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

Assignemntinstructions for accessing public company

Assignemnt Instructions for Accessing Public Company Financial Statements Accessing through SEC website 1. Start by going to www.sec.gov. 2. Under the ‘Filings' Menu, select ‘Company Filings Search' 3. Type in the Compan ...

Exercises1wasatch bank recently held an auction to dispose

Exercises 1. Wasatch Bank recently held an auction to dispose of various assets it had obtained through foreclosures and other loan settlements. Representatives of Aragon Semi-Conductors attended the auction to bid on an ...

Consider four different stocks all of which have a required

Consider four different stocks, all of which have a required return of 18.5 percent and a most recent dividend of $3.65 per share. Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the fo ...

Project part i peyton approved - budget variance reportyou

Project Part I Peyton Approved - Budget Variance Report You are a manager for Peyton Approved, a pet supplies manufacturer. This responsibility requires you to create budgets, make pricing decisions, and analyze the resu ...

Assignmentbullpreparationfor this problem you will need to

Assignment • Preparation For this problem, you will need to select two publicly traded companies. For comparison purposes, the two companies should be competitors within the same industry. Once you have selected two publ ...

Chapter 1 1 which of the following goals of the firm are

Chapter 1 1) Which of the following goals of the firm are synonymous (equivalent) to the maximization of shareholder wealth? A) profit maximization B) maximization of the total market value of the firm's common stock C) ...

Most agree that we should work to bring down the deficit

Most agree that we should work to bring down the deficit. Should the United States increase revenues by eliminating tax credits and loopholes, raising taxes, or stimulating the economy?

Robert wondered why he was always so stressed out when he

Robert wondered why he was always so stressed out when he was dealing with Lucas, the latest addition to his team. On the face of it, the new hire seemed very agreeable and supportive, but whatever interactions he had ha ...

Infrastructure of homeland security hmls 4081 i choose the

Infrastructure of Homeland Security (HMLS 408) 1. I choose The Department Of Energy 2. Parts I and II are to be submitted as one submission, in the form of a continuous document. Make sure to delineate/identify part I an ...

Exercise 1 recognizing accrued interest expenseharveys

Exercise 1. Recognizing accrued interest expense Harveys Corporation borrowed $60,000 from the bank on November 1, 2014. The note had a 6 percent annual rate of interest and matured on April 30, 2015. Interest and princi ...

  • 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