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

Select a violent female offender 2 pages bull describe the

Select a violent female offender 2 pages • Describe the violent female offender you selected. • Describe any social, environmental, psychological, and/or biological factors that may have contributed to the crime and expl ...

1 in reviewing a claim under the equal pay act do the

1. In reviewing a claim under the Equal Pay Act, do the courts require that the jobs in question be identical? 2. Why do health professionals view marketing in a different way than their counterparts in other industries? ...

I loss contingencies entries and essayon november 24 2014

I. (Loss Contingencies: Entries and Essay) On November 24, 2014, 26 passengers on Windsor Airlines Flight No. 901 were injured upon landing when the plane skidded off the runway. Personal injury suits for damages totalin ...

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 ...

Assignmentat this point you have examined three years of

Assignment At this point you have examined three years of financial statements for your firm and produced a proforma statement. You have also determined their sustainable growth rate as well. You have also learned about ...

Problem q 1on july 1 2014 linked up inc acquired a new

Problem: Q 1 On July 1, 2014 Linked Up Inc. acquired a new machine at a cost of $15,000 with a residual value of $3,000. The estimated useful life is 5 years and 100,000 units. For the year ending June 30, 2015 the machi ...

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 ...

Assignmenti a comparing three depreciation methods obj

Assignment I. A Comparing three depreciation methods ObJ. 2 Waldum Company purchased packaging equipment on January 5, 2012, for $135,000. The equipment was expected to have a useful life of three years, or 18,000 operat ...

Project - transactionsinstructionsthis project is a review

Project - Transactions/Instructions This project is a review of the accounting cycle that has been covered during class. You have two weeks to complete the project. Please prepare all information in a professional manner ...

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 ...

  • 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