Ue 45%. What was thellates (including total sales) were exactly correctApense ratio, which actually turned out to be 45%. What was theexcopproject's actual simple rate of return?EXERCISE 13-1 Payback Method LO13-1The management of Unter Corporation, an architectural design firm, is considering an investmentconnectGrawwith the following cash flows:YearInvestmentCash Inflow1 ...$15,000$8,000$1,000$2,0002 ...3..$2,500$4,000$5,000$6,000$5,000$4,0005..6..7 ..8 ..$3,0009...$2,00010 ...Required:1. Determine the payback period of the investment.- Would the payback period be affected if the cash inflow in the last year were several times as large?EXERCISE 13-2 Net Present Value Analysis LO13-2the purchase of a $27,000 machine that

1. Calculate payback period: Payback period = Year before full recovery + (Unrecovered cost at the…

Answered: Ue 45%. What was the llates (including…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 11P: Brook Corporation’s free cash flow for the current year (FCF0) was $3.00 million. Its investors...

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Weatherford Industries Inc. has the following ratios:A0*/S0 = 1.6; L0*/S0 = 0.4; profit margin = 0.10; and payout ratio = 0.45, or 45%. Sales lastyear were $100 million. Assuming that these ratios will remain constant, use the AFN equationto determine the maximum growth rate (the sustainable growth rate) Weatherford canachieve without having to employ nonspontaneous external funds.
Jones Corp. had the following results for the period just ended; Sales P 2.0 million Net Income P 0.5 million; Capital Investment P 1.0 million To arrive at the return on investment, the following should be used: a. ROI = (20/20) X (20/5) c. ROI = (10/20) X (20/5) b. ROI = (20/10) X (5/20) d. ROI = (10/20) X (5/20)
4. We only have OMR 800,000 to invest. Which do we select based on Weighted average profitability index method ? Project NPV Investment PI A 430,000 500,000 B 241,250 225,000 C 394,250 375,000 D 262,000 575,000
A company has sales of $200 million, NOPAT of $12 million, netincome of $8 million, net operating working capital (NOWC) of $10million, total net operating capital of $100 million, and total assetsof $110 million. What is its operating profitability (OP) ratio? (6%) Itscapital requirement (CR) ratio? (50%) Its return on invested capital(ROIC)? (12%)
Investments Quick and Slow cost $1,000 each, are mutually exclusive, and have the following cash flows. The firm’s cost of capital is 10 percent (refer to image): a.) According to the net present value method of capital budgeting, whichinvestment(s) should the firm make? b.) According to the internal rate of return method of capital budgeting, which investment(s) should the firm make? c.) If Q is chosen, the $1,300 can be reinvested and earn 12 percent. Doesthis information alter your conclusions concerning investing in Q and S? To answer, assume that S’s cash flows can be reinvested at its internal rate of return. Would your answer be different if S’s cash flows were reinvested at the cost of capital (10 percent)?
Jiminez Company has two investment opportunities. Both investments cost $5,000 and will provide the following net cash flows: Year Investment A investemen B 1 3,000 3,000 2 3,000 4,000 3 3,000 2,000 4 3,000 1,000 What is the total present value of Investment A's cash flows assuming an 8% minimum rate of return? (Do not round your intermediate calculations. Round your answer to the nearest whole dollar.) A) $14,936. B) $4,936.…
A project currently generates sales of $17 million, variable costs equal 40% of sales, and fixed costs are $3.4 million. The firm’s tax rate is 30%. Assume all sales and expenses are cash items. a. What are the effects on cash flow, if sales increase from $17 million to $18.7 million? (Input the amount as positive value. Enter your answer in dollars not in millions.) Req cash flow by b. What are the effects on cash flow, if variable costs increase to 45% of sales? (Input the amount as positive value. Enter your answer in dollars not in millions.) Req cash flow by
You have the following cash flows for the firm; What is NPV, if discount rate is 10% ? CF0 = -467 (CF0 is always negative. It is your initial investment) CF1 = 625 CF2 = 684 CF3 = 666 CF4 = 753 CF5 = 976
Choose the correct letter of answer: In the current year, Company A had P15 Million in sales, while total fixed costs were held to P6 Million. The firm's total assets at year-end were P20 Million and the debt/equity ratio was calculated at 0.60. If the firm's EBIT is P3 Million, the interest on all debt is 9%, and the tax rate is 40%, what is the firm's return on equity? a. 11.16%b. 14.4%c. 18.6%d. 24.0%e. 28.5%
Y2 Aportfolio manager states that the return for the period is 5.34 per cent by using the following annual rates of returm Year. Return 1. 6% 2 -37% 3. 27% What type of rate of return (HPR AM or GM) said by the manager and why?
Suppose Alcatel-Lucent has an equity cost of capital of 10%, market capitalization of $10.8 billion, and an enterprise value of $14.4 billion. Suppose Alcatel-Lucent’s debt cost of capital is 6.1% and its marginal tax rate is 35%. The cash flow for the project is as follows, same as was given in the previous question. Year 0 1 2 3 FCF -100 50 100 Calculate FCFE for each year but only answer: What is the Percentage change in FCFE in Year 2 from Year 1? Please give your answer in Percentage up to 2 places of Decimal without giving the % sign.
Use the cash flows and competitive spreads shown in the table below. ($ millions) Year 0 Year 1 Year 2 Years 3–10 Investment 190 Production (millions of pounds per year) 0 0 49 89 Spread ($ per pound) 1.04 1.04 1.04 1.04 Net revenues 0 0 50.96 92.56 Production costs 0 0 39.00 39.00 Transport 0 0 0 0 Other costs 0 29 29 29 Cash flow –190 −29 –17.04 24.56 NPV (at r = 6%) = 0 Assume the dividend payout ratio each year is 100%.a. Calculate the year−by−year book and economic profitability for investment in polyzone production. Assume straight−line depreciation over 10 years and a cost of capital of 6%. (Negative answers should be indicated by a minus sign. Leave no cells blank − be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your income answers in millions rounded to 2 decimal places and enter the rate of return as a percent rounded to 2 decimal places.)…

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