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

Taxable income- nick is married and has three children in

Taxable Income:- Nick is married and has three children in college. His wife is a homemaker. Nick has an adjusted gross income of $37,400. If Nick's standard deduction is $11,900, his itemized deductions are $12,200, and ...

Mayas incs optimal cash transfer amount using the baumol

Maya's Inc.'s optimal cash transfer amount, using the Baumol model, is $55,385. The firm's fixed cost per cash transfer of marketable securities to cash is $180. In addition, the total estimated cash costs (transfers and ...

The ok railroad needs to raise 95 million for capital

the O.K. Railroad needs to raise $9.5 million for capital improvements. One possibility is a new preferred stock issue - 8 percent dividend, $100 par value - stock that would yield 9 percent to investors. Flotation costs ...

Raymond mining corporation has 2 million shares of common

Raymond Mining Corporation has 2 million shares of common stock outstanding and 25,000 semiannual bonds outstanding, each with an annual coupon rate of 10% and a par value $1,000. The common stock currently sells for $35 ...

Define each of the followinga call optionb put optionc

Define each of the following: a. Call option b. Put option c. Strike price d. Expiration date 2. How do the rights and obligations of options buyers and sellers differ from the rights and obligations of futures buyers an ...

Assignment 2 required assignment 2-genesis energy capital

Assignment 2: Required Assignment 2-Genesis Energy Capital Plan Report The Genesis Energy operations management team, nearing completion of its agreement with Sensible Essentials, was asked by senior management to presen ...

A company has 1 00000 to invest in new rampd projects the

A company has $1, 00,000 to invest in new R&D projects. The company wants to determine what set of projects should be selected.   The following table summarizes the initial cost and revenue potential for each of the proj ...

Question 1 outline the differences between common stock and

Question 1: Outline the differences between common stock and preferred stock? Question 2: What are the differences between capital projects that are independent, mutually exclusive, and contingent? Question 3: Cortez Art ...

The following is an excerpt taken from a november 30 2007

The following is an excerpt taken from a November 30, 2007, speech entitled "Innovation, Information, and Regulation in Financial Markets" by Federal Reserve Governor Randall S. Kroszner (www. federalreserve.gov/newseven ...

1 what is a currency swap2 what is a credit swap in what

1. What is a currency swap? 2. What is a credit swap? In what ways is it different from an interest-rate swap? 3. What is a credit default swap? What difficulties did credit default swaps cause during the financial crisi ...

  • 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