Unit 6 assignment

Complete Chapter 12 question, 12-1, p. 530

a) Operating plan; financial plan

b) Spontaneous liabilities; profit; margin; payout ratio

c) Additional funds needed (AFN): AFN equation; capital intensity ratio:

     self-supporting growth rate

d) Forecasted financial statement approach using percent of sales

e) Excess capacity; lumpy assets; economies of scale

f) Full capacity sales; target fixed assets to sales ratio; required level of 

     fixed assets

Complete Chapter 15 problem, 15-3, p. 647

Ethier Enterprise has an unlettered beta of 1.0. Ethier is financed with 50% debt and has a levered beta of 1.6. If the risk-free rate is 5.5% and the market risk premium is 6%, how much is the additional premium that Ethier's shareholders require to be compensated for financial risk?

Clearly shows the reasoning and/or calculations used to arrive at the answer or conclusion.