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Strayer FIN100 Lab Assignment 7: Chapters 15 and 16

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Question;1.;value:5.00 points;Suppose;a firm has had the following historic sales figures.;Year;2009;2010;2011;2012;2013;Sales;$;2,600,000;$;2,850,000;$;2,500,000;$;3,100,000;$;2,700,000;What;would be the forecast for next year?s sales using the na?ve approach?;Next;year?s sales;$;2.;value:5.00 points;Suppose;that Lil John Industries? equity is currently selling for $42 per share and;that 2.5 million shares are outstanding. Assume the firm also has 35,000;bonds outstanding, and they are selling at 104 percent of par.;What;are the firm?s current capital structure weights? (Do not round intermediate calculations. Round your answers;to 2 decimal places.);Capital structure weights;Equity;%;Debt;%;3.;value:5.00 points;Suppose;a firm has had the following historic sales figures.;Year;2009;2010;2011;2012;2013;Sales;$;2,700,000;$;3,950,000;$;2,600,000;$;2,200,000;$;2,800,000;What;would be the forecast for next year?s sales using the na?ve approach?;Next;year?s sales;$;4.;value:5.00 points;Suppose;that Papa Bell, Inc.?s, equity is currently selling for $28 per share, with;2.3 million shares outstanding. The firm also has 9,000 bonds outstanding;which are selling at 93 percent of par. Assume Papa Bell was considering an;active change to its capital structure so as to have a D/E of 0.4.;Which;type of security (stocks or bonds) would the firm need to sell to accomplish;this?;Sell;bonds and buy back stock;Sell;stock and buy back bonds;How;much would it have to sell? (Enter your;answer in dollars not in millions. Do not round intermediate calculations and;round your final answer to 2 decimal places.);Selling;amount;4.;value:5.00 points;Suppose;that Papa Bell, Inc.?s, equity is currently selling for $28 per share, with;2.3 million shares outstanding. The firm also has 9,000 bonds outstanding;which are selling at 93 percent of par. Assume Papa Bell was considering an;active change to its capital structure so as to have a D/E of 0.4.;Which;type of security (stocks or bonds) would the firm need to sell to accomplish;this?;Sell;bonds and buy back stock;Sell;stock and buy back bonds;How;much would it have to sell? (Enter your;answer in dollars not in millions. Do not round intermediate calculations and;round your final answer to 2 decimal places.);Selling;amount

 

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