Description of this paper

Finance Problems - Ackert Company's and more Solution

Description

solution


Question

Question;1. Ackert Company's last dividend was $1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever. The firm's required return (rs) is 12.0%. What is the best estimate of the current stock price?$37.05$38.16$39.30$40.482. The Chadmark Corporation's budgeted monthly sales are $3,000. In the first month, 40% of its customers pay and take the 2% discount.The remaining 60% pay in the month following the sale and don't receive a discount.Chadmark's bad debts are very small and are excluded from this analysis. Purchases for next month's sales are constant each month at $1,500.Other payments for wages, rent, and taxes are constant at $700 per month. Construct a single month's cash budget with the information given.What is the average cash gain or (loss) during a typical month for the Chadmark Corporation? Please show your calculation.3. Consider the following for the following 4 firms:Firm Cash Debt Equity rD rE rCEenie 0 150 150 5% 10% 40%Meenie 0 250 750 6% 12% 35%Minie 25 175 325 6% 11% 35%Moe 50 350 150 7.5% 15% 30%Which is the weighted average cost of capital for Meenie closet to?a. 10.5% b. 7.4% c. 10.0% d. 8.8%4. Your consulting firm was hired to improve the performance of Shin-Soenen Inc which is highly profitable but has been experiencing cash shortage due to its high growth rate. As one part of your analysis, you want to determine the firm's cash conversion cycle, using the following information and a 365 day a year, what is the firm's present cash conversion cycle?Average Inventory 75,000Annual Sales 600,000Annual cost of goods sold 360,000Average accounts receivable 160,000Average accounts payable 25,000a. 120.6 days b. 126.9 days c. 133.6 days d. 140.6 dayse. 148.0 days.5. Your company has been offered credit terms of 4/30, net 90 days. What will be the nominal annual percentage cost of its nonfree trade credit if it pays 120 days after the purchase? (Assume a 365-day year.)a. 16.05%b. 16.90%c. 17.74%d. 18.63%e. 19.56%6. Division Asset Next period exp. free cash flow Exp. growthOil Exploration 1.4 450 4%Oil Refinery 1.1 525 2.5%Gas & Conv. 0.8 600 3.0%The risk free rate of interest is 3% and market risk premium is 5%. What is the cost of capital for oil exploration div. closet to:a. 6.0% b. 7.0% c. 8.5% d. 10%7. You expect CCM Corp to generate the foll. free cash flows ove rthe next 5 years:Yr 1 2 3 4 5FCF(million) 25 28 32 37 40If CCM has $150million of debt and 12million shares of stock outstandingwhich is the share price of CCM closest to/a. $49.50 b. $11.25 c. $20.50 d. $22.758. Which is the variance of returns on the index from 2,000 to 2009 closet to?Year End Index Realized Return (R-R) (R-R)22000 23.6% 14.78% 0.02184482001 24.7% 15.88% 0.02521742002 30.5% 21.68% 0.04700222003 9.0% 0.18% 3.4 E-062004 -2.0% -10.82% 0.01170722005 -17.3% -26.12% 0.06822542006 -24.3% -33.12% 0.10969342007 32.2% 23.38% 0.05466242008 4.4% -4.42% 0.00195362009 7.4% -1.42% 0.0002016A. 0.0450 B. 0.3400 C. 0.1935 D. 0.0375

 

Paper#49101 | Written in 18-Jul-2015

Price : $22
SiteLock