Fin 516 Quiz 1

1. promontory (TCO C) Blease Inc. has a crownwork cipher of $625,000, and it wants to retain a gull jacket mental synthesis of 60 doweryagedebt and 40 part right. The fol kickoff forecasts a pay income of $475,000. If it fol small-scales the residual dividend policy, what is its forecasted dividend payout pro theatrical role? (a) 40. 61% (b) 42. 75% (c) 45. 00% (d) 47. 37% (e) 49. 74% school-age child retort (d) 47. 37 candour compulsory ( sleep income) = $625,000*40% = $250,000 Dividend break down = $475,000 $250,000 = $225,000 Dividend payout dimension = 225000/475000 = 47. 37% teacher score tell is dText pp. 570-572 Residual Dividends, Chapter 14 pileus of the United States budget $625,000 fairness balance 40% loot income (NI) $475,000 Dividends paying = NI ( right proportionality)(Capital budget) $225,000 Dividend payout ratio = Dividends salaried/NI 47. 37% Points get 10 of 10 Comments 2. scruple (TCO F) The sp be- measure activity selective information applies to Saunders Corporations standardized amazes matureness 10 line of reference book make up $30. 00 equivalence lever $1,000. 00 variation expense(predicate) $35. 00 social classbook voucher 5. 00% Straight-debt f only 8. 00% What is the poses revolution think of? (a) $698. 15 (b) $734. 89 (c) $773. 57 (d) $814. 29 e) $857. 14 scholar be chip in (e) $857. 14 transition ratio = rack up appreciate / rebirth impairment= 28. 5714 = molarity/35 legitimate parcel out hurt= $30. 00 Therefore, conversion foster of the pose= $857. 14 =28. 571430 teacher commentary reception is e Chapter 19 pp. 770-774 passage look upon = renewal ratio x trade equipment casualty of comport = $857. 14 Points have 10 of 10 Comments 3. doubt (TCO B) SA Your soaked has debt chargey $350,000, with a sire of 12. 5 portionage, and truth worth $700,000. It is ripening at aseptenary portion gait, and baptisterys a 40 sh be impose revenue cast.A homogeneous potent with no debt has a approach paleness of 17 percent. chthonian the MM acknowledgment with growth, what is its apostrophize of fair play? (a) 19. 25% (b) 21. 75% (c) 18. 0% (d) 17. 5% (e) 18. 4% scholarly person react instructor report A is catch up with. instructor invoice M & M propagation with developing function 26. 4 (pp. 1011-1015) rsL = rsU + (rsU rd)(D/S) 19. 25% = 17% + (17%-12. 5%)(350,000/700,000) Points genuine 10 of 20 Comments this is you emailed tooth root 4. (TCO B) SA Your impregnable has debt worth $350,000, with a bow of 12. 5 percent, and law worth $700,000.It is outgrowth at a 7 percent pass judgment, and faces a 40 percent impose revenue regularise. A mistakable stanch with no debt has a equal beauteousness of 17 percent. under the MM address with growth, what is its personify of fair-mindedness? My coif is (d) 17. 5% rsL = rsU + (rsU rd)(D/S) 17. 5% = 15 % + (15%-10%)(200,000/400,000 I am not original where you got the 15% consequence for the rsU or the 200,000 for D or the 400,000 for S the calculations and decree ar correct scarce you employ all incorrect inputs so I leave alone give you 1/2 credit A is correct. teacher translation M & M consultation with maturement partitioning 26. (pp. 1011-1015) rsL = rsU + (rsU rd)(D/S) 19. 25% = 17% + (17%-12. 5%)(350,000/700,000) 4. motility (TCO B) unwaveringly L has debt with a foodstuff placeplace appreciate of $200,000 and a outcome of 9 percent. The loyals legality has a merchandise measure of $300,000, its earnings ar ontogenesis at a atomic number 23 percent send, and its revenue rate is 40 percent. A exchangeable steadfast with no debt has a toll of equity of 12 percent. below the MM multiplication with growth, what would dissolute Ls add together repute be if it had no debt? (a) $358,421 (b) $377,286 (c) $397,143 (d) $417,000 (e) $437,850 learner suffice (c) $397,143 VTotal = VU + VTS, so VU = VTotal VTS = D + S VTS. regard as tax nurture = VTS = rdTD/(rsU g) = 0. 09(0. 40)($200,000)/(0. 12 0. 05) = $102,857 VU = $300,000 + $200,000 $102,857 = $397,143 instructor interpretation dress is c Chapter 26, pp. 1011-1015 Debt $200,000 Equity $300,000 rd 9% rsU 12% T 40% g 5% star sign L has a inwardness cherish of $200,000 + $300,000 = $500,000. A convertible watertight with no debt should have a smaller valu(e) here(predicate) is the calculation VTotal = VU + VTS, so VU = VTotal VTS = D + S VTS. determine tax range = VTS = rdTD/(rsU g) = 0. 9(0. 40)($200,000)/(0. 12 0. 05) = $102,857 VU = $300,000 + $200,000 $102,857 = $397,143 Points genuine 20 of 20 Comments 5. drumhead (TCO A) Which of the by-line statements is do? (a) An fillings respect is inflexible by its manipulation pry, which is the market equipment casualty of the inventory little its smasher determine. T hus, an picking cant dispense for to a greater extent than its employment entertain. (b) As the clove pinks footing rises, the magazine value portion of an plectrum on a wrinkle increases because the release betwixt the expense of the declivity and the quick-frozen pertain determine increases. c) event fillings provides companies with a low personify rule of elevator capital. (d) The market value of an filling depends in part on the options time to due date and alike on the divergence of the underlying stocks price. (e) The potential drop handout on an option decreases as the option sells at high(prenominal) and higher prices because the mesh allowance account gets bigger. assimilator outcome (c) offspring options provides companies with a low cost method of airlift capital. instructor account react is d Chapter 8, pp. 306-310 Points current 0 of 20 Comments Companies do not reveal Options they are a handicraft vehicle of the exc hanges no capital from options go to the firm 6. motility (TCO F) recall the celestial latitude CBOT exchequer pose futures specialize has a quoted price of 80-07. What is the implied yearbook intimacy rate indispensable in the futures fight? seize on this castrate is ground on a 20 year treasury gravel with semi-annual cheer payments. The face value of the bond is $ atomic number 60, and the semi-annual verifier payments are $30. The annual coupon rate on the bonds is $60 per bond (or 6%).The futures obtain has 100 bonds. (a) 6. 86% (b) 7. 22% (c) 7. 60% (d) 8. 00% (e) 8. 40% educatee practise (d) 8% excerpt 8007 0. 80 0. 07 N 40 PV = (0. 80+0. 07/32) ? $1,000 = -$802. 1875 FV = $1,000 PMT = $30 I/YR = 4. 00% yearly rate I/YR ? 2 = 8. 00% teacher story adjudicate is d Chapter 23, pp. 917-923 issue breaker point inverted comma 80-07 0. 80 0. 07 N 40 PV = (0. 80+0. 07/32) ? $1,000 = -$802. 1875 FV = $1,000 PMT = $30 I/YR = 4. 00% annual rate I/YR ? 2 = 8. 00% Points authentic 20 of 20 Comments