Finance 3301 questions Essay

Broussard Skateboard’s gross revenues are expected to increase by 15 % from $ 8 million in 2012 to $ 9. 2 million in 2013. Its assets totaled $ 5 million at the terminal of 2012. Broussard is already at full capacity. so its assets must turn at the same rate as projected gross revenues. At the terminal of 2012. current liabilities were $ 1. 4 million. dwelling of $ 450. 000 of histories collectible. $ 500. 000 of notes collectible. and $ 450. 000 of accumulations. The after-tax net income border is forecasted to be 6 % . and the forecasted payout ratio is 40 % .

Use the AFN equation to calculate Brous- sard’s extra financess needed for the approaching twelvemonth. Required addition in assets – Increase in self-generated liabilities – Increase in maintained net incomes = AFN AFN= ( $ 5/ $ 8 ) * $ 1. 2 – ( $ 1. 4/ $ 8 ) * $ 1. 2- $ 9. 2*6 % * ( 1-40 % ) =0. 75 – 0. 21 – 0. 33=21 % Chapter 10 Tony Company’s balance sheet shows $ 300 million in debt. $ 50 million in preferable stock. and $ 250 million in entire common equity. Tony Company`s revenue enhancement rate is 40 % . rd =6 % . rPS =5 % . andrs =10 % .

If Tony Company acquire capital construction of 30 % debt. 5 % preferable stock. and 65 % common stock. what is its WACC? Wd=30 % ; Wps=5 % ; Ws=65 % WACC=Wd*rd* ( 1-T ) +Wps*rps+ws*rs=30 % *6 % ( 1-40 % ) +5 % *5 % +65 % *10 % =0. 0108+0. 000125+0. 065=7. 59 % What kinds of the T-bonds is the best placeholder for the riskless rate is the output on? Answer: A A. long-run B. short-run C. No 1 Chapter 11 A company creates value when the spread between EROIC and WACC is positive—that is. when Answer: B A. EROIC? WACC = 0 B. EROIC? WACC & gt ; 0 ; C. EROIC? WACC