015) YR2 Dividend =1.5968(1.57325*1.015) After Year 2 stock price will be = 43.11 (1.5968*1.08/(.12-.08) 1.57325/1.12+1.5968/1.12 2 +43.11/1.12 2 =37.05 4. (TCO G) The ABC Corporation’s budgeted monthly sales are $4‚000. In the first month‚ 40% of its customers pay and take the 3% discount. The remaining 60% pay in the month following the sale and don’t receive a discount. ABC’s bad debts are very small and are excluded from this analysis. Purchases for next month’s
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4. Which one of the following terms is defined as dividends paid expressed as a percentage of net income? A. dividend retention ratio B. dividend yield C. dividend payout ratio D. dividend portion E. dividend section 5. Which one of the following correctly defines the retention ratio? A. one plus the dividend payout ratio B. addition to retained earnings divided by net income C. addition to retained earnings divided by dividends paid D. net income minus additions to retained earnings
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CHAPTER 16: FINANCIAL PLANNING AND FORECASTING 1. The first‚ and most critical‚ step in constructing a set of forecasted financial statements is the sales forecast. a. True b. False ANSWER: True 2. A typical sales forecast‚ though concerned with future events‚ will usually be based on recent historical trends and events as well as on forecasts of economic prospects. a. True b. False ANSWER: True 3. Errors in the sales forecast can be offset by similar errors in costs and income forecasts
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0. Its sales are $100 million and it has total assets of $50 million. What is its ROE? () Answer: B A‚ 10% B‚ 40% C‚ 20% D‚ 25% The Total assets turnover = Sales/TA=$100/$50=2 ROE= (profit margin)(equity multi-plier)(Total assets turnover)=10%*2*2=40% Chapter 9 When the firm’s sales growth rate going higher‚ and its payout ratio will () Answer: C A‚ Same B‚ Lower C‚ Higher Broussard Skateboard’s sales are expected to
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decision is an important one for the firm as it may influence its capital structure and stock price. Beside‚ dividend is a part of your investment return. A Company that manages their cash flow effectively tend to sustain and grow their dividend payouts over time. Successful growth of earnings usually pays off for investors in the form of higher share prices. Because of those reasons‚ I find this topic very interesting so I decide to choose financing for the individual assignment. 2. Company: P&G
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capital structure of 60% debt and 40% 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: Answer: d. 47.37% Dividends paid = $475‚000 - (40%)($625‚000) = $225‚000 Dividend payout ratio = $225‚000/$475‚000 = 47.37% Instructor Explanation: Answer is: d Chapter 17 Capital budget $625‚000 Equity ratio 40% Net income (NI) $475‚000 Dividends
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Chapter 16: Capital Structure: Basic Concepts 16.1 a. Since Alpha Corporation is an all-equity firm‚ its value is equal to the market value of its outstanding shares. Alpha has 5‚000 shares of common stock outstanding‚ worth $20 per share. Therefore‚ the value of Alpha Corporation is $100‚000 (= 5‚000 shares * $20 per share). b. Modigliani-Miller Proposition I states that in the absence of taxes‚ the value of a levered firm equals the value of an otherwise identical unlevered
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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‚000 = $225‚000 Dividend payout ratio = 225000/475000 = 47.37% | | Instructor Explanation:
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Lil Lady Review Lil’ Lady is an IGT-powered video slot machine with 5 reels and 40 paylines. The previous statement probably isn’t going to have you chomping at the bit to play this game‚ but it certainly doesn’t tell the story of this particular game. At heart‚ Lil’ Lady is a classic slot machine from the land-based casino era with a new coat of paint splashed all over it. The “ladies” in Lil’ Lady are ladybirds‚ which is why the game has earned a lot of “buzz”‚ if you pardon the pun. IGT really
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almost 28% of DB’s sales. With the present growth 2001 budget requires and investment of EUR 7 mln‚ proposed investments for 2002 is EUR 6.8 mln. DB has a traditional dividend payout policy of 75% from earnings each year and plans an increase of EUR 698‚000 for this quarter. In Ukraine Oleg extended credits to 80 days from 40 days and plans to extend it to 90 days. So far the bad debt has been anticipated to only 2%. Oleg’s suggestion is to borrow at 6.5% from the bank and use those funds to finance
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