The Morrit Corporation has $570,000 of debt outstanding, and it pays an interest rate of 10% annually. Morrit's annual sales are $3 million, its average tax rate is 25%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ratio of at least 3 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morrit's TIE ratio? Do not round intermediate calculations. Round your answer to two decimal places.
Q: i) Calculate the firm’s breakeven point (BEP), assuming its initial estimates are accurate. (ii)…
A: Breakeven point is the number of units the company has to make so that they make no profit nor loss.…
Q: . Simple Interest Solve the following Problem 1. A man borrowed P45,000 from a lending institution…
A: Simple interest is the rate of interest calculated on the principal amount at the percentage which…
Q: You plan to retire after working for 45 years. You estimate you need 4 million to retire and live…
A: The FV of an investment is used to find out the worth of its cash flows today at maturity assuming…
Q: Larry borrowed $1,000 through a loan shark, two years later he ended up paying $1,500 to settle his…
A: In contrast to a fee that the borrower may pay the lender or another party, interest is a payment…
Q: If the earnings per share of Microsoft in 2022 is 5.1, how much did you earn from its 1.5 share…
A: Earnings per share is the amount of earnings attributable to each shareholder. This is calculated by…
Q: Show Solution. Topic: Perpetuities 1. A Filipino billionaire wants to provide a perpetual P950,000…
A: The perpetual cash flows are the same ones that are received for an endless period of time.…
Q: Complete the pro-forma income statement below: (Round to the nearest dollar.) Pro-Forma Income…
A: Pro-forma Income Statement is the adjusted Income Statement which shows newly created Income…
Q: Rhea lent P 100,000 today each to Perlyn, Kat and Regine under the following terms. (4) Kat agreed…
A: As per the requirement of the question, only Question 4 is solved. Monthly payments refer to the…
Q: The McGregor Whisky Company is proposing to market diet scotch. The product will first be…
A: NPV is calculated to determine whether a project is profitable in terms of initial investment and…
Q: (a) A "Long Call" is Port = CE. (b) A "Short Call" is Port = -CE. (c) A "Long Put" is Port = PE. (d)…
A: Please note that all 11 sub parts cannot be answered under the answering guidelines. The solution to…
Q: 9. In 2016, when the interest rate on 10-year German government bonds became negative, an article in…
A: Expectation theory predicts the prices of future short-term interest rates through analysis of…
Q: A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $116 and is selling…
A: Bonds are issued by bond issuers such as companies or governments to bondholders such as the public.…
Q: Need ASAP! Determine A) How much is each quarterly sinking fund deposit? B) Calculate the net…
A: Let us calculate the deposits required to be made in the sinking fund balance. The sinking fund…
Q: For S= 105, r = 0.05, compute the following: (a) Find the value of P100(105, T-1) - C100 (105, T −…
A: We have to find the value of several portfolios of put and call options, at different time to…
Q: Two partners have decided to acquire a more extensivemanufacturing facility. One of the partners…
A: There are two offers to conduct a leverage buyout of the factory. Both the offers will translate…
Q: One of your groupmates is planning to purchase a cellular phone. Here are the three offers of an…
A: A loan is an agreement between two parties where one forwards an amount to the other in exchange for…
Q: Example: suppose the following rates on risk-free zeros: Maturity (years) Yield to Maturity (y) 1 2…
A: The forward rate refers to the yield that security provides for a future period. It is determined by…
Q: Pearson Motors has a target capital structure of 35% debt and 65% common equity, with no preferred…
A: Cost of Common Equity: It represents the cost of raising equity capital from the investors for the…
Q: In Problem 4, you investigated the length of time for an investment to double in value when interest…
A: Predicted doubling time The predicted doubling time is calculated using Rule 72, as shown below.…
Q: The earnings per share of Microsoft in 2010 is 1.50 and 0.85 in 2000, what is the rate of interest…
A:
Q: REQUIRED i. Calculate the Accounting Rate of Return ii. Calculate the Internal Rate of Return iii.…
A: ARR (Accounting rate of return) is the average net income the investment earns. This can be…
Q: Find the amount to which $500 will grow in five years under each of the following conditions: a. 12…
A: Future value of a given amount of money is calculated using following equation Future value =…
Q: eBook Problem 3-15 Short Position Margin Assume an investor shorted 1,000 shares of Company Y at…
A: The short sale refers to the process where an investor borrows the shares from others at a high…
Q: 1. Calculate the forward deposit rate, that they can agree on with the financial institution. 2.…
A: Given 3 month spot rate = 4% 6 month spot rate = 4.6% Please imagine a time line that has two…
Q: 7. Problem 10-07 B Problem 10-07 eBook A stock is currently trading for $34. The company has a…
A: STEP 1 The link between a company's stock price and earnings per share is known as the…
Q: Beth obtained a student loan of $75,000 to finish her last 2 years of medical school. She would make…
A: Periodic monthly installment is the amount of monthly installment made by the borrower to the lender…
Q: 12. Find the compound interest on $1000 for 10 years at 4% per annum if the interest is calculated…
A: To determine the compound interest, we need to use the formula below: Interest = Prinicpal[(1+r)n -…
Q: 3. Which of the below statements is false? P/E ratio decreases with ROI If a constant fraction b…
A: the statement : P/E ratio decreases with ROI is false. ROI is the opposite of P/E . The higher the…
Q: On November 20, 2021, JD borrowed Php36,500 from Migs. He promised to pay the principal and 11.75%…
A: The borrowed amount is Php 36,500 The simple interest rate is 11.75% The borrowed date is November…
Q: What is the equity multiplier? (Do not round intermediate calculations and round your answer to 2…
A: Given, Debt-Equity ratio = 0.6 Return on asset = 7.5% Total Equity = $486,000
Q: eBook oblem 5-3 Holding Period Returns e year-end closing prices of stock XYZ are shown in the…
A: Holding period return (HPR) It is the rate of return received when a security is held for a…
Q: 7. Negotiating the Rate. A sovereign borrower is considering a $100 million loan for a 4-year…
A: STEP 1 All payments that are made annually are collectively referred to as annual payments. Because…
Q: Calculate the following ratios using the information below: Note: Round decimal places to the…
A: Current Ratio - Current Asset / Current Liability This Ratio suggest whether the company has…
Q: A company is building a distribution centre, with investment cost (year zero) of €200 million and…
A: Net present value is used to evaluate the projects based on the present value of cash inflow and…
Q: If a manager requires greater return when risk increases, then he is said be....... A.…
A: Risk averse reflects the quality of an individual who do not like much of the risk in the portfolio…
Q: Find the present value of the following ordinary annuities. (Notes: If you are using a financial…
A: Present Value: It represents the current worth of the future cash flow stream or a future sum of…
Q: Show Solution. Topic: Simple Differed Annuity Find the present value of a deferred annuity of…
A: Present value of Annuity: How much cash would be required today to cover a series of future annuity…
Q: First, ignore the fact that rrf depends on whether you are long or short the risk-free asset.…
A: An investor has multiple options to infuse the funds. A collection of all the investment…
Q: For each of the following annuities, calculate the annuity payment. Note: Do not round intermediate…
A: An annuity is a constant and fixed sum of money that is paid or made on a periodic basis. We are…
Q: What are the several components of a deposite institution 's liquidity plan? How can such a plan…
A: A liquidity shortage refers to a situation where an institution, such as a bank or other financial…
Q: Rafael Saves for Japan Tour Rafael saves PHP 1,000 per month and increases by PHP 20 per month with…
A: Future Value An asset's future value is its value when that future date arrives. It is the present…
Q: Check all that apply. Increase the efficiency of its assets so that it generates more sales with…
A: Let us calculate the ratios using the excel spreadsheet. Ratios Calculation Value Profitability…
Q: Nataro, Incorporated, has sales of $668,000, costs of $330,000, depreciation expense of $74,000,…
A: Given, Sales = $688,000 Cost = $330,000 Depreciation expense = $74,000 Interest Expense = $47,000…
Q: Smith family borrowed a large sum of money to purchase their family car. The interest rate on their…
A: Given a certain rate of return, present value (PV) is the current worth of a future sum of money or…
Q: Alex is a currency speculator working for CIBC Currency funds in Toronto. He focuses nearly all of…
A: The option is a type of derivative contract which is providing with the right to buy or sell an…
Q: Jessica had 600 shares of G Fund on January 1. The shares had a value of $22.35. During the year she…
A: A mutual fund denotes a professionally managed investments' collection. An investor generally…
Q: The advertisement for the 3-D TV at the Electronic Boutique appeared in your local newspaper this…
A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…
Q: The 'bank's Return on Equity (ROE) ratio is 13%. Using the risk-adjusted return on capital (RAROC)…
A: Please refer to the excel spreadsheet below. Loan Amount $3,000,000 Given Up_fron Fee 0.15%…
Q: Suppose you deposit $1,030.00 into an account 4.00 years from today. Exactly 13.00 years from today…
A: Future Value refers to the value of the current asset or investment or of cash flows at a specified…
Q: The Star company, is considering two mutually exclusive projects. The expected cash flow values for…
A: We have two projects whose quantum and timing of cash flows are known. We have to find the payback…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- 9) The Morrit Corporation has $450,000 of debt outstanding, and it pays an interest rate of 9% annually. Morrit's annual sales are $3 million, its average tax rate is 25%, and its net profit margin on sales is 5%. If the company does not maintain a TIE ratio of at least 3 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morrit's TIE ratio? Do not round intermediate calculations. Round your answer to two decimal places. 10) What is the future value of a 6%, 5-year ordinary annuity that pays $350 each year? Do not round intermediate calculations. Round your answer to the nearest cent. $ If this were an annuity due, what would its future value be? Do not round intermediate calculations. Round your answer to the nearest cent. $The Tarpon Corp has $325,000 of debt outstanding, and it pays an interest rate of 7% annually. Its annual sales are $900,000, its average tax rate is 25%, and its net profit margin on sales is 10 %. If the company does not maintain a times interest earned (TIE) ratio of greater than 5 to 1, then its bank will refuse to renew the loan and bankruptcy will result. Holding sales constant, at what operating (EBIT) margin would the bank refuse to renew the loan? O 14.06% O 16.25% O 15.17% O 17.50%The Morrit Corporation has $900,000 of debt outstanding, and it pays an interest rate of 8% annually. Morrit's annual sales are $6 million, its average tax rate is 25%, and its net profit margin on sales is 5%. If the company does not maintain a TIE ratio of at least 5 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morrit's TIE ratio? Do not round intermediate calculations. Round your answer to two decimal places.
- 1. A company usually has an average balance in its bank account equal to $60,000. TheThe company makes a loan for $80,000 to pay it off over the long term. The interest rate on the loan is7%. The bank requires the company that, while the loan is in force, the company must havean average balance in your bank account of not less than $80,000. The requirement of this balancecompensation will result in the effective interest rate that the company will pay will be:a. 7%b. Less than 7%c. Greater than 7%d. cannot be determinedhe Morrit Corporation has $600,000 of debt outstanding, and it pays an interest rate of 8% annually. Morrit’s annual sales are $3 million, its average tax rate is 25%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ratio of at least 5 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morrit’s TIE ratio?5. Kirk Development buys on terms of 2/15, net 60 days. It does not take discounts, and it typically pays on time, 60 days after the invoice date. Net purchases amount to $225,000 per year. On average, what is the dollar amount of total trade credit (costly + free) the firm receives during the year, i.e., what are its average accounts payable? (Assume a 365-day year, and note that purchases are net of discounts.)
- Salma Corporation sells on terms of net/90. Their accounts receivable are on average 20 days past due. If annual credit sales are P800,000, what is the company’s average investment in accounts receivable? choose the letter of correct answera. P44,444.00b. P144,444.00c. P224,444.00d. P244,444.00e. P344,444.00The Blake Company has an outstanding bank loan of P400,000 at an interest rate of 12%. The company is required to maintain a 20% compensating balance in its checking account. What is the effective interest cost of the loan? Assume that the company would not normally maintain this average amount? Format: 11%National Corporation has P850,000 of debt outstanding, and it pays an interest rate of 10 percent annually on its bank loan. National’s annual sales are P3,200,000, its average tax rate is 40 percent, and its net profit margin on sales (Net income after tax) is 6 percent. If the company does not maintain a Times Interest Earned ratio of at least 4 times, its bank will refuse to renew its loan, and bankruptcy will result. What is National’s current Times Interest Earned ratio?
- Viserion, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 28 years to maturity that is quoted at 106 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually. What is the company's pretax cost of debt? multiple choice 1 5.57% 6.69% 4.24% 6.13% 5.02% If the tax rate is 24 percent, what is the aftertax cost of debt? multiple choice 2 4.24% 3.81% 4.66% 5.93% 5.57%The Morrit Corporation has $600,000 of debt outstanding, and it paysan interest rate of 8% annually. Morrit’s annual sales are $3 million, itsaverage tax rate is 40%, and its net profit margin on sales is 3%. If thecompany does not maintain a TIE ratio of at least 5 to 1, then its bankwill refuse to renew the loan, and bankruptcy will result. What is Morrit’sTIE ratio?For questions 37 – 40 use the following: Starlight Corporation has accounts payable of $200,000 (a typical amount for the company, non-interest bearing), a bank loan of $300,000 at 8% interest rate, a bank loan of $500,000 at 7% interest rate, and equity of $1,400,000. Its income tax rate is 31%. Management estimates the company’s cost of equity is 14%. A. What is the company’s after-tax cost for each of its two bank loans? a. 6% b. 4% c. 7.5% d. 5% B. What is the company’s weighted average cost of capital on interest-bearing debt and equity? a. 12% b. 9% c. 14% d. 11% C. What is the company’s weighted average cost of capital on non-interest-bearing debt, interest bearing debt, and equity (or total invest capital)? a. 9% b. 10% c. 12% d. 8%