1. Ackert Company’s last dividend was $1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever. The firm’s required return (rs) is 12.0%. What is the best estimate of the current stock price?
2. The Chadmark Corporation’s budgeted monthly sales are $3,000. In the first month, 40% of its customers pay and take the 2% discount.
The remaining 60% pay in the month following the sale and don’t receive a discount.
Chadmark’s bad debts are very small and are excluded from this analysis. Purchases for next month’s sales are constant each month at $1,500.
Other payments for wages, rent, and taxes are constant at $700 per month. Construct a single month’s cash budget with the information given.
What is the average cash gain or (loss) during a typical month for the Chadmark Corporation? Please show your calculation.
3. Consider the following for the following 4 firms:
Firm Cash Debt Equity rD rE rC
Eenie 0 150 150 5% 10% 40%
Meenie 0 250 750 6% 12% 35%
Minie 25 175 325 6% 11% 35%
Moe 50 350 150 7.5% 15% 30%
Which is the weighted average cost of capital for Meenie closet to?
a. 10.5% b. 7.4% c. 10.0% d. 8.8%
4. Your consulting firm was hired to improve the performance of Shin-Soenen Inc which is highly profitable but has been experiencing cash shortage due to its high growth rate. As one part of your analysis, you want to determine the firm’s cash conversion cycle, using the following information and a 365 day a year, what is the firm’s present cash conversion cycle?
Average Inventory 75,000
Annual Sales 600,000
Annual cost of goods sold 360,000
Average accounts receivable 160,000
Average accounts payable 25,000
a. 120.6 days b. 126.9 days c. 133.6 days d. 140.6 days
e. 148.0 days.
5. Your company has been offered credit terms of 4/30, net 90 days. What will be the nominal annual percentage cost of its nonfree trade credit if it pays 120 days after the purchase? (Assume a 365-day year.)
6. Division Asset Next period exp. free cash flow Exp. growth
Oil Exploration 1.4 450 4%
Oil Refinery 1.1 525 2.5%
Gas & Conv. 0.8 600 3.0%
The risk free rate of interest is 3% and market risk premium is 5%. What is the cost of capital for oil exploration div. closet to:
a. 6.0% b. 7.0% c. 8.5% d. 10%
7. You expect CCM Corp to generate the foll. free cash flows ove rthe next 5 years:
Yr 1 2 3 4 5
FCF(million) 25 28 32 37 40
If CCM has $150million of debt and 12million shares of stock outstanding
which is the share price of CCM closest to/
a. $49.50 b. $11.25 c. $20.50 d. $22.75
8. Which is the variance of returns on the index from 2,000 to 2009 closet to?
Year End Index Realized Return (R-R) (R-R)2
2000 23.6% 14.78% 0.0218448
2001 24.7% 15.88% 0.0252174
2002 30.5% 21.68% 0.0470022
2003 9.0% 0.18% 3.4 E-06
2004 -2.0% -10.82% 0.0117072
2005 -17.3% -26.12% 0.0682254
2006 -24.3% -33.12% 0.1096934
2007 32.2% 23.38% 0.0546624
2008 4.4% -4.42% 0.0019536
2009 7.4% -1.42% 0.0002016
A. 0.0450 B. 0.3400 C. 0.1935 D. 0.0375
We are committed to making our customer experience enjoyable and that we are keen on creating conditions where our customers feel secured and respected in their interactions with us.
With our qualified expert team who are available 24/7, we ensure that all our customer needs and concerns are met..
Our refund policy allows you to get your money back when you are eligible for a refund. In such a case, we guarantee that you will be paid back to your credit card. Another alternative we offer you is saving this money with us as a credit. Instead of processing the money back, keeping it with us would be an easier way to pay for next the orders you placeRead more
All orders you place on our website are written from scratch. Our expert team ensures that they exercise professionalism, the laid down guidelines and ethical considerations which only allows crediting or acknowledging any information borrowed from scholarly sources by citing. In cases where plagiarism is confirmed, then the costumier to a full refund or a free paper revision depending on the customer’s request..Read more
Quality is all our company is about and we make sure we hire the most qualified writers with outstanding academic qualifications in every field. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.Read more
We understand that students are not allowed to seek help on their projects, papers and assignments from online writing services. We therefore strive to uphold the confidentiality that every student is entitled to. We will not share your personal information elsewhere. You are further guaranteed the full rights of originality and ownership for your paper once its finished.Read more
By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.Read more