round 13

ROUND 48$

#1 Homework #5E (HPR, Annualized holding period return, Effective annual rate on investment)

You purchased 250 shares of General Motors stock at a price of $86.75 two years ago. You sold all stocks today for $84.26. During this period the stock paid dividends of $4.47 per share. What is your annualized holding period return (annual percentage rate)?

Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box)

Your Answer:

#2 Homework #6A (Payback period and Discounted payback period)

Find the Discounted Payback period for the following project. The discount is 6%

	Project y
Initial outlay	$8,936
Year 1	$3,620
Year 2	$3,528
Year 3	$5,285
Year 4	$6,771

Round the answer to two decimal place

Your Answer

#3Homework #6B (NPV)

Green Landscaping, Inc. is using net present value (NPV) when evaluating projects. Green Landscaping’s cost of capital is 6.45 percent. What is the NPV of a project if the initial costs are $2,427,180 and the project life is estimated as 12 years? The project will produce the same after-tax cash inflows of $539,639 per year at the end of the year.

Round the answer to two decimal places.

Your Answer:

#4 Homework #6C (IRR and MIRR annually and semi-annually)

Find the internal rate of return (IRR) for the following series of future cash flows. The initial outlay is $546,200.

Year 1: 173,600

Year 2: 145,600

Year 3: 125,800

Year 4: 145,300

Year 5: 166,300

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

You should use Excel or financial calculator.

Your Answer:

#5Homework #6D (Profitability Index)

Gold Mining, Inc. is using the profitability index (PI) when evaluating projects. Gold Mining’s cost of capital is 6.39 percent. What is the PI of a project if the initial costs are $1,904,990 and the project life is estimated as 10 years? The project will produce the same after-tax cash inflows of $601,496 per year at the end of the year.

Round the answer to two decimal places.

Your Answer:

#6Homework #6E (Before and after-tax cost of debt financing)

Great Seneca Inc. sells $100 million worth of 25-year to maturity 13.76% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $992 for each $1,000 bond. The firm's marginal tax rate is 30%. What is the after-tax cost of capital for this debt financing?

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

You should use Excel or financial calculator.

Your Answer:

#7Homework #6F (Cost of equity financing)

Last year the Black Water Inc. paid dividends $3.24. Company’s dividends are expected to grow at an annual rate of 4% forever. The company’s common stock is currently selling on the market for $68.41. The investments banker will charge flotation costs $3.55 per share. Calculate the cost of common equity financing using Gordon Model.

Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box).

Your Answer:

#8Homework #6G (WACC)

The Black Bird Company plans an expansion. The expansion is to be financed by selling $97 million in new debt and $64 million in new common stock. The before-tax required rate of return on debt is 5.35% percent and the required rate of return on equity is 14.58% percent. If the company is in the 34 percent tax bracket, what is the weighted average cost of capital?

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

Your Answer:

#9 Homework #7A (Break-even point, Operating leverage)

The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $30.02. The variable cost per unit is $22.73, Poseidon Swim has average fixed costs per year of $29,654.

What is the break-even point in dollar sales?

Your answer

#10 Homework #7B (Financial leverage)

Irresistible Chips is reviewing its financial condition. The firm generated an operating profit of $4,968,400. The firm’s interest expense was $2,015,390.

What will be the resulting percentage change in earnings per share if they expect operating profit to change 0.6 percent? 

(You should calculate the degree of financial leverage first).

(Write the percentage sign in the "units" box).

Round the answer to two decimals

Your Answer:

#11Homework #7C (Total (Combined) leverage)

Haunted Forest, Inc.is selling fog machines.

Use the following information about Haunted Forest, Inc. to answer the following questions.

Average selling price per unit $331.

Variable cost per unit $181

Units sold 305

Fixed costs $17,692

Interest expense $3,457

 Based on the data above, what is the degree of total (combined) leverage of Haunted Forest, Inc.?

Round the answer to two decimals

Your Answer:

#12 Homework #7D (Project Initial Outlay and Operating cash flow)

El Dorado Storage has the following projections for Year 1 of a capital budgeting project.

Sales $227,010

Variable costs $111,589

Fixed costs adn selling, general and administrative expenses $10,398

Depreciation Expense $15,550

Tax Rate 35%

Calculate the operating cash flow for Year 1. Round the answer to two decimals

Your Answer:

#13 Homework #7E (After-Tax cash flow from selling the old asset)

Genetic Insights Co. purchases an asset for $15,366. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, respectively. Genetic Insights has a tax rate of 30%. The asset is sold at the end of six years for $4,997.

Calculate book value of an asset. Round the answer to two decimals.

Your Answer:

#14 Homework #8A (Lock-Box system, Cost of Trade Credit)

Book Depot Inc. sells on terms of 3/15, net 50. What is the implicit cost of trade credit under these terms? Use a 365-day year

Round the answer to two decimal places in percentage form

Your Answer

#15Homework #8B (Carrying Costs and Ordering Costs)

Post Card Depot, an large retailer of post cards, orders 9,687,820 post cards per year from its manufacturer. Post Card Depot plans on ordering post card 20 times over the next year. Post Card Depot receives the same number of post cards each time it orders. The carrying cost is $0.20 per post card per year. The ordering cost is $414 per order.

What is the annual ordering cost of the post card inventory?

(Round the answer to two decimal places)

Your Answer:

#16 Homework #8C (EOQ, Average Inventory)

Cheeseburger and Taco Company purchases 11,237 boxes of cheese each year. It costs $29 to place and ship each order and $3.20 per year for each box held as inventory. The company is using Economic Order Quantity model in placing the orders.

 What is the average inventory held during the year?

Round the answer to the whole number

Your Answer: