ll STAY SAFE ?3:32 PM© 80% 4financial distresscost homework1. Short AnswerGood Time Company is a regional chaindepartment store. It willremain in business for one more year. Theprobability of a boom year is 60 percentand the probability of a recession is 40percent. It is projected that the companywill generate a total cash flow of $148million in a boom year and $61 million in arecession. The company' s required debtpayment at the end of the year is $88million.The market value of the company'soutstanding debt is $67 million. Thecompanypays no taxes.a. What payoff do bondholders expect toreceive in the event of a recession?b. What is the promised return on thecompany' s debt?c. What is the expected return on thecompany' s debt?

Bondholders: They are holders of bonds and receive coupon payments and the principal amount for…

Answered: a. What payoff do bondholders expect to…

a. What payoff do bondholders expect to receive in the event of a recession? b. What is the promised return on the company' s debt? c. What is the expected return on the company' s debt?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 5P: Relaxing Collection Efforts The Boyd Corporation has annual credit sales of 1.6 million. Current...

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Relaxing Collection Efforts The Boyd Corporation has annual credit sales of 1.6 million. Current expenses for the collection department are 35,000, bad-debt losses are 1.5%, and the days sales outstanding is 30 days. The firm is considering easing its collection efforts such that collection expenses will be reduced to 22,000 per year. The change is expected to increase bad-debt losses to 2.5% and to increase the days sales outstanding to 45 days. In addition, sales are expected to increase to 1,625,000 per year. Should the firm relax collection efforts if the opportunity cost of funds is 16%, the variable cost ratio is 75%, and taxes are 40%?
Fast pls solve this question correctly in 5 min pls I will give u like for sure Surbh Assume the firm has a constant dividend payout ratio and a projected sales increase of 10 percent. All costs, assets, and current liabilities vary directly with sales. The firm is currently at full production. What is the external financing need? Currently, the firm’s sales =$5,700, net income is $520, total assets=8890, dividends=156, A/P =990, LTD= 3730, and common stock=2980, and retained earnings =1200. $146.00 $251.20 $379.60 $421.60 $550.30
H3. please show proper step by step calculation Good Time Company is a regional chain department store. It will remain in business for one more year. The probability of a boom year is 60 percent and the probability of a recession is 40 percent. It is projected that the company will generate a total cash flow of $193 million in a boom year and $84 million in a recession. The company's required debt payment at the end of the year is $118 million. The market value of the company’s outstanding debt is $91 million. The company pays no taxes. a. What payoff do bondholders expect to receive in the event of a recession? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) b. What is the promised return on the company's debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the expected return on the…
Which one is correct answer please confirm? QUESTION 39 Getrag expects its sales to increase 20% next year from its current level of $4.7 million. Getrag has current assets of $660,000, net fixed assets of $1.5 million, and current liabilities of $462,000. All assets are expected to grow proportionately with sales. If Getrag has a net profit margin of 10%, what additional financing will be needed to support the increase in sales? Getrag does not pay dividends. a. $339,600 b. No financing needed, surplus of $224,400 c. No financing needed, surplus of $524,400 d. $283,200
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Wal-Mart plans to open a new store near Campus. Wal-Mart is going to finance via bond market and stock market. Total capital required is 10 million dollars. 3 million dollars are going to be financed via stock market. Wal-Mart’s beta is 0.70. Three month Treasury Bill rate is 2% (risk free rate) and the S&P500 index return is 8% (market return). How much is the cost of equity to Wal-Mart stockholders? 2% 5% 2% 1%
which one is correct please suggest? QUESTION 39 Getrag expects its sales to increase 20% next year from its current level of $4.7 million. Getrag has current assets of $660,000, net fixed assets of $1.5 million, and current liabilities of $462,000. All assets are expected to grow proportionately with sales. If Getrag has a net profit margin of 10%, what additional financing will be needed to support the increase in sales? Getrag does not pay dividends. a. $339,600 b. No financing needed, surplus of $224,400 c. No financing needed, surplus of $524,400 d. $283,200
Only need answers for parts d) and e). Please include calculations. XYZ company has the following expected cash flows for three scenarios that could occur: Recession Expected Expansion (prob. = .2) (prob. = .5) (prob. =.3) EBIT $10,000 $20,000 $30,000 MV Assets ______ (a) Complete the table above if the company is 100% equity financed, it pays taxes at 30%, the non-levered return on equity is expected to be 12%, the constant growth rate (g) is 5%, and overall firm value is calculated based on the expected after-tax cash flows (b) If the company wants to recapitalize (debt for equity swap) to save on taxes, what is the most debt the company can add (at a 6% rate) so that it will never go bankrupt under the above scenarios? (Assume the company goes bankrupt if EBIT < Interest owed) (c) Calculate the WACC for the unlevered case and for the…
Consider a firm with a 2010 revenue of S60 million and cost of goods sold of $25 million lf the balance shert amount show $4million of inventory and $1.5 million ofproperty, plant & equipment how many weeks of suppiy does the fim bolat(2 weeksinoneyear)(use 2 decimals)Select oneO a.8.33O b.6.25Oc 13.75O d. 400Oe 12.50
What amount of cash must be invested today in order to have $60,000 at the end of one year assuming the rate of return is 9%? (Do not round your PV factors.)A. $54,600.00B. $45,454.56 C. $55,045.88 D. $54,000.00
Q1: Aztec Products wishes to evaluate its cash conversion cycle (CCC). Research by one of the firm’s financial analysts indicates that on average the firm holds items in inventory for 65 days, pays its suppliers 35 days after purchase, and collects its receivables after 55 days. The firm’s annual sales (all on credit) are about $2.1 billion, its cost of goods sold represent about 67 percent of sales, and purchases represent about 40 percent of cost of goods sold. Assume a 365-day year. A) How many dollars of resources does Aztec have invested in (1) inventory, (2) accounts receivable, (3) accounts payable, and (4) the total CCC? B). If Aztec could shorten its cash conversion cycle by reducing its inventory holding period by 5 days, what effect would it have on its total resource investment found in part A?
Q1: Aztec Products wishes to evaluate its cash conversion cycle (CCC). Research by one of the firm’s financial analysts indicates that on average the firm holds items in inventory for 65 days, pays its suppliers 35 days after purchase, and collects its receivables after 55 days. The firm’s annual sales (all on credit) are about $2.1 billion, its cost of goods sold represent about 67 percent of sales, and purchases represent about 40 percent of cost of goods sold. Assume a 365-day year. a) If Dean Muhammad Suppliers receive an invoice for purchases dated 12/12/2002 subject to credit terms of "2/10, net 30", what is the last possible day the discount can be taken? January 11 January 22 January 30 December 22