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

Business finance assignmenttasks to complete1download and

Business Finance Assignment Tasks to complete: 1. Download and save the Excel file, "Excel_Assignment". The file is located in the Excel Assignment folder. 2. Save the file to your own drive and rename the file with your ...

Forecasting and preparing financial statementstina one of

Forecasting and Preparing Financial Statements Tina, one of your friends, approached you and proposed a partnership in a new venture that she is planning to start-a fashion boutique that will sell women's clothing and ac ...

Assignmentconstructive retirement at beginning of year

Assignment Constructive Retirement at Beginning of Year (Effective Interest Method) Able Company issued $690,000 of 7 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay interest ...

Business simulation tasksassessed task 1 financial

Business Simulation Tasks Assessed Task 1: Financial Analysis The Board of directors has asked you to perform a review of the financial performance and financial position of the business based on the company's 2032 finan ...

Assignmentyou have just been hired as a new management

Assignment You have just been hired as a new management trainee by XYZ Co, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little i ...

In fiscal 2010 dell inc acquired perot systems for 3878

In Fiscal 2010, Dell Inc. acquired Perot Systems for $3,878 million in cash. Perot's net assets acquired hand the following fair values at the acquisition date. In Million Fair Value cash and cash equivalents $266 Accoun ...

Financial statement analysismy company is walmartpart

Financial Statement Analysis My company is Walmart. Part I • Perform at least one profitability ratio to measure the income and operating success of your selected company. • Perform at least one liquidity ratio to measur ...

Bad debt expense calculationsone of my classes a few terms

Bad Debt Expense Calculations One of my classes a few terms ago asked for an example or a bit better explanation regarding calculating Bad Debt Expenses. The following is what I have come up with. There are three basic m ...

1 describe the formal procedures associated with issuing

1. Describe the formal procedures associated with issuing long-term debt. 2. Describe the nature, type, and valuation of current liabilities. 3. Explain the accounting for different types of loss contingencies. 4. Explai ...

Problem 1millar company has the following cost records for

PROBLEM 1 Millar Company has the following cost records for May 2016 Indirect factory labor $ 10,000 Advertising Expense $ 8,000 Direct materials used 13,000 Depreciation, factory equipment 4,200 Work in process, 5/1/15 ...

  • 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

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

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen