Neko Inc. uses Additional Funds Needed as a plug item. If the company had forecast its additional financing needed to be 2,340,000, its capital budget at 3,600,000, and net income at 1,800,000, what is its retention ratio
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Neko Inc. uses Additional Funds Needed as a plug item. If the company had
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- Would you rather have $7,500 today or at the end of 20 years after it has been invested at 15%? Explain your answer. The following are independent situations. For each capital budgeting project, indicate whether management should accept or reject the project and list a brief reason why.Your division is considering two investment projects, each of which requires an up-front expenditure of 25 million. You estimate that the cost of capital is 10% and that the investments will produce the following after-tax cash flows (in millions of dollars): a. What is the regular payback period for each of the projects? b. What is the discounted payback period for each of the projects? c. If the two projects are independent and the cost of capital is 10%, which project or projects should the firm undertake? d. If the two projects are mutually exclusive and the cost of capital is 5%, which project should the firm undertake? e. If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake? f. What is the crossover rate? g. If the cost of capital is 10%, what is the modified IRR (MIRR) of each project?Inc. uses Additional Funds Needed as a plug item. If the company had forecast its additional financing needed to be 2,340,000, its capital budget at 3,600,000, and net income at 1,800,000, what is its retention ratio?
- Bulldogs Inc. uses Additional Funds Needed as a plug item. If the company had forecast its additional financing needed to be 2,340,000, its capital budget at 3,600,000, and net income at 1,800,000, what is its retention ratio?Put percentage sign (XX%)BIASA Corporation has four investment projects with the following costs and estimated expected rates of return (i.e. internal rates of return estimated from the discounted cash flow analysis): Cost IRR Project 1 $2,900,000 17% Project 2 $3,200,000 15% Project 3 $3,500,000 13% Project 4 $2,700,000 12% The company has a capital budget set for the coming year of $4 million, i.e. the maximum capital expenditure is set at $4 million. The company estimates that it can issue debt at a before-tax cost of 8% and its tax rate is 30%. The company can also issue preference shares at $45 per share, which pay a constant dividend of $4.50 per share per year. The company’s stock currently sells at $33 per share. The next dividend D1 is expected to be $3.20 and the dividend is expected to grow at a constant rate of 5% per year. The company’s capital structure consists of 75% ordinary shares 20% debt and 5% preference shares. (a) Which project(s) should…A firm utilizes a strategy of capital rationing, which is currently $375,000 and is considering the following two projects: Project A has a cost of $335,000 and the following cash flows: year 1$140,000; year 2$150,000; and year 3$100,000. Project B has a cost of $365,000 and the following cash flows: year 1$220,000; year 2$110,000; and year 3$150,000. Using a 6% cost of capital, which decision should the financial manager make? Multiple Choice Do not select either project. Select project B. Select project A. Select both projec
- The financial manager of Sarap Corporation wants to determine the amount of cash outlays to be spent for the next period. He asked the help of the accountant and the latter provided a cash budget for the next year. According to the computations, the company would be incurring cash expenses of P6,612,500 per month. The financial manager has estimated a cost of P40 per transaction in case non-cash asset is converted to cash. The firm's opportunity cost ratio is 12%. a. The optimum cash balance is?onson, Inc. is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the retention ratio from 90% that was used in the past to 50%, which the firm's investment bankers have recommended. Seventy-five percent of the total assets are considered variable. Based on the AFN equation, by how much would the AFN for the coming year change if Jonson, Inc. decreased the retention from 90% to the new level? All pesos are in millions. Last year’s sales P300.0 Last year’s accounts payable P40.0 Sales growth rate 15% Last year’s notes payable P10.0 Last year’s total assets P500.0 Last year’s accruals P20.0 Last year’s profit margin 15.0% Initial retention ratio…Jonson, Inc. is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the retention ratio from 90% that was used in the past to 50%, which the firm's investment bankers have recommended. Seventy-five percent of the total assets are considered variable. Based on the AFN equation, by how much would the AFN for the coming year change if Jonson, Inc. decreased the retention from 90% to the new level? All pesos are in millions. Last year’s sales P300.0 Last year’s accounts payable P40.0 Sales growth rate 15% Last year’s notes payable P10.0 Last year’s total assets P500.0 Last year’s accruals P20.0 Last year’s profit margin 15.0% Initial retention…
- Jonson, Inc. is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the retention ratio from 90% that was used in the past to 50%, which the firm's investment bankers have recommended. Seventy-five percent of the total assets are considered variable. Based on the AFN equation, by how much would the AFN for the coming year change if Jonson, Inc. decreased the retention from 90% to the new level? All pesos are in millions. Last year’s sales P300.0 Last year’s accounts payable P40.0 Sales growth rate 15% Last year’s notes payable P10.0 Last year’s total assets P500.0 Last year’s accruals P20.0 Last year’s profit margin 15.0% Initial retention…Jonson, Inc. is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the retention ratio from 90% that was used in the past to 50%, which the firm's investment bankers have recommended. Seventy-five percent of the total assets are considered variable. Based on the AFN equation, by how much would the AFN for the coming year change if Jonson, Inc. decreased the retention from 90% to the new level? All pesos are in millions. Last year's sales P300.0 Last year's accounts payable P40.0 Sales growth rate 15% Last year's notes payable P10.0 Last year's total assets P500.0 Last year's accruals P20.0 Last year's profit margin 15.0% Initial retention ratio 90.0% P33.6M P20.7M -P33.6M P21.4M -P20.7M Refer to the case of Jonson Inc., What would the comoany's capital intensity ratio be if…Jonson, Inc. is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the retention ratio from 90% that was used in the past to 50%, which the firm's investment bankers have recommended. Seventy-five percent of the total assets are considered variable. Based on the AFN equation, by how much would the AFN for the coming year change if Jonson, Inc. decreased the retention from 90% to the new level? All pesos are in millions. Last year’s sales P300.0 Last year’s accounts payable P40.0 Sales growth rate 15% Last year’s notes payable P10.0 Last year’s total assets P500.0 Last year’s accruals P20.0 Last year’s profit margin 15.0% Initial retention…
