55559
4-5, Market Value = $20 X 1.2 = $24
P/E = $24 / $2 = 12.0
4-14, EBIT = $1,000,000
-Interest $300,000
EBT $700,000
Tax @ 34% $238,000
Net Income $462,000
Asset turnover ratio = total revenue / total assets
2 = $10000000 / total assets
Total Assets = $5000000
Equity ratio = 1 – debt ratio
Equity ratio = 40%
Total Equity = equity ratio x total assets
Total equity = 40% x $5000000
Total equity = $2000000
Return on Equity = $462000 / $2000000
Return on Equity = 23.10%
4-18, Times Interest Earned Ratio = (net income + interest) / interest.
ROA = Net Income /Total Assets = 5% = Ne tIncome/ $5,000,000,000,
Net Income = $250,000,000
Basic Earning Power = EBIT/Total Assets
10% = EBIT/$5,000,000,000
EBIT =$500,000,000
EBT = $250,000,000/0.60 = $416,666,667
Interest = $500,000,000 - $416,666,667 =$83,333,333
TIE = ($250,000,000 + $83,333,333) / $83,333,333 = 4 times
4-21, Earnings went from $2 million to $3.25 million, an increase of (3.25-2)/2 = 62.5%
P/E is price to earnings, so if the P/E is going to be the same 1 year from now, and earnings went up 62.5%, then the price of the stock has to go up the same amount to keep the P/E ratio the same.
5-2, N = 20, I/YR = 7, PMT = 0, and FV = 5000. Solve for PV = $1,292.10.
5-3, $250,000*(1+i)
18=$1,000,000(1+i)
18=$1,000,000/$250,000(1+i)
18=41+i= (4)
1/18
I=1.08006-1I=0.08006
5-5, 1. Amount of 42,180.53
2. An annual PMT of $5000
Rate of Return i =12%
FV of annuity due is FVA= PMT*[FVIFA (i,n)] = PMT*[(1+i)^n - 1]/I
Here we have an initial fixed amount of 42180.53 which will also row annually at 12% + the annual PMT of 5000.
So we have FVA = 42180.53*(1+12%)^n + 5000*[(1+12%)^n-1]/12% = 250,000
42180.53*1.12^n + 5000*(1.12^n - 1)/0.12 = 250,000
42180.53*(1.12)^n + 41666.67*(1.12)^n - 41667.67 = 250,000
83847.2*(1.12)^n = 250,000+41666.67 = 291666.67
1.12^n = 291,666.67/83847.2 = 3.478 n*Log1.12 = Log(3.478) = 1.2464 n = 1.2464/0.1133 = 10.998 = 11
5-10, a.
P/E = $24 / $2 = 12.0
4-14, EBIT = $1,000,000
-Interest $300,000
EBT $700,000
Tax @ 34% $238,000
Net Income $462,000
Asset turnover ratio = total revenue / total assets
2 = $10000000 / total assets
Total Assets = $5000000
Equity ratio = 1 – debt ratio
Equity ratio = 40%
Total Equity = equity ratio x total assets
Total equity = 40% x $5000000
Total equity = $2000000
Return on Equity = $462000 / $2000000
Return on Equity = 23.10%
4-18, Times Interest Earned Ratio = (net income + interest) / interest.
ROA = Net Income /Total Assets = 5% = Ne tIncome/ $5,000,000,000,
Net Income = $250,000,000
Basic Earning Power = EBIT/Total Assets
10% = EBIT/$5,000,000,000
EBIT =$500,000,000
EBT = $250,000,000/0.60 = $416,666,667
Interest = $500,000,000 - $416,666,667 =$83,333,333
TIE = ($250,000,000 + $83,333,333) / $83,333,333 = 4 times
4-21, Earnings went from $2 million to $3.25 million, an increase of (3.25-2)/2 = 62.5%
P/E is price to earnings, so if the P/E is going to be the same 1 year from now, and earnings went up 62.5%, then the price of the stock has to go up the same amount to keep the P/E ratio the same.
5-2, N = 20, I/YR = 7, PMT = 0, and FV = 5000. Solve for PV = $1,292.10.
5-3, $250,000*(1+i)
18=$1,000,000(1+i)
18=$1,000,000/$250,000(1+i)
18=41+i= (4)
1/18
I=1.08006-1I=0.08006
5-5, 1. Amount of 42,180.53
2. An annual PMT of $5000
Rate of Return i =12%
FV of annuity due is FVA= PMT*[FVIFA (i,n)] = PMT*[(1+i)^n - 1]/I
Here we have an initial fixed amount of 42180.53 which will also row annually at 12% + the annual PMT of 5000.
So we have FVA = 42180.53*(1+12%)^n + 5000*[(1+12%)^n-1]/12% = 250,000
42180.53*1.12^n + 5000*(1.12^n - 1)/0.12 = 250,000
42180.53*(1.12)^n + 41666.67*(1.12)^n - 41667.67 = 250,000
83847.2*(1.12)^n = 250,000+41666.67 = 291666.67
1.12^n = 291,666.67/83847.2 = 3.478 n*Log1.12 = Log(3.478) = 1.2464 n = 1.2464/0.1133 = 10.998 = 11
5-10, a.