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28 Sep 2019
- 1. RaoConstruction recently reported $20.50 million of sales, $13 millionof operating costs other than depreciation, and $3 million ofdepreciation. It had $8.35 million of bonds outstanding that carrya 8.0% interest rate, and its federal-plus-state income tax ratewas 35%. What was Rao's operating income, or EBIT, inmillions?
- Vasudevan Inc. recently reported operatingincome of $2.9 million, depreciation of $1.10 million, and had atax rate of 40%.The firm's expenditures on fixed assets and networking capital totaled $0.6 million.How much was its free cashflow, in millions?2.
- 3. On 12/31/08, Hite Industriesreported retained earnings of $525,000 on its balance sheet, and itreported that it had $150,000 of net incomeduring the year. On its previous balance sheet, at 12/31/07, thecompany had reported $450,000 of retained earnings. No shares wererepurchased during 2008. How much in dividends did the firm payduring 2008?
- 4. 26 points. Baker &Co. has applied for a loan from the Trust Us Bank in order toinvest in several potential opportunities. The following are thefinancial statements given to Trust Us Bank:
- BalanceSheet 12/31/08 12/31/09
- Cash $305 270
- Accountsreceivable 275 290
- Inventory 600 580
- Currentassets 1,180 1,140
- Plantandequipment 1,700 1,940
- Less:accdepr (500) (600)
- Netplant andequipment 1,200 1,340
- Totalassets $2,380 $2,480
- Liabilities and Owners%u2019 Equity
- Accountspayable $150 $200
- Notespayable 125 0
- Currentliabilities 275 200
- Bonds 500 500
- Owners%u2019 equity
- Commonstock 165 305
- Paid-in-capital 775 775
- Retainedearnings 665 700
- Totalowners%u2019equity 1,605 1,780
- Totalliabilities and owners%u2019 equity $2,380 $2,480
- Income Statement
- Sales(100%credit) $1,100 $1,330
- Cost ofgoodssold 600 760
- Grossprofit 500 570
- Operatingexpenses 20 30
- Depreciation 160 200
- Netoperatingincome 320 340
- Interestexpense 64 57
- Netincome beforetaxes 256 283
- Taxes 87 96
- Netincome 169 187
- Compute the following ratios for2009:
- 2009
- Currentratio
- Acid testratio
- Inventory turnover
- Times Interest Earned
- Fixed AssetTurnover
- DSO
- Debtratio
- Total assetturnover
- ROA
- Operating profitmargin
- Profitmargin
- Return on equity
- Basic Earning Power
- 5. Inorder to send your oldest child to law school when the time comes,you want to accumulate $80,000 at the end of 18 years. Assumingthat your savings account will pay 5% compounded monthly, how muchwould you have to deposit if:
- a. you want to deposit an amount annually atthe end of each month?
- b. you want to deposit one large lump sumtoday?
- 6. What is the present value of the followingperpetuities?
- a. $800 discounted at 7%
- b. $450 discounted at 11%
- c. $1,100 discounted at 6%
- d. $790 discounted at 9.5%
- 7.
- a.) If Sparco, Inc. deposits $180 at the endof each year for the next eight years in an account that pays 6%interest, how much money will Sparco have at the end of eightyears?
- b.) Suppose Sparco decides that they need tohave $8000 at the end of the eight years. How much will they haveto deposit at the end of each year?
- 8. You have a credit card with a balance of $20,000. The annualinterest rate on the card is 18% compounded monthly, and theminimum payment is $250 per month. If you pay only the minimumpayment each month and do not make any new charges on the card, howmany years will it take for you to pay off the $20,000balance?
- 9. Torepay a $2000 loan from your bank, you promise to make equalpayments every six months for the next five years totaling $3500.What annual rate of interest will you be paying?
- 1. RaoConstruction recently reported $20.50 million of sales, $13 millionof operating costs other than depreciation, and $3 million ofdepreciation. It had $8.35 million of bonds outstanding that carrya 8.0% interest rate, and its federal-plus-state income tax ratewas 35%. What was Rao's operating income, or EBIT, inmillions?
- Vasudevan Inc. recently reported operatingincome of $2.9 million, depreciation of $1.10 million, and had atax rate of 40%.The firm's expenditures on fixed assets and networking capital totaled $0.6 million.How much was its free cashflow, in millions?2.
- 3. On 12/31/08, Hite Industriesreported retained earnings of $525,000 on its balance sheet, and itreported that it had $150,000 of net incomeduring the year. On its previous balance sheet, at 12/31/07, thecompany had reported $450,000 of retained earnings. No shares wererepurchased during 2008. How much in dividends did the firm payduring 2008?
- 4. 26 points. Baker &Co. has applied for a loan from the Trust Us Bank in order toinvest in several potential opportunities. The following are thefinancial statements given to Trust Us Bank:
- BalanceSheet 12/31/08 12/31/09
- Cash $305 270
- Accountsreceivable 275 290
- Inventory 600 580
- Currentassets 1,180 1,140
- Plantandequipment 1,700 1,940
- Less:accdepr (500) (600)
- Netplant andequipment 1,200 1,340
- Totalassets $2,380 $2,480
- Liabilities and Owners%u2019 Equity
- Accountspayable $150 $200
- Notespayable 125 0
- Currentliabilities 275 200
- Bonds 500 500
- Owners%u2019 equity
- Commonstock 165 305
- Paid-in-capital 775 775
- Retainedearnings 665 700
- Totalowners%u2019equity 1,605 1,780
- Totalliabilities and owners%u2019 equity $2,380 $2,480
- Income Statement
- Sales(100%credit) $1,100 $1,330
- Cost ofgoodssold 600 760
- Grossprofit 500 570
- Operatingexpenses 20 30
- Depreciation 160 200
- Netoperatingincome 320 340
- Interestexpense 64 57
- Netincome beforetaxes 256 283
- Taxes 87 96
- Netincome 169 187
- Compute the following ratios for2009:
- 2009
- Currentratio
- Acid testratio
- Inventory turnover
- Times Interest Earned
- Fixed AssetTurnover
- DSO
- Debtratio
- Total assetturnover
- ROA
- Operating profitmargin
- Profitmargin
- Return on equity
- Basic Earning Power
- 5. Inorder to send your oldest child to law school when the time comes,you want to accumulate $80,000 at the end of 18 years. Assumingthat your savings account will pay 5% compounded monthly, how muchwould you have to deposit if:
- a. you want to deposit an amount annually atthe end of each month?
- b. you want to deposit one large lump sumtoday?
- 6. What is the present value of the followingperpetuities?
- a. $800 discounted at 7%
- b. $450 discounted at 11%
- c. $1,100 discounted at 6%
- d. $790 discounted at 9.5%
- 7.
- a.) If Sparco, Inc. deposits $180 at the endof each year for the next eight years in an account that pays 6%interest, how much money will Sparco have at the end of eightyears?
- b.) Suppose Sparco decides that they need tohave $8000 at the end of the eight years. How much will they haveto deposit at the end of each year?
- 8. You have a credit card with a balance of $20,000. The annualinterest rate on the card is 18% compounded monthly, and theminimum payment is $250 per month. If you pay only the minimumpayment each month and do not make any new charges on the card, howmany years will it take for you to pay off the $20,000balance?
- 9. Torepay a $2000 loan from your bank, you promise to make equalpayments every six months for the next five years totaling $3500.What annual rate of interest will you be paying?
Trinidad TremblayLv2
28 Sep 2019