3 In-Class Exc Ch III SOLVED

Destin Company Information: Total Assets $940,000 Total Liabilities $600,000 Cost of debt 5.8% Risk-free rate 1.97% Beta 0.89 Market Return 10%   A) Using CAPM, what is cost of equity? (so you are not confused, the opportunity cost of using equity is the return we were expecting to receive on the equity).  a)8.03% b)7.77% c) 9.12% d) 8.9% B) What is Destin's Weighted Average Cost of Capital? a) 6.22% b) 5.89% c) 6.07% d) 5.72%

12 Gates Appliances has a return-on-assets (investment) ratio of 20 percent. a. If the debt-to-total-assets ratio is 25 percent, what is the return on equity? (Input your answer as a percent rounded to 2 decimal places.) Return on equity % b. If the firm had no debt, what would the return-on-equity ratio be? (Input your answer as a percent rounded to 2 decimal places.) Return on equity

Calculate the equity multiplier (total assets / total equity) for the firm below. Make sure you do NOT convert your answer and keep 2 decimals for your final answer.....for examples, if you calculate 6,000/400 = 15, you should enter 15 into BB to be marked correct.  Sales $5,000 COGS $1,200 Depreciation $800 Interest $500 Net Income $200 Total Assets 5000 Total Equity 1400

Q. 1 Y3K, Inc. has sales of $7425, total assets of $3,500, and a debt-equity ratio of 0.29. Assume the return on equity is 20% What is the net income? (DO NOT round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16) Step 1 Given information, Sales =$6,209 Total assets=$2,825 Debt-equity ratio(D/E)=1.10 Return on equity =11% arrow_forward Step 2 Return on equity(ROE) = (Profit margin)(Total asset turnover)(Equity multiplier)   = (Profit margin)(Sales / Total assets)(1 + D/E) Therefore, Profit margin = [(Return on equity)(Total assets)] / [(1 + D/E)(Sales)]    =[0.11*2,825]/[( 1 + 1.1)*6,209]    =310.75/13,038.9    =0.0238325   Hence, Net income = Sales *profit margin    =$6,209* 0.0238    =$147.98 But I am getting an error saying this answer is complete but not entirely correct?

Please show work and explain answer  5. Decorative Paintings has total debt of $69,000, total equity of $445,000, and a return on equity of 10 percent. What is the return on assets?  6. If the equity multiplier for a firm is 4, what is the debt ratio for that firm?

Assume that you are a consultant to Morton Inc., and you have been provided with the following data: D0 - $1.4: PO - $36; and g - 4.8% (constant). What is the cost of equity from retained earnings based on the DCF approach? OO Ⓒ948% 8.88% Go htt

Q2: For example, a firm's financial data shows the following: Equity = $8,000 Debt = $2,000 Re = 12.5% Rd = 6% Tax rate = 30% Calculate the WACC, enter the values into the equation and solve:

Q3. ColdWell Co. have a debt-equity ratio of 0.80, total equity of $900,000, total asset turnover of 1.5, a profit margin of 9% and a net income of $100,000. Find their: a. Equity multiplier b. ROE c. ROA

Calculate the equity multiplier (total assets / total equity) for the firm below. Keep to 2 decimal places and do not convert it. ....for examples, if you calculate 6,000/400 = 15, you should enter 15 into BB to be marked correct.  Sales $5,000 COGS $1,200 Depreciation $800 Interest $500 Net Income $200 Total Assets 6000 Total Equity 1300

From the balance sheet prepare a proforma income statement where revenues can increase by 2% and the firm can borrow at 5.5% BALANCE SHEET  2021 Cash and cash equivalents 280 Receivables 2588 Inventory 2516 Other  CA 189 TOTAL CA 5573 Fixed assets 5024 TOTAL ASSETS 10597 Accounts payable 4713 Short term debt 78 TOTAL CL 4790 LT debt 921 Shareh. Equity 4886 TOTAL LIAB. AND SHARH. EQUITY 10597     INCOME STATEMENT 2021 Sales 19418 COGS 13136 Depreciations 354 SG&A 4952 EBIT 976 Interest  Expenses 52 Tax 268 Net income 656 Pro-forma statement Pro Forma Forecasts Actual Projected Projected Projected Projected Projected   2021 2022 2023 2024 2025 2026 COGS/REVENUES             SGA/SALES              INVENTORIES/COGS             OTHER CA/SALES             AR/SALES             AP/COGS             SALES/FIXED ASSETS             DEPR/ FIXED  ASSETS             EQUITY/INVESTED CAPITAL             ST DEBT/INVESTED…

213erform the 3 step DuPont Return on Equity (ROE) analysis for Brady Corp. using cell references. (25 pts) Write a brief analysis (50-100 words) of what you learn from the DuPont analysis on your Excel worksheet. Balance Sheet ($000) Ratios Calculation Assets Liabilities and Equity Liquidity Cash 2$ Accounts payable Notes payable 1,500 12,500 Current Marketable securities $ $ $ 2,500 12,500 Quick Accounts receivable 15,000 Total current liabilities $ 25,000 Inventory 33,000 Long-term debt 22,000 Asset Management Total current assets 2$ 52,000 Total liabilities 47,000 Average collection period Fixed assets (net) 35,000 Common stock (par value) 2$ 5,000 Inventory turnover Total assets $ Fixed-asset turnover Contributed capital in excess of par Retained earnings 87,000 18,000 17,000 Total asset turnover Total stockholders' equity 40,000 Total liabilities and stockholders' equity 87,000 Financial Leverage Debt Income Statement ($000) Other Info Debt-to-equity Times interest earned Sales…

Assume the following relationships for the Caulder Corp.: Sales/Total assets 2.2x Return on assets (ROA) 6% Return on equity (ROE) 15% a. Calculate Caulder's profit margin assuming the firm uses only debt and common equity, so total assets equal total invested capital. Round your answer to two decimal places. % b. Calculate Caulder's debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answer to two decimal places. %

Proforma balance sheet for the upcoming year is given. The estimated net income is $2,621.60. If the company is planning pay $500 dividends, what should be the external financing needs (EFN)? Assets $20,972.80 Debt Equity $20,972.80 Total Total Proforma Balance Sheet Multiple Choice O O -$208.8. $208.8. $500. $291.2. -$500. $11,000.00 $10,181.60 $21,181.60

14-7 You are a business analyst with a big investment bank, and you are evaluating the equity risk, business risk, and financial risk of Abilon's Inc. You went online and found that the industry consensus on Abilon's equity risk is 1.5. You also know that the company's debt-equity ratio is 1. What is Abilon's estimated business and financial risk based on the model βA(1 + D/E)? Select one: a. 0.5; 1 b. 0.5; 2 c. 0.75 and 0.5 d. 0.75 and 0.75 e. 1 and 1

Use the following information to answer the question: First National Bank of Beverly Hills (Millions $) Interest rate Assets Amount of return Liab. & Equity Amount Interest Cost Securities %24 325 3.09% Liabilities $1,175 2.5% Loans 925 8.0% Equity Total 125 Non-eaming 50 0.0% S1,300 Total $1,300 First National Bank Industry Average Net interest margin (NIM) Return on Equity (ROE) 2096 4.00%% Tax rate 3496 Overhead Efficiency 0.65 Noninterest Expense Provisions for Loan Losses (PPL) S40 Average Loan Rate (ALR) $3 If the net noninterest income were to change to -$20, what would the average loan rate (ALR) have to be to generate a 20% ROE? Compared to the industry, does this ALR appear feasible? O 6.25%, feasible O 6.25%, not feasible O 8.70%, feasible O 8.70%, not feasible O 7.50%, feasible

If a bank has a leverage ratio of 0.5 and a return on assets of 1%, what is its return on equity? Select one: OA 0.2% O B. 2% OC 5% O D. 20%

TOPIC: Financial Statement Analysis1. Calculate the debt ratio of a company that as an equity multiplier of 2.5  2. A company's sales last year were $615,000 and its net income was $45,800. It has $465,000 in assets financed only by common equity. Determine the profit margin needed to achieve a 14.5% ROE. Use 4 decimal places in your final answer. Express in percentage3. Net income for 2020 was P1,825,600. In 2021, it decreased by 53%. Still using the 2020 net income as the base year, by 2022, net income increased by 130%. Determine the net income for 2021 and 2022, respectively.   4. P240,000 will be deposited in a fund at the beginning of each six months for 5 yrs. Using 11% as the interest rate compounded semiannually, compute how much is in the fund at the end of 4 ½ years just after the last deposit. (use 2 decimal places for your final answer)   5. A company has $6,435,000 in common equity and 1,063,000 in outstanding shares. Shares sell at a price of $30.70 each. Calculate the…

Motorola Credit Corporation's annual report: (dollars in millions) %24 Net revenue (sales) Net earnings 307 168 Total assets Total liabilities Total stockholders' equity 2, 225 1,915 310 a. Find the total debt to total assets ratio. (Round your answer to the nearest hundredth percent.) Total debt to total assets b. Find the return on equity ratio. (Round your answer to the nearest hundredth percent.) Return on equity c. Find the asset turnover ratio. (Round your answer to the nearest cent.) acer

Suppose First National Bank has $500 million of assets and $ $75 million of equity capital. If First National Bank has a 5% return on assets (ROA), what is its return on equity (ROE)? A. 35% B. 33.3% C. 25% D. None of the above

q. 20 Lee Sun’s has sales of $3,350, total assets of $3,050, and a profit margin of 5 percent. The firm has a total debt ratio of 41 percent. What is the return on equity? a. 5.00 percent b. 5.49 percent c. 10.74 percent d. 9.31 percent e. 4.09 percent

Check my work Evans Technology has the following capital structure. Debt Common equity 25% 75 The aftertax cost of debt is 7.00 percent, and the cost of common equity (in the form of retained earnings) is 14.00 percent. a. What is the firm's weighted average cost of capital? (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Weighted Cost Debt Common equity Weighted average cost of capital 0.00 % An outside consultant has suggested that because debt is cheaper than equity, the firm should switch to a capital structure that is 50 percent debt and 50 percent equity. EGO 152 APA ttv MacBook Air

4. Computer Geeks has sales of $521,000, a profit margin of 14.8%, a total asset turnover rate of 2.16, and an equity multiplier of 1.3. What is the return on equity? a. 8.91% b. 18.28% c. 32.11% d. 41.56% 5

Q18 If the company’s EBIT is OMR 500,000; market value of the equity is OMR 2,000,000 and value of Debt is OMR 4,000,000; then what is the overall cost of capital of the firm under Net Income Approach? a. 12.5% b. 10% c. 25% d. 8.33%

Atlanta Company $ 820,000 490,000 Atlanta Company Spokane Company Total liabilities Total equity Compute the debt-to-equity ratio for each of the above companies. Choose Numerator: 100 Atlanta Company Spokane Company Spokane Company $ 298,900 1,786,000 Debt to equity ratio / Choose Denominator: mation Which company appears to have a riskier financing structure? Prev 4 of 5 = Debt-to-equity ratio II MacBook Air Next >

Assume that you are a consultant to a company, and you have been provided with the following data: D1 = $0.67; P0 = $30.00; and g = 8.00% (constant). What is the cost of equity from retained earnings? 10.41% 8.80% 9.82% 10.23% 10.54%

Assuming total invested capital = total assets, which of the following would have the highest equity multiplier? Enter question A. Company A with a debt to capital ratio of 80% B. Company B with a debt to capital ratio of 25% C. Company C with a debt to capital ratio of 60% D. Company D with a debt to capital ratio of 10%

Calculate the cost of equity with the CAPM Calculate the cost od debt based on what the company is currently paying for its debt - Beta of the industry = 1.16 - Equity Risk Premium = 6.97% - Risk-free rate = 3.77% - Objective capital structure of the industry = 13.24%

Consider a simple firm that has the following market-value balance sheet: Assets Liabilities end equity $1 040 Debt Equity $400 640 Next year, there are two possible values for its assets, each equally likely: $1 180 and $960. Its debt will be due with 4.9% interest. Because all of the cash flows from the assets must go to either the debt or the equity, if you hold a portfolio of the debt and equity in the same proportions as the firm's capital structure, your portfolio should earn exactly the expected return on the firm's assets. Show that a portfolio invested 38% in the firm's debt and 62% in its equity will have the same expected return as the assets of the firm. That is, show that the firm's pre-tax WACC is the same as the expected return on its assets. If the assets will be worth $1 180 in one year, the expected return on assets will be %. (Round to one decimal place.)

1- Suppose that a company is established in the beginning of the year 2020. As of the 2020 year end, you have the following data: (a) Current ratio =12: (b) Equity multiplier = 4; (c) Fixed assets/invested capital = 0.4; (d) Total liabilities 3.000 TL. What is the weight of fixed assets in the balance sheet? 10% 90% 75% 25% O O0O00O0 Diger: 2- Refer to Question 1. You have the following additional data for the year 2020: (a) Revenue = 10,000 TL; (b) Gross profit margin = 50%; (c) OpEx = 4.000 TL: (d) Depreciation expense = 100 TL: (¢) Interest expense = 300 TL: (f) Income tax = 20%: (g) price per share = 2 TL . What is the Altman's Z-score? (Assume that the equity section in the balance sheet involves 1 TL par common stocks and retained earnings only. Retained earnings include net profit.) O a2 O 877 O 3835 Q 1 o Diger:

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