Finance 4300
• Question 1
7.692 out of 7.692 points Chua Chang & Wu Inc. is planning its operations for next year, and the CEO wants you to forecast the firm's additional funds needed (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year?
Last year's sales = S0 $200,000 Last year's accounts payable $50,000
Sales growth rate = g 40% Last year's notes payable $15,000
Last year's total assets = A0* $135,000 Last year's accruals $20,000
Last year's profit margin = PM 20.0% Target payout ratio 25.0% Answer Selected Answer:
$16,000
• Question 2
7.692 out of 7.692 points Which of the following statements is CORRECT?
Answer
Selected Answer:
A negative AFN indicates that retained earnings and spontaneous liabilities are far more than sufficient to finance the additional assets needed. • Question 3
7.692 out of 7.692 points A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?
Year: 1 2 3
Free cash flow: $15 $10 $40 Answer Selected Answer:
$386
• Question 4
7.692 out of 7.692 points Based on the corporate valuation model, Bernile Inc.'s value of operations is $750 million. Its balance sheet shows $50 million of short-term investments that are unrelated to operations, $100 million of accounts payable, $100 million of notes payable, $200 million of long-term debt, $40 million of common stock (par plus paid-in-capital), and $160 million of retained earnings. What is the best estimate for the firm's value of equity, in millions?
Answer
Selected Answer:
$500
• Question 5
7.692 out of 7.692 points Based on
7.692 out of 7.692 points Chua Chang & Wu Inc. is planning its operations for next year, and the CEO wants you to forecast the firm's additional funds needed (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year?
Last year's sales = S0 $200,000 Last year's accounts payable $50,000
Sales growth rate = g 40% Last year's notes payable $15,000
Last year's total assets = A0* $135,000 Last year's accruals $20,000
Last year's profit margin = PM 20.0% Target payout ratio 25.0% Answer Selected Answer:
$16,000
• Question 2
7.692 out of 7.692 points Which of the following statements is CORRECT?
Answer
Selected Answer:
A negative AFN indicates that retained earnings and spontaneous liabilities are far more than sufficient to finance the additional assets needed. • Question 3
7.692 out of 7.692 points A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?
Year: 1 2 3
Free cash flow: $15 $10 $40 Answer Selected Answer:
$386
• Question 4
7.692 out of 7.692 points Based on the corporate valuation model, Bernile Inc.'s value of operations is $750 million. Its balance sheet shows $50 million of short-term investments that are unrelated to operations, $100 million of accounts payable, $100 million of notes payable, $200 million of long-term debt, $40 million of common stock (par plus paid-in-capital), and $160 million of retained earnings. What is the best estimate for the firm's value of equity, in millions?
Answer
Selected Answer:
$500
• Question 5
7.692 out of 7.692 points Based on