Week 2 Fin515 Homework

8. If a company has $181,000 in total liabilities and $225,000 in total assets, what percentage of total assets is being financed with the use of other people’s money? 80.4 (http://www.cliffsnotes.com/study_guide/Ratio-Analysis.topicArticleId-21248,articleId-21213.html)

The goal of communications is to make ethics a live, ongoing conversation. If ethics is something that is constantly addressed, referenced frequently in company meetings, and in personal conversations among managers and employees, then people are more aware and more willing to defend the company’s policies when they see or hear of problems. Employees will hold other employees responsible and accountable for living the company’s values.

CitedBrigham, Eugene F. , and Phillip R. Daves. Intermediate Financial Management. 8th ed. Mason: Thomson South-Western, 2004.

Debt to Equity Ratio of 1.23 more than 1 reveals that more than half of assets are financed by debt.

9. What is the Cost of Debt, before and after taxes? Using the interest rate for the largest debt…cannot use the weighted interest rate for the debt since it includes capital lease obligations with no stated rate and could not find in the notes to the financials. 5.4% After tax cost is .054 x (1-.36) = 3.5%

1. This is a closed book exam. You may only have pens, pencils and a calculator at

Learning to me is allowing your brain to receive information and then applying in to your life experiences. I feel like face to face learning is better, however, online is more convenient. I prefer face to face because it offers a more personal relationship with your classmates and your professor. Although it is not practical for my life, I do wish I could attend classes in a regular environment. Online provides me that much needed space and opportunity to move at my own pace. Now that I have taken this class, I know that while I am receiving information I will be more aware of the information being delivered because I will now be more intentional with receiving the information.

- Merlo, Inc. maintains a debt-equity ratio of 0.25 and follows a residual dividend policy. The company has after-tax earnings of $3,800 for the year and needs $3,200 for new investments. What is the total amount Merlo will pay out in dividends this year?If debt = 0.25 and equity = 1, then debt + equity = 1.25. Equity portion of new investments = $3,200 × (1 / 1.25) = $2,560.00

Sonja is seriously injured in an auto accident. After six months, she is still unable to return to work. She has no income from her job, and the insurance premium payments are financially burdensome. In this case Sonja has an ordinary life insurance with the waiver-of-premium attached so after six months all premiums would be waived if Sonja is totally disabled. Under some policies, a retroactive refund of the premium paid during the first six months would be paid. (Rejda, George, McNamara, 2014).

24) A firm has assets of $250 million, of which $25 million is cash. It has debt of $100 million. If the firm were to repurchase $10 million of its stock, what would its new debt-to-equity ratio be?

This indicates that nearly 62% of the brewery’s assets are currently financed by debt. This is

BIBLIOGRAPHYBrigham, Eugene F., and Joel F. Houston. Fundamentals of Financial Management., "Chapter 7 spreadsheet module".

In Scenario A, the Debt would remain at 0 for good. This results in a D/V ratio of 0 which gives us a WACC of 9.21. Using the WACC to derive the Enterprise value of the company, it is found to be $3.043B. Subtracting the debt of $1.25B, we have a Value of Equity of $1.79B. Subtracting the $765M that is

Ehrhardt, M.C. & Brigham, E.F. (2011). Financial Management: Theory and Practice, Ed 13. Ohio: South-Western Cengage Learning.

Greene Sisters has a DSO of 20 days. The company’s average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year.