Reference no: EM131612817
Question 1: Brodigan Corporation has provided the following information concerning a capital budgeting project: Investment required in equipment $450,000 Net annual operating cash inflow $220,000 Tax rate 30% After-tax discount rate 12% Final Examination 9 The expected life of the project and the equipment is 3 years and the equipment has zero salvage value. The company uses straight-line depreciation on all equipment and the depreciation expense on the equipment would be $150,000 per year. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting. The net annual operating cash inflow is the difference between the incremental sales revenue and incremental cash operating expenses. Required: What is the net present value of the project?
Question 2: Dukas Corporation's net cash provided by operating activities was $218,000; its net income was $203,000; its capital expenditures were $146,000; and its cash dividends were $49,000. Required: What is the company's free cash flow? 10 Final Examination
Question 3: Mihok Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $5,000. The market price of common stock at the end of Year 2 was $0.97 per share.
Required: A. What is the company's earnings per share for Year 2?
B. What is the company's price-earnings ratio for Year 2?
C. What is the company's dividend payout ratio for Year 2?
D. What is the company's dividend yield ratio for Year 2?
E. What is the company's book value per share at the end of Year 2?
Income Statement For the Year Ended December 31, Year 2
Sales . . . . . . . . . . . . . . . . . . . . . . . . . .$1,380,000
Cost of goods sold . . . . . . . . . . . . . . . . . . .780,000
Gross margin . . . . . . . . . . . . . . . . . . . . . .600,000
Operating expenses . . . . . . . . . . . . . . . . . .567,714
Net operating income . . . . . . . . . . . . . . . . .32,286
Interest expense . . . . . . . . . . . . . . . . . . . . . 18,000
Net income before taxes . . . . . . . . . . . . . . .14,286
Income taxes (30%) . . . . . . . . . . . . . . . . . . 4,286
Net income . . . . . . . . . . . . . . . . . . . . . . . .$10,000
Year 2 Year 1
Stockholders' equity: Common stock, $3 par value . . . . . . . . . . . . . . . .$300,000 $300,000
Additional paid-in capital-common stock . . . . . . .100,000 100,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . .375,000 370,000
Total stockholders' equity . . . . . . . . . . . . . . . . . . . .$775,000 $770,000