Grading Summary |
These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. | Date Taken: | 9/25/2011 | Time Spent: | 1 h , 14 min , 19 secs | Points Received: | 90 / 100 (90%) | | Question Type: | # Of Questions: | # Correct: | Short | 6 | N/A | | |
Grade Details |
1. | Question : | (TCO C) Pate & Co. has a capital budget of $3,000,000. The company wants to maintain a target capital structure that is 15 percent debt and 85 percent equity. The company forecasts that its net income this year will be $3,500,000. If the company follows a residual dividend policy, what will be its total dividend payment?
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Straight debt issue would require a 8% coupon. Call the bonds when the conversion value is greater than $800. Conversion ratio = Par value of the convertible bond / Conversion price of equity CR = $1,000 / $35 CR = 28.57 Use the financial calculator to determine the straight-debt value: N = 10 I/YR = 8% PMT = 28.57 FV = 1000 Solve for PV = $684.78 | | Instructor Explanation: | Answer is: d
Chapter 19: pp. 770-774
Inputs to find the straight-debt value: N = 10; I/YR = 8; PMT = 50; FV = 1,000. $798.70 | | | | Points Received: | 5 of 10 | | Comments: | | | | 3. | Question : | (TCO B) The Congress Company has identified two methods for producing playing cards. One method involves using a machine having a fixed cost of $10,000 and variable costs of $1.00 per deck of cards. The other method would use a less expensive machine (fixed cost = $5,000), but it would require greater variable costs ($1.50 per deck of cards). If the selling price per deck of cards will be the same under each method, at what level of output will the two methods produce the same net operating income (EBIT)?
(a) 5,000 decks
(b) 10,000 decks
(c) 15,000 decks
(d) 20,000 decks
(e) 25,000 decks | | | Student Answer: | | Answer: B 10,000 decks Method 1 = (10,000 * $1.00) + $10,000 Method 1 = $20,000 cost Method 2 = (10,000 * $1.50) + $5,000 Method 2 = $20,000 cost At 10,000 decks, the cost is the same between the 2 methods. | | Instructor Explanation:
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The fixed cost is assumed that Larry has discovered the other fixed cost incurred. The total investment is $800,000. The worst case scenario assumes that Larry got a total line of credit from the bank in the amount of $400,000 and invested $400,000 from other source. The Notes payable – short term and the long-term debt is (11.8 + 3.7) = 15.5 % from Table F in the handout. The Loan interest and payment per year is ($400,000 * 0.155)= $62,000. The Income data from Table F indicates that there is a 0.4% of all other expenses net out of the total sales which equals to $109,908 (5,700,666 gallons * $4.82 *0.4%) .
2. Working according to the agreed ways means following the organisation’s policy and procedures in relation to pressure areas. It also means following the individual care plans and respecting the instructions in place. For example making sure a resident is turned every two hours, applying Cavilon cream on areas; fill in turning charts, prompt fluid intake. Under the duty of care a care assistant must always be aware of and raise concerns regarding possible pressure areas. Always record information in care plans accurately and in confidentiality.
Based on the above income statement data (assume interest income is zero), the company's interest coverage ratio is
I will refer to a particular service user I support as (A). 2years ago (A) was assessed and deemed a risk to their self in the community and within the house when alone with out staff support during the hours of 8am and 9pm but at night (A) had appropriate measures in place to ensure safety at night, door
Person centred planning is a set of approaches designed to assist someone plan their life with support. It is most often used as a model to enable people with disabilities or otherwise requiring support to increase their personal self determination and improve their own independence. It discovers and acts on what is important to the person.
Inputs to find the straight-debt value: N = 10; I/YR = 8; PMT = 50; FV = 1,000. $798.70 |
These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below.
Criteria 1.4: State why and when health and safety control equipment, identified by the principles of protection, should be used relating to types, purpose and limitations of each type, the work situation, occupational use and the general work environment, in relation to:
1. Ernestine Friedl says that the position of women is higher the more they are involved in (l) primary subsistence (as owners or controllers, NOT merely as laborers) and (2) the PUBLIC distribution of the product of subsistence. Use this argument to account for the position of women in Kung society. Make sure you use both part (l) and part (2) of Friedl’s argument. (Don’t worry that Friedl’s argument is simplistic; she is not trying to say that women’s role in subsistence is the ONLY factor that affects their position in society.)
Which layer of the OSI reference model handles logical addressing (IP addresses) and routing traffic?
| a) Crash cost of A = (600-300)/(5-3) = $150; Crash Cost of B = (450-250)/(3-2) = $200; Crash Cost of C = (500-400)/(6-4) = $50; Crash Cost of D = (400-150)/(5-3) = $125 b) As per the above schedule, the activities on the
- The Bet-r-Bilt Company has a 5-year bond outstanding with a 4.30 percent coupon. Interest payments are paid semi-annually. The face amount of the bond is $1,000. This bond is currently selling for 93 percent of its face value. What is the company's pre-tax cost of debt?
= 299.629. Notice, that the value of the firm with debt overhang is lower than the same problem without debt overhang in part (e). (h) Suppose the firm were to hedge. Would equity holders take the gamble and what would be the value of the firm? (10 points) Answer: If the firm were to hedge by selling gold in a forward contract, it would get a sure cash flow of $350. Then it would not not take the gamble, because even if it lost, it could still make the debt payment of 250 · (1.05) = 262.5 and taxes of .4(50 − 250 · .05) = 15 (we assume the debt is safe, and therefore has a yield of 0.05, and verify that it can make the payment).
13. Luteran Motors is an all equity firm with perpetual cashflows of $10 million forever. There are 10 million shares outstanding. The cost of capital for the unlevered firm is 10%. Firm plans to build a new plant that will cost $ 4 million. The plant is expected to generate additional cashflow of $1 million forever. The firm will issue $4 million of either equity or debt. Show the effects of different financing methods on value of firm, cost of equity and price per share. There are no taxes in the economy. 14. Water Corporate has a tax rate of 40% and expects EBIT of $ 1 Million. Its entire earnings after taxes are paid out as dividends. The firm is considering two alternative capital structures. Under Plan I, Water Products has no debt in its capital structure. Under Plan II, the company would have $ 4,000,000 of Debt, B. The cost of debt is 10%. What is the amount of Tax savings under plan II? 15. Dividend Airline is currently an all equity firm. Its management is considering changing its capital structure. The company has perpetual earnings $ 166.67 before interest and taxes (EBIT). It faces corporate tax rate of 40% and thus has after tax cashflow of $100. Its cost of debt capital is 10%. Unlevered firms in the same industry have cost of equity of 20%. The management wants to issue 200 of debt and use the