89$eBookCoastal Carolina Heating and Cooling Inc. has a 6-month backlog of orders for its patented solar heating system. To meet this demand, management plans to expand production capacity by 50% with a $5 million investment in plant andmachinery. The firm wants to maintain a 35% debt level in its capital structure. It also wants to maintain its past dividend policy of distributing 60% of last year's net income. In 2021, net income was $5 million. How much external equitymust Coastal Carolina seek at the beginning of 2022 to expand capacity as desired? Assume that the firm uses only debt and common equity in its capital structure. Write out your answer completely. For example, 25 million should beentered as 25,000,000. Round your answer to the nearest cent.

Formula to calculate the required external equity is:Total required equity - Retained…

Answered: Coastal Carolina Heating and Cooling…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 9P

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1.C.) Rose Turkish Delight Company is a new company and will start to operations in January, 2022. • Its beginning cash balance is 5,000 TL. • It plans to sell 1000 boxes at 20 TL each month. • 90% of the sales will be in cash, 10% of sales will be collected in the following month. • In January, short term investment will be sold at 10,000 TL in cash. • Production costs will be 20,000 TL and selling and administrative expenses will be 10,000 TL in January and all will be paid in cash • Production costs will be 20,000 TL and selling and administrative expenses will be 5,000 TL in February and all| will be paid in cash • Minimum cash balance is 5,000 TL. Prepare a cash budget for January and February 2022.
year 15-5 EXTERNAL EQUITY FINANCING Coastal Carolina Heating and Cooling Inc. has a 6-month backlog of orders for its patented solar heating system. To meet this demand, management plans to expand production capacity by 45% with a $20 million investment in plant and machinery. The firm wants to maintain a 35% debt level in its capital structure. It also wants to maintain its past dividend policy of distributing 55% of last year's net income. In 2018, net income was $5 million. How much external equity must Coastal Carolina seek at the Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203 19 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). as deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning…
Bronze It Tanning Salon expects annual sales of $1,175,000, annual fixed cash outlays are $586,000 a year at each location, variable cash outlays are 12 percent of sales, depreciation is $115,000 per year, and taxes are 32% (of pretax income). Initial outlay for the building is $2,140,000. The company does its analysis based on a 20-year store life. We believe the business can be sold for $580,000 after taxes at the end of its 20 year operating life. 1. Using an 12% required return, what is the net present value of this venture? 2. Please rework the prior problem to determine the net present value level of annual sales volume that is needed to generate a net present value of $0?
Broussard Skateboard’s sales are expected to increase by 15% from $8 million in 2018 to $9.2 million in 2019. Its assets totaled $5 million at the end of 2018. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2018, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 40%. Use the AFN equation to forecast Broussard’s additional funds needed for the coming year.
Strickler Technology is considering changes in its working capital policies to improve its cash flow cycle. Stricklers sales last year were 3,250,000 (all on credit), and its net profit margin was 7%. Its inventory turnover was 6.0 times during the year, and its DSO was 41 days. Its annual cost of goods sold was 1,800,000. The firm had fixed assets totaling 535,000. Stricklers payables deferral period is 45 days. a. Calculate Stricklers cash conversion cycle. b. Assuming Strickler holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. c. Suppose Stricklers managers believe the annual inventory turnover can be raised to 9 times without affecting sale or profit margins. What would Stricklers cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9 for the year?
Distribution Limited projects sales next year to be $4 million and expects to earn 5% of that amount after taxes. The company is currently in the process of projecting its financial needs and has made the following assumptions (projections): - Current Assets will equal 8% of sales, and fixed assets will remain at their current level of $1million. - Common equity is currently $0.6million (made up entirely of Retained earnings), and the company pays out half of its after-tax earnings in dividends. - The company has short-term payables that normally equal 7% of sales each and it has no long-term debt outstanding. What are the company’s financing needs for the coming year?

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