1. | Question : | (TCO C) Blease Inc. has a capital budget of $625‚000‚ and it wants to maintain a target capital structure of 60 percent debt and 40 percent equity. The company forecasts a net income of $475‚000. If it follows the residual dividend policy‚ what is its forecasted dividend payout ratio? (a) 40.61% (b) 42.75% (c) 45.00% (d) 47.37% (e) 49.74% | | | Student Answer: | | (d) 47.37 Equity required (Residual income) = $625‚000*40% = $250‚000 Dividend paid = $475‚000 - $250
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1. | Question : | (TCO D) Which of the following factors would increase the likelihood that a company would call its outstanding bonds at this time? (a) The yield to maturity on the company’s outstanding bonds increases due to a weakening of the firm’s financial situation. (b) A provision in the bond indenture lowers the call price on specific dates‚ and yesterday was one of those dates. (c) The flotation costs associated with issuing new bonds rise. (d) The firm’s CFO believes that interest
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FIN-516 WEEK 1 – HOMEWORK ASSIGNMENT Problem Based on Chapter 14‚ Residual Dividends Middlesex Plastics Manufacturing had 2011 Net Income of $15.0 Million. Its 2012 Net Income is forecast to increase by 8%. The company’s capital structure has been 35% Debt and 65% Equity since 2010‚ and the company plans to maintain this capital structure in 2012. The company paid $3.0 Million cash dividends in 2011. The company is planning to invest in a major capital project in 2012. The capital budget
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Carmen Yost Feburary 9th 2015 Fin 410 Chapter 4 Problems Dr. Terry Dowdy Resource: Ch. 4 of Foundations of Financial Management Complete Problems 16‚ 19‚ & 25 in Ch. 4 of Foundations of Financial Management 16. J. Lo’s Clothiers has forecast credit sales for the fourth quarter of the year as: September (actual) $70‚000 Fourth Quarter October $60‚000 November 55‚000 December 80‚000 Schedule of cash receipts (LO2) Experience has shown that 30 percent of sales are collected
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In this paperwork of FIN 515 Week 4 Midterm you will find the next information: 1. (TCO A) Which of the following statements is CORRECT? 2. (TCO G) Which of the following statements is CORRECT? 3. (TCO G) LeCompte Corp. has $312‚900 of assets‚ and it uses only common equity capital (zero debt). Its sales for the last year were $620‚000‚ and its net income after taxes was $24‚655. Stockholders recently voted in a new management team that has promised to lower costs and get the return
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Legal Forms of Business Organizations Carol Sauceda FIN/419 February 4‚ 2013 Kristtine Donnelly Legal Forms of Business Organizations In business‚ there are legal forms that organizations are classified under. There are three most common forms of business organizations‚ sole proprietorship‚ partnership‚ and corporation. The life cycle theory of the firm starts out as a proprietorship. As a firm grows larger‚ more complex and needs more capital than is available from the proprietor‚ the proprietor
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Write a 200- to 300-word response describing the goals of financial management. The description should include how earnings are valued‚ how shareholder wealth can be maximized‚ and how management decisions affect stockholder wealth. The goals of financial management include profits. The problem with profits is that if you profit too or too little‚ your company will look bad. The key to having good financial management is having the ability to see that sometimes profit is not everything. Sometimes
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Financial Analysis of Coca-Cola Company - February 7th‚ 2011 The Coca-Cola Company (NYSE: KO) is a beverage retailer‚ manufacturer and marketer of non-alcoholic beverage concentrates and syrups. The company is best known for its flagship product Coca-Cola‚ invented by pharmacist John Stith Pemberton in 1886. The Coca-Cola formula and brand was bought in 1889 by Asa Candler who incorporated The Coca-Cola Company in 1892. Besides its namesake Coca-Cola beverage‚ Coca-Cola currently offers more than
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Question 1 Your finance text book sold 53‚250 copies in its first year. The publishing company expects the sales to grow at a rate of 20 percent for the next three years‚ and by 10 percent in the fourth year. Calculate the total number of copies that the publisher expects to sell in year 3 and 4. (If you solve this problem with algebra round intermediate calculations to 6 decimal places‚ in all cases round your final answers to the nearest whole number.) Number of copies sold after 3 years Number
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Problem Assignment 4 1. You’ve observed the following returns on INTC Corporation’s stock over the past five years: -25%‚ -36%‚ 9%‚ 11%‚ and 17%. a. What was the arithmetic average return on the stock over this five-year period? b. What was the variance of returns over this period? c. What was the standard deviation of returns over this period? d. Suppose the current T-bill rate is 0.15%. What is the risk premium of owing INTC Corporation’s stock? e. What range of returns would you expect
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