Archives: Solution Manual
978-1305637108 Chapter 20 Mini Case Model
1 2 3 4 5 6 7 14 15 16 17 18 The following data apply to all three alternatives: would be prohibitive. Thus, he has narrowed his choice of financing alternatives to: (1) preferred stock; (2) bonds with warrants; […]
978-1305637108 Build Model Solution Ch20 P08 Build a Model Solution
1 2 3 4 5 6 7 8 13 14 15 16 17 18 Inputs: 7% $22.00 25% of the bonds’ par value (not their call price). Straight bond yield Current stock price 24 25 26 27 32 5 $1,090.00 […]
978-1305637108 Chapter 2 Solution Manual Part 2
© 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. MINI CASE Jenny Cochran, a graduate of The University of Tennessee with 4 years […]
978-1305637108 Chapter 2 Solution Manual Part 1
Answers and Solutions: 2 – 1 Chapter 2 Financial Statements, Cash Flow, and Taxes ANSWERS TO END-OF-CHAPTER QUESTIONS 2-1 a. The annual report is a report issued annually by a corporation to its stockholders. It contains basic financial statements, as […]
978-1305637108 Chapter 2 Mini Case Model Part 2
1 2 3 4 5 6 7 8 9 10 11 12 13 I J K 14 15 16 17 18 19 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 […]
978-1305637108 Chapter 2 Mini Case Model Part 1
1 2 3 4 5 6 7 8 9 10 11 12 13 A B C D E F G H 10/28/2015 Situation Jenny Cochran, a graduate of The University of Tennessee with 4 years of experience as an equities […]
978-1305637108 Build Model Solution Ch02 P15 Build a Model Solution
Solution 7/16/2015 Chapter: 2 Problem: 15 Lan & Chen Technologies: Income Statements for Year Ending December 31 (Thousands of Dollars) 2016 2015 Sales $945,000 $900,000 Expenses excluding depreciation and amortization 812,700 774,000 EBITDA $132,300 $126,000 Depreciation and amortization 33,100 31,500 […]
978-1305637108 Build Model Solution Ch02 P14 Build a Model Solution
Solution Chapter: 2 Problem: 14 Key Input Data for Cumberland Industries 2016 (Thousands of dollars) Sales Revenue $455,000 Expenses (excluding depreciation) as a percent of sales 85.0% Net fixed assest $67,000 Depr. as a % of net fixed assets 10.0% […]
978-1305637108 Chapter 19 Solution Manual Part 2
Answers and Solutions: 19 – 11 Cost of Leasing: After-tax cost of lease = $320,000 (1 – T) = $320,000(1 – 0.34) = $211,200 After-tax cost of debt = 14% x (1 – T) = 14% x (1 – 0.34) […]
978-1305637108 Chapter 19 Solution Manual Part 1
Answers and Solutions: 19 – 1 Chapter 19 Lease Financing ANSWERS TO END-OF-CHAPTER QUESTIONS 19-1 a. The lessee is the party leasing the property. The party receiving the payments from the lease (that is, the owner of the property) is […]
978-1305637108 Chapter 19 Mini Case Model
1 2 3 4 5 6 7 8 9 10 11 12 13 19 20 21 22 23 24 25 26 27 28 (4) What effect does leasing have on a firm’s balance sheet? Answer: See Chapter 19 Mini Case […]
978-1305637108 Build Model Solution Ch19 P06 Build a Model Solution
1 2 3 4 5 6 7 8 9 10 11 12 19 20 21 22 23 24 25 26 27 28 29 a. Should the loom be leased or purchased? First, we want to lay out all of the […]
978-1305637108 Chapter 18 Solution Manual Part 2
Answers and Solutions: 18 – 11 18-7 a. Investment outlay required to refund the issue (all figures after-tax): Call premium on old issue: $5,400,000 New flotation cost: 5,000,000 Tax savings on old flotation: (1,666,667) Additional interest on old issue: 450,000 […]
978-1305637108 Chapter 18 Solution Manual Part 1
Answers and Solutions: 18 – 1 Chapter 18 Public and Private Financing: Initial Offerings, Seasoned Offerings, and Investment Banks ANSWERS TO END-OF-CHAPTER QUESTIONS 18-1 a. A closely held corporation goes public when it sells stock to the general public. Going […]
978-1305637108 Chapter 18 Mini Case Model
Situation For answers to the individual discussion questions, see the Chapter 18 PowerPoint Show. Setting the Offer Price and Number of New Shares to Be Sold Pre-IPO value of equity = $63 million Target net proceeds = $18.60 million Number […]
978-1305637108 Build Model Solution Ch18 P09 Build a Model Solution
1 2 3 4 5 6 7 8 9 10 11 12 18 19 20 21 22 23 24 25 26 27 28 Tax rate 40% Refunding data Coupon rate 8.0000% Maturity 22 29 30 31 32 33 34 35 […]
978-1305637108 Build Model Solution Ch18 P08 Build a Model Solution
1 2 3 4 5 6 7 8 9 10 11 18 19 20 21 22 23 24 25 26 27 28 Gross proceeds = $32.258 million b. Given the target net proceeds, what amount of gross proceeds are required? […]
978-1305637108 Chapter 17 Solution Manual Part 3
Mini Case: 17 – 18 When a currency increases in value relative to another currency, it is said to appreciate. Under the fixed exchange rate system, strong currencies had to be revalued occasionally, which changed the tie to other currencies […]
978-1305637108 Chapter 17 Solution Manual Part 2
Answers and Solutions: 17 – 11 website, in whole or in part. SOLUTION TO SPREADSHEET PROBLEM 17-15 The detailed solution for the spreadsheet problem, Ch 17 P15 Build a Model Solution.xlsx, is available on the textbook’s Web site. © 2017 […]
978-1305637108 Chapter 17 Solution Manual Part 1
Answers and Solutions: 17 – 1 Chapter 17 Multinational Financial Management ANSWERS TO END-OF-CHAPTER QUESTIONS 17-1 a. A multinational corporation is one that operates in two or more countries. b. The exchange rate specifies the number of units of a […]
978-1305637108 Chapter 17 Mini Case Model Part 2
1 2 3 4 5 6 7 8 9 10 11 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 […]
978-1305637108 Chapter 17 Mini Case Model Part 1
1 2 3 4 5 6 7 8 9 10 11 18 19 20 21 22 23 24 25 26 27 28 Firms expand into other countries: To seek new markets. To seek new supplies of raw materials. To gain […]
978-1305637108 Build Model Solution Ch17 P15 Build a Model Solution Part 2
1 2 3 4 5 6 7 8 9 10 11 12 13 20 21 22 23 24 25 26 27 28 29 30 31 32 33 14 15 16 17 18 19 34 35 36 37 38 39 40 […]
978-1305637108 Build Model Solution Ch17 P15 Build a Model Solution Part 1
1 2 3 4 5 6 7 8 9 14 15 16 17 18 19 Collins sells some of this model in the U.S., but the majority of the units are sold in England where he has developed a Rosewood […]
978-1305637108 Chapter 16 Solution Manual Part 3
Mini Case: 16 – 20 d. Is there any reason to think that RR may be holding too much inventory? Answer: As pointed out in part a, RR’s inventory turnover (10.8) is considerably lower than the average firm’s turnover (20.00). […]
978-1305637108 Chapter 16 Solution Manual Part 2
Answers and Solutions: 16 – 11 Restricted Moderate Relaxed Current assets (% of sales Sales) $ 900,000 $1,000,000 $1,200,000 Fixed assets 1,000,000 1,000,000 1,000,000 Total assets $1,900,000 $2,000,000 $2,200,000 Debt (60% of assets) $1,140,000 $1,200,000 $1,320,000 Equity 760,000 800,000 […]
978-1305637108 Chapter 16 Mini Case Model
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 36 37 A B C D E F G H I […]
978-1305637108 Build Model Solution Ch16 P18 Build a Model Solution
Solution 7/16/2015 Chapter: 16 Problem: 18 Input Data Collections during month of sale 15% Collections during month after sale 65% Collections during second month after sale 20% Lease payments $5,000 Target cash balance $40,000 General and administrative salaries $15,000 Depreciation […]
978-1305637108 Chapter 15 Solution Manual Part 3
Mini Case: 15 – 19 i. Describe the recapitalization process and apply it to PizzaPalace. Calculate the resulting the value of the debt that will be issued, the resulting market value of equity, the price per share, the number of […]
978-1305637108 Chapter 15 Solution Manual Part 1
Answers and Solutions: 15 – 1 website, in whole or in part. Chapter 15 Capital Structure Decisions ANSWERS TO END-OF-CHAPTER QUESTIONS 15-1 a. Capital structure is the manner in which a firm’s assets are financed; that is, the right– hand […]
978-1305637108 Chapter 15 Mini Case Model
1 2 3 4 5 6 7 8 9 10 11 12 19 20 21 22 23 24 25 26 27 28 29 repurchase stock. Pizza Palace is in the 40% state-plus-federal tax bracket, the risk-free rate is 6 percent, […]
978-1305637108 Build Model Solution Ch15 P14 Build a Model Solution
Solution 7/16/2015 Chapter: 15 Problem: 14 a. Using the Black-Scholes Option Pricing Model, how much is the equity worth? Black-Scholes Option Pricing Model Total Value of Firm 200.00 this is the current value of operations Face Value of Debt 100.00 […]
978-1305637108 Build Model Solution Ch15 P13 Build a Model Solution
Solution Chapter: 15 Problem: 13 Input Data Risk-free rate 4.5% Market risk premium 5.5% Unlevered beta 0.8 0% 6.0% Tax rate 40.0% 10% 6.1% 20% 7.0% 30% 8.0% 40% 10.0% 50% 12.5% 60% 15.5% 70% 18.0% Fill in formulas in […]
978-1305637108 Chapter 14 Solution Manual Part 3
Mini Case: 14 – 18 d. (2) What is a stock repurchase? Describe the procedures a company follows when it make a distribution through a stock repurchase. Answer: A firm may distribute cash to stockholders by repurchasing its own stock […]
978-1305637108 Chapter 14 Solution Manual Part 2
Answers and Solutions: 14 – 11 SPREADSHEET PROBLEM 14-13 The detailed solution for the problem is available in the file Ch14 P13 Build a Model Solution.xlsx on the textbook’s Web site. © 2017 Cengage Learning. All Rights Reserved. May not […]
978-1305637108 Chapter 14 Solution Manual Part 1
Answers and Solutions: 14 – 1 Chapter 14 Distributions to Shareholders: Dividends and Repurchases ANSWERS TO END-OF-CHAPTER QUESTIONS 14-1 a. The optimal distribution policy is one that strikes a balance between dividend yield and capital gains so that the firm’s […]
978-1305637108 Chapter 14 Mini Case Model Part 2
10/28/2015 pare for its public offering, of dividend policy and discuss t to dividend payouts? a. (1.) What is meant by the term “distribution policy”? How have dividend payouts versus stock repurchases changed over nd David Smithfield to exploit ctional […]
978-1305637108 Chapter 14 Mini Case Model Part 1
Situation Net Income $140.00 Target equity ratio 80% Total capital budget $112.50 Number of shares 100 Distribution = Net Income – [(Target equity ratio) * (Total capital budget)] Capital budget $112.50 Net income $140 Chapter 14. Mini Case Your new […]
978-1305637108 Build Model Solution Ch14 P13 Build a Model Solution
Solution Chapter: 14 Problem: 13 Inputs Amount of distribution $500 Tax rate 40% WACC 11.0% Number of shares 1,000 FCF constant growth rate 6.0% Actual Projected Income Statement (Millions of Dollars) 6/30/2016 6/30/2017 Net Sales $20,000.00 $21,200.00 Costs (except depreciation) […]
978-1305637108 Chapter 13 Solution Manual
Mini Case: 13 – 1 Chapter 13 Corporate Governance ANSWERS TO END-OF-CHAPTER QUESTIONS 13-1 a. An agency relationship arises whenever one or more individuals, the principals, hire another individual, the agent, to perform some service and then delegate decision– making […]
978-1305637108 Chapter 12 Solution Manual Part 3
Mini Case: 12 – 21 e. 1. For each of the next four years, forecast the following items: sales, cash, accounts receivable, inventories, net fixed assets, accounts payable & accruals, operating costs (excluding depreciation), depreciation, and earnings before interest and […]
978-1305637108 Chapter 12 Solution Manual Part 2
Answers and Solutions: 12 – 11 b. See the balance sheet for part a. Line of credit = $2,128 (thousands of $). c. If debt is added throughout the year rather than only at the end of the year, interest […]
978-1305637108 Chapter 12 Mini Case Model Part 3
420.0 Carry over from previous year $420.00 200.0 $253 $620.0 $673 $1,200.0 $1,320 Check: TA − Total Liab. & Eq. = $0.00 Most Recent Forecast 2016 Input 2017 $2,000.0 110% $2,200.00 1,800.0 90.00% $1,980.00 50.0 10.00% $55.00 $150.0 $165.00 40.0 […]
978-1305637108 Chapter 12 Mini Case Model Part 2
For inputs: 2020 Error Check 5% Ok 90% Ok 10% Ok 1% Ok 14% Ok 20% Ok 25% Ok 4% Ok 40% Ok 8% 10% 2020 $2,620 $26 $367 $524 $655 $105 $2,358 $65 $196 2020 Definitions: $118 NOPAT = […]
978-1305637108 Chapter 12 Mini Case Model Part 1
2016 Cash $20 Sales Accts. rec. $280 Op. costs (excl. depr.) Inventories $400 Depreciation Total CA $700 EBIT Net fixed assets $500 Interest Total assets $1,200 Pretax earnings Taxes (40%) Accts. pay. & accruals $80 Net income Line of credit […]
978-1305637108 Build Model Solution Ch12 P11 Build a Model Solution
Solution to Build a Model Problem Chapter: 12 Problem: 11 2016 Net Sales 800.0$ Costs (except depreciation) 576.0$ Depreciation 60.0$ Total operating costs 636.0$ Earning before int. & tax 164.0$ Less interest 32.0$ Earning before taxes 132.0$ Taxes (40%) 52.8$ […]
978-1305637108 Build Model Solution Ch12 P10 Build a Model Solution
Solution to Build a Model Problem Chapter: 12 Problem: 10 Key Input Data: Used in the forecast Tax rate 40% Dividend growth rate 8% Rate on notes payable-term debt, rstd 9% Rate on long-term debt, rd11% Rate on line of […]
978-1305637108 Chapter 11 Solution Manual Part 5
Mini Case: 11 – 37 which in turn is likely to be highly correlated with its market risk. j. 1. What is sensitivity analysis? Answer: Sensitivity analysis measures the effect of changes in a particular variable, say revenues, on a […]
978-1305637108 Chapter 11 Solution Manual Part 4
Mini Case: 11 – 31 MINI CASE Shrieves Casting Company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by Sidney Johnson, a recently graduated MBA. The production line would be […]
978-1305637108 Chapter 11 Solution Manual Part 3
11-13 a. Old depreciation = $5,500 per year. Book value = $55,000 – 5($5,500) = $27,500. Gain = $35,000 – $27,500 = $7,500. Tax on book gain = $7,500(0.35) = $2,625. Price ($55,000) SV (old machine) 35,000 Tax effect (2,625) […]