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

1 behavioral measures frequently have the advantage of

1. Behavioral measures frequently have the advantage of reducing participant reactivity. Since they can capture the behavior of individuals more honestly, why are they so infrequently used in behavioral research? 2. Cons ...

Able company is selling a bond for 867 the bond is with a

Able Company is selling a bond for $867. The bond is with a 20% coupon rate annually, and will mature in 10 years. The company's shareholders are receiving a 22.5% return. The company is subject to a 25% tax rate. The co ...

1 should demand characteristics be eliminated or

1. Should demand characteristics be eliminated or strengthened in an experiment? Explain. 2. How do researchers detect and eliminate placebo effects? 3. What effect does error variance have on the results of an experimen ...

Assuming the borrower is in no danger of default under what

Assuming the borrower is in no danger of default, under what conditions might a lender be willing to accept a lesser amount from a borrower than the outstanding balance of a loan and still consider the loan paid in full?

King manufacturing turns its inventory 91 times each year

King Manufacturing turns its inventory 9.1 times each year, has an average payment period of 35 days, and has an average collection period of 60 days. The firm's annual sales are $72 million, its cost of goods sold repre ...

1 discuss how the interrupted time series design with a

1. Discuss how the interrupted time series design with a reversal and the interrupted time series design with multiple replications improve on the simple interrupted time series design. 2. Distinguish between a longitudi ...

Consider a lottery that pays to the winner an annuity of

Consider a lottery that pays to the winner an annuity of $800 that begins at the end of the first year and continues at the end of each consecutive year for a total of 18 years with one exception. Because of high adminis ...

A spherical pellet containing pure solid a is suspended in

A spherical pellet containing pure solid A is suspended in a flowing liquid stream at 20°C. The initial diameter of the pellet is 1.0 cm, and the bulk liquid velocity is 5 cm/s. Component A is soluble in the liquid, and ...

1 should demand characteristics be eliminated or

1. Should demand characteristics be eliminated or strengthened in an experiment? Explain. 2. How do researchers detect and eliminate placebo effects? 3. What effect does error variance have on the results of an experimen ...

Define the endurance limit of a bolt which is greater the

Define the endurance limit of a bolt ? Which is greater, the static yield strength or the endurance limit of the bolt? When will an increase in preload increase fatigue life? When will an increase in preload decrease fat ...

  • 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