Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem 1: This problem requires you to use information from the 2011 financial statements of Ace Hardware Stores. To find those statements, go to http://ourcompany.acehardware.com/financialreports.asp and click on the link to “Financial Statements” under the item 2011 Annual Summary (dated April 19, 2012). This opens a pdf document. Pages 4 and 5 (of 36) of that document will have the information needed. Using that information, find out the following (Be sure to show your work):

a) Current Ratio at the end of 2011
b) Debt-Equity Ratio at the end of 2011
c) Profit Margin for 2011
d) Rate of Return on Assets for 2011

problem 2: On January 1 a bond with face value of $1,000 is for sale in the market. That bond has a coupon rate of 6%, pays interest once a year and the end of the year, and matures at the end of 10 years. If the “market” interest rate on January 1 is 5%, what would you expect the selling price of that bond to be? (Be sure to show your work.)

problem 3: Towson Enterprises has identified two mutually exclusive (can’t do both) projects. The relevant cash flows and timing of those cash flows are shown in the following table. Assume that the cash flows in years 1 through 4 all are received at the end of the year.

510_cash flows.jpg

a) What is the approximate internal rate of return for each of the two projects? If you apply the internal rate of return decision rule, which project should Towson accept? (Be sure to show your work.)

b) If the required rate of return is 9%, what is the net present value for each of the two projects? Which project would Towson choose if it applies the net present value decision rule? (Be sure to show your work.)

problem 4: Brixton Products is considering the purchase of a new $520,000 computer-based entry order system. The cost of the system will be depreciated on a straight-line basis over its five-year life. Brixton plans to sell the applicable computer equipment at the end of five years for $40,000. During the five-year life of the project, Brixton will save $160,000 each year in order-processing costs. What is the approximate internal rate of return for this project?  Ignore income taxes. (Be sure to show your work.)

problem 5: Given the following information for Allyson Corporation, find out the Corporation’s weighted cost of capital. (Be sure to show your work.)

1682_cost of capital.jpg

problem 6: McGovern Company is comparing two different capital structures - an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the Company would have 700,000 shares of stock outstanding. Under Plan II, the Company would have 450,000 shares of stock outstanding and $6 million in debt outstanding. The interest rate on the debt would be 10%. Assume no taxes.

a) If earnings before interest is $1.3 million, which plan would result in the highest earnings-per-share? (Be sure to show your work.)

b) If earnings before interest is $2.8 million, which plan would result in the highest earnings-per-share? (Be sure to show your work.)

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91372

Have any Question? 


Related Questions in Basic Finance

An investor has a cash of 10000000 at disposal he wants to

An investor has a cash of $10,000,000 at disposal. He wants to invest in a bond with $1,000 nominal value and whose dirty price is equal to 107.457%. 1. What is the number of bonds he will buy? 2. Same question if the no ...

How do bonds provide financing to corporations for their

How do bonds provide financing to corporations for their capital projects? What are the key differences between using bonds to finance capital projects and using stock for that purpose? The value of a bond is dependent p ...

Assignmentbob and lisa are both married working adults they

ASSIGNMENT Bob and Lisa are both married, working adults. They both plan for retirement and consider the $2,000 annual contribution a must. First, consider Lisa's savings. She began working at age 20 and began making an ...

Would you rather own the stocks or bonds of a particular

Would you rather own the stocks or bonds of a particular corporation if you believed that the corporation was going to earn exceptional profits next year?

Homework set2015 strayer university all rights reserved

Homework Set 2015 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or ...

Determine the target weighted average cost of capital for

Determine the target weighted average cost of capital for Felicia & Fred, given following assumptions: Weights of 30% debt and 70% common equity (no preferred equity) A 35% tax rate The cost of debt is 9% The beta of the ...

What does it mean that managers should maximize shareholder

What does it mean that managers should maximize shareholder wealth "subject to ethical constraints"? What are the ethical considerations that might impact decisions that result in cash flow and price effects that are les ...

Assume that after you graduate you get a job as the chief

Assume that after you graduate, you get a job as the chief financial officer of a small company. Explain why being able to forecast the direction of interest rate changes may be critical for your success in that position ...

Define the various capital budgeting methods such as net

Define the various capital budgeting methods such as net present value (NPV), internal rate of return (IRR), and so on, and explain how they differ from one another. Identify which, if any, of the methods discussed might ...

Assignment financial reporting standards in germanyuse

Assignment: Financial Reporting Standards in Germany Use inductive or deductive methods to correlate Germany's history with its financial reporting standards. Requirements: 1. Identify historical events that led to the i ...

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate