., have the following operating results:
Brake, Inc.
Carbo, Inc.
Sales
$300,000
Variable Costs
60,000
180,000
Fixed Costs
210,000
90,000
Operating Income
$30,000
What required rate of return would provide an intrinsic value similar to the current market price and What long term dividend growth rate will provide an intrinsic value similar to the current market price
The Pine Furniture Corporation makes fine country furniture. The firm's current product lines consist of coffee tables, end tables, & dining room tables.
Selection of optimal source of finance and calculating times interest earned ratio - Suppose Morton adopts Plan 2, and the Boston facility initially operates at an annual EBIT level of $6 million. What is the time interest earned ratio?
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what difference would it make to the cost of the option if the executive were able to change the firm's dividend policy so as to stop the firm from paying out any dividends during the term of the option
MT 217 can manufacture new PDA for $200 each in variable costs. Fixed costs for the operation are determined to run $4.5 million per year. The estimated sales volume is 70,000, 80,000, 100,000, 85,000, & 75,000 every year for the next 5-years, respec..
Calculate the expected EPS fo both financing plans - What factors should the company consider in deciding which financing plan to adopt?
Determine the internal rate of return for the project and determine the reinvested rate of return for the project.
what are the substantive procedures using generalized audit software to audit.
Based on the information given evaluate the weighted average cost of capital.
Discuss the benefits and drawbacks of accumulating cash balances rather than paying dividends and what effects do dividend policy have on this type of decision?
Determine the Expected Return by investors at FPL Group?
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