Wally is pleased with your work. He asks you for help on one more project - and thenyou can take a well-deserved break! He gives you this information that he has collectedon one of AndrewCo's key subsidiaries, Oscar & Ollie Inc.:.•Sales $165,000Net Income = $14,800Dividends $3,300Total Debt = $68,000Total Equity = $51,000=•Wally wants to know -(a) What is the sustainable growth rate?(b) If Oscar & Ollie grows at this rate, how much new borrowing will take place in thecoming year, assuming a constant debt-equity ratio?(c) What growth rate could be supported with no outside financing at all?

Step 1: Calculate the Return on equity as follows: Step 2: Calculate the Retention ratio as…

Answered: Wally is pleased with your work. He…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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1 AND 2
1) Find the sale price of an item that has a list price is 27 dollars and a discount rate of 33.33%. 2) Jason bought a pair of sunglasses from a rack that was labeled $10 off all Retrop brand glasses. The original price of the sunglasses was $39. What was the sale price of the sunglasses?
Your personal banker added a clause in the contract. To be entitle for the loan, the business should yield a positive NPV. To set up the business, you will be required to purchase an equipment costing Rs 60,000.00. You expect inventory will increase by Rs 18,000.00 and accounts payable will increase by Rs5000.00. All the other working capital components will stay the same. So the change in net operating working capital is Rs 13,000.00 at t=0. You expect to keep the company for 4 years and you expect to sell 20,000.00 units of peanut butter at a unit price of Rs35.00 and believe that both prices and quantity will remain the same. The fixed cost is Rs 7,000 every year and variable costs will be Rs1.03 per unit. You plan to use the straight- line depreciation and the equipment will be fully depreciated after 4 years. The salvage value is Rs24, 000 and tax rate is 23% 1. What are the incremental cash flows for the 4 years 2. If the WACC is 11%, will you get the loan?
Plz help
I invest $10,000 in a new company. The company then gets a bank loan for $5,000. The company then buys a machine for $3,000 and inventory for $2,000. Create a balance sheet for the company.
You are the owner of a graphic design firm that has a number of high-end clients. Your business started up last year and is financed by three angel investors. Your initial pro forma showed that you were going to be very profitable and return a maximum of $5 million to the angel investors within five-to-six years. The angel investors expect a return of 14 percent on their investment and originally invested $1 million in your startup. At this rate, the net present value (discounted cash flow of the future returns) was $3.8 million (Present Value of future discounted cash flows). Q2. After the first year, “so far so good,” you have signed on some new clients that show great potential and met the targets of your scorecard. That said, it looks like you will have to expand staff and buy some high-end equipment to satisfy the needs of the new clients. You estimate you will need an additional $2.2 million from investors to carry you through the next two years. With the new investments and…
question 2
You are an investor looking to buy an ownership interest in a business. One company is a manufacturing company and the other is an online retailer. Here are the cash flow summaries for both: MFR ONLINE RETAILER Cash from Operations $75,000 $15,000 Cash from Financing 50,000 75,000 Cash from Investing <75,000> <25,000> Net Free Cash Flow $50,000 $65,000 If your most important investment criterion is “quality of cash flow” which of these two companies would you choose to invest your money in? Why?
What is the situation of the McCormick & Company Inc in which this company functions? What does this Compay's future look like? (Minimum 200 words
You are the chief financial officer (CFO) of Gaga Enterprises, an edgy fashion design firm. Your firm needs $11 million to expand production. How do you think the process of raising this money will vary if you raise it with the help of a financial institution versus raising it directly in the financial markets? ... The process of raising the money will vary if you raise it with the help of a financial institution versus raising it directly in the financial markets. Select all the statements below which support this statement: (Select all the answers that apply.) A. Raising the money directly in the financial markets will allow the Gaga Enterprises CFO to avoid the investment bank's commissions and thus raise more money at a lower cost per dollar raised. B. The investment banking institution will allow the Gaga Enterprises CFO to raise more money at a lower cost per dollar raised. C. Financial institutions, such as investment banks, provide expertise in the acquisition of funds. D.…
Q4) a) Dimond 7 has been operating an excavation company in British Columbia for the last 20 years. The company has been successful in generating revenue and free cash flows (FCF). The company is planning to replace 7 excavators. The supplier will trade in old excavators and will deduct $95,000 from the total purchase price of new excavators. Each new excavator will cost $175,000. The corporate tax rate is 35%. The company beta (BA) is 1.15, risk-free return (Rf) is 0.65%, and the expected rate of return on market portfolio is 6%. Based on the risk, the bank will charge 6.35% on the commercial loans/chattel mortgages granted for excavators. The company will use 90% equity financing and 10% debt financing. Based on the above information, please calculate the WACC. Please show all the calculations by which you came up with the final answer. b) Another excavation company called Diamond 12 has 50,000 shares of common stock outstanding with a market price of $50 per share. It has 1,500…
(Financing Ongoing Operations Part 1) Case Study Dakki Corp. has been in the Textile industry for five years, offering a wide variety of local silk, linens, and different kinds of fabrics. They now have five manufacturing plant locations in major cities nationwide and plan to expand their operations in three years. For 2022, their financial projection shows that they need a working capital of P8,000,000 pesos to support their operations. To carry out this plan, they need to look for other external sources to fund thelacking P500,000. They have the following option:1. Selling a machine used in Operations worth P800,000, which was bought last January 1, 2020. It has a useful life of 10 years and has no residual value. The Company has a 25% tax rate and Cost of capital 10%. The Company expected to sell the equipment forP650,000 in December 2021.2. The Company was approved to have a short-term loan at Philippine National Bank (PNB) at 6% annual interest.3. Sale of an old building owned by…

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