Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Accounting Expert

problem1. The mitchem marble company has the target current ratio of 2.0 however has experienced some difficulties financing its expanding sales in the past few months. At present the firm has the current ratio of 2.5 and current assets of $2.5 million. When mitchem expands its receivables and inventories using its short-term line of credit. How much additional short term funding can it borrow before its current ratio standard is reached?

problem2. John and Daphne are saving for their daughter Ellen's college education. Ellen just turned 10 at (t = 0), and she will be accessing college 8 years from now (at t = 8). College tuition and expenditures at State U. are currently $14,500 a year, however they are expected to rise at a rate of 3.5% a year. Ellen must graduate in four years if she takes longer or desires to go to graduate school, she will be on her own. Tuition and other costs will be due at the starting of each school year (at t = 8, 9, 10, and 11). So far, John and Daphne have accumulated $15,000 in their college savings account (at t = 0). Their long-run financial plan is to add an additional $5,000 in each of the next four years (at t = 1, 2, 3, and 4). Then they plan to make 3 equal annual contributions in each of the following years, t = 5, 6, and 7. They anticipate their investment account to earn 9%. How large must the yearly payments at t = 5, 6, and 7 be to cover Ellen's expected college costs? Show all work.

a. $1,965.21

b. $2,068.64

c. $2,177.51

d. $2,292.12

e. $2,412.76

problem3. RECAPITALIZATION: Tapley Inc. currently has a total capital equal to $8 million, has zero debt, is in the 40% federal-plus-state tax bracket, has the net income of $2 million, and pays out 40% of its earnings as dividends. Net income is anticipated to grow at a constant rate of 5% per year, 340,000 shares of stock are outstanding, and the current WACC is 12.70%. The company is considering a recapitalization where it will issue $5 million in debt and use the proceeds to repurchase stock. Investment bankers have estimated that when the company goes through with the recapitalization, its before-tax cost of debt will be 11% and its cost of equity will rise to 15.5%.

A.) What is stock's current price per share (before the recapitalization)? $ ____________

B.) Supposing that the company maintains the same payout ratio, what will be its stock price following recapitalization? Suppose that shares are repurchased at the price computed in Part a.

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M93885

Have any Question? 


Related Questions in Financial Accounting

Financial acounting assignmentcompanies1-oula fuel

FINANCIAL ACOUNTING ASSIGNMENT Companies: 1- Oula fuel marketing co 2- Kuwait resort company http://www.boursakuwait.com.kw/Stock/Financials.aspx?Stk=651&S=INC 1. Revenue Recognition Revenue is the largest item on the in ...

Community budget analysis - government homework helpyou are

Community Budget Analysis - Government Homework Help You are the City Administrator for your community. You received a letter from a community member demanding to know why their tax dollars are being used by the city for ...

1 distinguish groupthink with managing agreement how are

1. Distinguish groupthink with managing agreement. How are these two concepts? similar? 2. Give multiple examples of the advantages and disadvantages associated with? cross-functional teams.

Assignment1 benzton inchad sales of 1200000 during 2015

Assignment 1. Benzton Inc.had sales of $1,200,000 during 2015. Twenty-five percent of these were cash sales. In addition to the 2015 cash sales, $569,400 of the 2015 credit sales were collected during the year. $30,000 o ...

Intermediate accountingthe following information is

Intermediate Accounting The following information is available for the pension plan of Jones Company for the year 2014. Actual and expected return on plan assets $ 15,000 Benefits paid to retirees 40,000 Contributions (f ...

Assignmentcomprehensive receivables problem connecticut inc

Assignment (Comprehensive Receivables Problem) Connecticut Inc. had the following long-term receivable account balances at December 31, 2006. Note receivable from sale of division $1,800,000 Note receivable from officer ...

Assignmentpart 11 monthly sales were 200000 it was

Assignment Part 1 1) Monthly sales were $200,000. It was estimated that 4% of the units sold would have to be replaced under warranty. On the date of sale the company should record a debit to: A) Sales for $8,000 B) Warr ...

Benoit company produces three products a b and c data

Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per unit): Demand for the company's products is very strong, with far more orders each month than the company can produce wi ...

Assignmentin integrative problem 86 in chapter 4 you were

Assignment In integrative problem 86 in Chapter 4, you were asked to calculate Carmin's gross income for 2013. This is the second phase, which provides the additional information necessary for you to calculate her taxabl ...

Assignment audrey jhingrees ice cream parloraudrey jingle

Assignment: Audrey Jhingree's ice cream parlor Audrey Jingle opened an ice cream parlor in a university town. The parlor specializes in ice cream combinations named after popular professors in the business department of ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro