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Please show step by step work: 1. Corporate Bonds...




Please show step by step work: 1. Corporate Bonds issued by Johnson Corporation currently yield 8%. Municipal bonds of equal risk currently yield 6%. At what tax rate would an investor be indifferent between these two bonds? 2. Pearson Brothers recently reported an EBITDA of $7.5 million and net income of $1.8 million. It had $2.0 million of interest expense, and its corporate rate was 40%. What was its charge for depreciation and amortization? 3. In its most recent financial statement, Newhouse Inc. reported $50 million of net income and $810 million of retained earnings. The previous retained earnings were $780 million. How much in dividends was paid to shareholders during the years? 4. The Shrieves Corporation has $10,000 that it plans to invest in marketable securities. It is choosing among AT&T bonds, which yield 7.5 %, state of Florida muni bonds, which yield 5% (but are not taxable), and AT&T preferred stock, with a dividend yield of 6%. Shrieve's corporate tax rate is 35%, and 70% of the dividends received are tax exempt. Find the after-tax rates of return on all three securities. 5. Donaldson & Son has an ROA of 10%, a 2% profit margin, and a return on equity equal to 15%. What is the company's total assets turnover? What is the firm's equity multiplier? 6. The Nelson Company has $1,312,500 in current assets and $525,000 in current liabilities. Its initial inventory level is $375,000, and it will raise funds as additional notes payable and use them to increase inventory. How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 2.0? What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds? 7. Complete the balance sheet and sales information in the table that follows for Hoffmeiset Industries using the following financial data: Debt ratio. 50% Quick ratio: 0.80 Total assets turnover: 1.5 Days sales outstanding: 36.5 days Gross profit margin on sales: (Sales-Cost of goods sold)/Sales=25% Inventory turnover ratio: 5.0 Balance Sheet Cash _______ Accounts receivable ___________ Inventories ________ Fixed Assets ____________ Total Assets $300,000 Sales _____________ Accounts payable Long term debt 60,000 Common stock Retained earnings 97,500 Total liabilities and equity Cost of goods sold 8. Data for Mortin Chip Company and its industry averages follow. a. Calculate the indicated ratios for Morton. b. Construct the extended Du Pont equation for both Morton and the industry. c. Outline Morton's strengths and weaknesses as revealed by your analysis.


Paper#5471 | Written in 18-Jul-2015

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