Topic:
finance
Description
Ford
Company's cost of capital is 13%. It has invested x (million dollars) in
current assets. The following function represents the shortage cost of its
current assets:
S = 9 e−x/3
Find
the following:
(a) The optimal level of current assets.
(b) Total annual cost of these assets at the optimal level.
(a) The optimal level of current assets.
(b) Total annual cost of these assets at the optimal level.
Hudson
Corporation needs a machine that costs $60,000 and is expected to run for 5
years. Hudson will depreciate it completely in 4 years on a straight-line
basis. The tax rate of the company is 33%, and the proper discount rate is 13%.
Find the minimum annual earnings before taxes that this machine should have to
justify its purchase.
Daly Company has the following information for 2008.
Cost of goods sold
$88 million
Dividend per share
$0.20
Earnings before interest and taxes
$13 million
Income tax rate
35%
Interest expense (at average interest rate 10%)
$1 million
Inventory turnover ratio
5
No of shares
5 million
Price per share
$13
Weighted average cost of capital
12%
Find its (a) Earnings per share, (b) Interest coverage ratio, (c) Dividend payout ratio, (d) P-E ratio, and (e) Average inventory.
In the
previous problem, find the cost of equity of the Daly Company.
Anderson Company has the following information for 2009.
Total sales
$783 million
Accounts receivable (average)
$82 million
Accounts payable (average)
$75 million
Inventory (average)
$100 Million
Cost of Goods Sold
$616 million
Cost of Capital
11%
Income Tax Rate
32%
Find the NPV of one cycle of the company. Find the value of Anderson based on its operations.
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