mid term paper

Debt to Equity ℎℎ ′ 9,771+1,885 Dividend Payout Inventory Turnover = 0.069 Working backwards from the income tax expense, we estimate income tax rate to be 34%. NOPAT is then Operating profit taxes, or 3,137*(1-0.34) = 0.319 Average

22. Suppose that Hanna Nails, Inc capital structure features 45 percent equity, 55 percent debt, and that it’s before tax cost of debt is 5%, while its cost of equity is 9 percent. If the appropriate weighted average tax rate is 40 percent, What will be Hanna Nails’ WACC?

Since we are not given the cost of equity capital r, but are given the needed data for a

12. Today, you deposit $10,750 in a bank account that pays 3 percent simple interest. How much interest will you earn over the next 7 years?

ratio of 0.25. The cost of equity is 12 percent and the cost of debt is 7 percent. The corporate tax rate is

- 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

a. How much must be invested today in a CD paying 8.4 percent annual interest in order to

11. A 65-year-old wishes to convert the cash value of his insurance policy into an annuity. He can select an annuity that will last 15 years or one that lasts 20 years. If the cash value is $450,000 and interest rates are 5.25%, how much less per year will he receive if he chooses the 20-year annuity?

Dividend Yield: measures cash return per common share by dividing annual cash dividends per share by market price per share.

Reinvestment Returns: I found "b" (the reinvestment rate) by using exhibit 1 to calculate the percentage of net income per share of common stock that is paid out in dividends, and subtracting it from 1 to solve for the percentage reinvested. The return on equity, "k", is found by dividing net income (exhibit 1) by book value (exhibit 2). G = b*k shows g = 8.14%.

14) Various Capital Structures Character Enterprises currently has $1.5 million in total assets and is totally equity financed. It is contemplating a change in its capital structure. Compute the amount of debt and equity that would be outstanding is the firm were to shift to each of the following debt ratios: 10%, 20%, 30%, 40%, 50%, 60%, and 90%.

This year is going to be a different type of year for me because it matters the most. I expect it to be wonderful an to accomplish great things. I am going to make it and a movie. This year I plan to be focusing on several to ensure that i am successful. My senior year is going to be mostly determine my future.

Throughout my life, I’ve had to deal with a common but challenging condition. My junior year of high school I was diagnosed with generalized anxiety disorder and depression, but I had been suffering long before that. For as long as I can remember, I would get horrible stomach aches and headaches frequently for no reason. It wasn’t until the start of my senior year that I really learned to overcome it. Living a normal teenage life became literally impossible for me. I wa too afraid and uncomfortable to do the things I used to love, such as stay at a friends, go to the movies, or even attend mass of Sunday mornings. I would have panic attacks often and would be embarrassed and insecure because people didn’t understand why I was so worked up.

(Note: retained earnings information is irrelevant here) Part b. Total market value = debt + pref. equity + Common equity = 1,147,200 + 1,250,000 + 2,500,000 = $4,897,200

Weight of Equity = 71%; Equity Cost of Capital = 12%; Weight of Debt = 29%; Debt Cost of Capital = 4.55%