Question 1
(7?2) Constant Growth Valuation Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e., D1 = $1.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 15%. What is the value per share of Boehm?s stock? (7?4) Preferred Stock Valuation Nick?s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the end of each year. The preferred sells for $50 a share. What is the stock?s required rate of return? (7?5) Nonconstant Growth Valuation A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the company?s dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 7% thereafter. The company?s stock has a beta of 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock?s current price? Can you show the work too, so I can understand the material.,(9-2) After-Tax Cost of Debt LL Incorporated?s currently outstanding 11% coupon bonds have a yield to maturity of 8%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is LL?s after-tax cost of debt? (9-4) Cost of Preferred Stock with Flotation Costs Burnwood Tech plans to issue some $60 par preferred stock with a 6% dividend. A similar stock is selling on the market for $70. Burnwood must pay flotation costs of 5% of the issue price. What is the cost of the preferred stock? (9-5) Cost of Equity: DCF Summerdahl Resort?s common stock is currently trading at $36 a share. The stock is expected to pay a dividend of $3.00 a share at the end of the year (D1 = $3.00), and the dividend is expected to grow at a constant rate of 5% a year. What is its cost of common equity? (9-6) Cost of Equity: CAPM Booher Book Stores has a beta of 0.8. The yield on a 3-month T-bill is 4% and the yield on a 10-year T-bond is 6%. The market risk premium is 5.5%, and the return on an average stock in the market last year was 15%. What is the estimated cost of common equity using the CAPM? (9-7) WACC Shi Importer?s balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi?s tax rate is 40%, rd = 6%, rps = 5.8%, and rs = 12%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Can you show the work again please? Thank you.
Question 2
On January 1, 2012, Harrington Company has the following defined benefit pension plan balances. Projected benefits obligation $5,600,000 Fair value of plan assets 6,400,000 The interest (settlement) rate applicable to the plan is 9%. On January 1, 2013, the company amends its pension agreement so that service costs of $620,000 are created. Other data related to the pension plan are as follows: 2012 2013 Service costs $180,000 $195,000 Prior service costs 0 97,000 amortization Contributions (funding) 255,000 305,000 to the plan Benefits paid 225,000 300,000 Actual return on plan 320,000 515,000 assets Expected rate of return 5% 8% on assets Instructions: (a) Prepare a pension worksheet for the pension plan for 2012 and 2013. HARRINGTON COMPANY Pension Worksheet?2012 and 2013 General Journal Entries Memo Record The 7 general journal entries are: "Annual Pension Expense" "Cash" "OCI - Prior Service Cost" "OCI - Gain/Loss" "Pension Asset/ Liability" "Projected Benefit Obligation" "Plan Assets" The below items include: Balance, Jan. 1, 2012 (a) Service cost (b) Interest cost (c) Actual return (d) Contributions (e) Benefits Journal entry, 12/31/12 Accum OCI, 12/31/11 Balance, Dec. 31, 2012 (f) Additional PSC January 1, 2013 (g) Service cost (h) Interest cost (i) Actual return (j) Unexpected loss (k) Amortization of PSC (l) Contributions (m) Benefits Journal entry, 12/31/13 Accum OCI, 12/31/12 Balance, Dec. 31, 2013 Area for calculations as desired (b) For 2013, prepare the journal entry to record pension-related amounts.
Question 3
1.From the following accounts, prepare in proper form a post-closing trial balance for Morris Company on December 31. Accounts Receivable $2,200 Accounts Payable 2,000 Cash 1,000 Salaries Payable 1,200 Supplies 300 Prepaid Insurance 2,000 Morris, Capital 2,300 2.Given the following accounts: [1] Cash [2] Accounts receivable [3] Merchandise inventory [4] Supplies [5] Accounts payable [6] Sales [7] Sales returns and allowances [8] Sales discounts [9] Cost of goods sold [10] Purchases [11] Purchase returns and allowances [12] Purchase discounts [13] Purchase discounts [14] Freight in [15] Freight expense Indicate the account(s) to be debited and credited to record the following transactions. Explain how you reached your answer. Sold merchandise for cash. ? Periodic Debit ______ & ______ Credit ______ & ______,Thank dear tutor, Just please be very careful because you've answered few questions I sent you before and they were wrong. These are the questions that you gave me the wrong answer: 24) The August bank statement for Mobile Service shows a balance of $8,900, but the balance per books shows a cash balance of $8,310. Other information includes: 25) From the bank reconciliation no entry was recorded for the interest on a note collected. This would cause: 18) The business failed to close any of the revenue accounts, this error will cause: 8) The adjustment for the deferral of a prepaid item was omitted. This would: I sent you a total of 5 questions and 4 were wrong.,Hi, thank you. On answer number two, could you please explain how you reached your answer? Thank you once more!! Indicate the account(s) to be debited and credited to record the following transactions. Explain how you reached your answer. Sold merchandise for cash. ? Periodic Debit ______ & ______ Credit ______ & ____ Solution:- Computation of the Debit or Credit [1] Cash Debit [2] Accounts receivable Debit [3] Merchandise inventory Debit [4] Supplies Debit [5] Accounts payable Credit [6] Sales Credit [7] Sales returns and allowances Debit [8] Sales discounts Debit [9] Cost of goods sold Debit [10] Purchases Debit [11] Purchase returns and allowances [12] Purchase discounts Credit [13] Purchase discounts Credit [14] Freight in Debit [15] Freight expense Debit
Question 4
Which of the following statements is most CORRECT? a. In a private placement, securities are sold to private (individual) investors rather than to institutions. b. Private placements occur most frequently with stocks, but bonds can also be sold in a private placement. c. Private placements are convenient for issuers, but the convenience is offset by higher flotation costs. d. The SEC requires that all private placements be handled by a registered investment banker. e. Private placements can generally bring in funds faster than is the case with public offerings. Which of the following factors would increase the likelihood that a company would call its outstanding bonds at this time? a. The yield to maturity on the company?s outstanding bonds increases due to a weakening of the firm?s financial situation. b. A provision in the bond indenture lowers the call price on specific dates, and yesterday was one of those dates. c. The flotation costs associated with issuing new bonds rise. d. The firm?s CFO believes that interest rates are likely to decline in the future. e. The firm?s CFO believes that corporate tax rates are likely to be increased in the future. Heavy use of off-balance sheet lease financing will tend to a. make a company appear more risky than it actually is because its stated debt ratio will be increased. b. make a company appear less risky than it actually is because its stated debt ratio will appear lower. c. affect a company's cash flows but not its degree of risk. d. have no effect on either cash flows or risk because the cash flows are already reflected in the income statement. e. affect the lessee?s cash flows but only due to tax effects. Which of the following statements is most CORRECT? a. Leveraged buyouts (LBOs) occur when a firm issues equity and uses the proceeds to take a firm public. b. In a typical LBO, bondholders do well but shareholders see their value decline. c. Firms are forbidden by law to sell any assets during the first five years following a leveraged buyout. d. All of the answers above are correct. e. None of the answers above is correct. Corporations that invest surplus funds in floating-rate preferred stock benefit from getting a relatively stable price, which is desirable for liquidity portfolios, and they also benefit from the 70% tax exemption on the preferred dividends received. True False In the lease versus buy decision, leasing is often preferable a. because lease obligations do no affect the firm's risk as seen by its investors. b. because, generally, no down payment is required, and there are no indirect interest costs. c. because the lessee may have greater flexibility in abandoning the project in which the leased property is used than if the lessee bought and owned the asset. d. because it has no effect on the firm's ability to borrow to make other investments. e. because the lessee owns the property at the end of the lease term. Which of the following is generally NOT true and an advantage of going public? a. Facilitates stockholder diversification. b. Increases the liquidity of the firm's stock. c. Makes it easier to obtain new equity capital. d. Establishes a market value for the firm. e. Makes it easier for owner-managers to engage in profitable self-dealings. Which of the following statements is most CORRECT? a. In a private placement, securities are sold to private (individual) investors rather than to institutions. b. Private placements occur most frequently with stocks, but bonds can also be sold in a private placement. c. Private placements are convenient for issuers, but the convenience is offset by higher flotation costs. d. The SEC requires that all private placements be handled by a registered investment banker. e. Private placements can generally bring in funds faster than is the case with public offerings. Which of the following factors would increase the likelihood that a company would call its outstanding bonds at this time? a. The yield to maturity on the company?s outstanding bonds increases due to a weakening of the firm?s financial situation. b. A provision in the bond indenture lowers the call price on specific dates, and yesterday was one of those dates. c. The flotation costs associated with issuing new bonds rise. d. The firm?s CFO believes that interest rates are likely to decline in the future. e. The firm?s CFO believes that corporate tax rates are likely to be increased in the future. The City of Charleston issued $3,000,000 of 8% coupon, 30 year, semi annual payment, tax-exempt muni bonds 10 years ago. The bonds had 10 years of call protection, but now the bonds can be called if the city chooses to do so. The call premium would be 7.50% of the face amount. New 20 year, 6%, semiannual payment, bonds can be sold at par, but flotation costs on this issue would be 1.5% of the amount of bonds sold. What is the net present value of the refunding? Note that cities pay no income taxes, hence taxes are not relevant. Orient Airlines' common stock currently sells for $24 per share, and its 8% convertible debentures (issued at par, or $1,000) sell for $950. Each debenture can be converted into 20 shares of common stock at any time before 2019. What is the conversion value of the bond? Sutton Corporation, which has a zero tax rate due to tax loss carry-forwards, is considering a 5 year, $6,000,000 bank loan to finance service equipment. The loan has an interest rate of 10.50% and would be amortized over 5 years, with 5 end-of-year equal payments. Sutton can also lease the equipment for 5 end-of-year payments of $1,825,000 each. How much larger or smaller is the bank loan payment than the lease payment? Note: subtract the loan payment from the lease payment. Valdes Enterprises is considering issuing a 10 year convertible bond that would be priced at its $1,000 par value. The bonds would have an 8.00% annual coupon, and each bond could be converted into 20 shares of common stock. The required rate of return on an otherwise similar nonconvertible bond is 9.50%. The stock currently sells for $40.00 a share, has an expected dividend in the coming year of $2.00, and has an expected constant growth rate of 6.00%. What is the estimated floor price of the convertible at the end of Year 3?
Question 5
Attached is the research paper, based on which following data extraction questions are to be completed. Best Practices Does the study identify any best practice on SSCs? List the practice(s) or copy and paste the passage(s) that refers to the best practice(s). Always include the page number. ? Impacts Does the study identify impact(s) to constituents and resources from best practice(s) adopted? List the impact(s) or copy and paste the passage(s) that refers to impact(s). Always include the page number. ? Benefits Does the study identify benefit(s) that resulted from the best practice(s) adopted? List the benefit(s) or copy and paste the passage(s) that refers to benefit(s). Always include the page number. ? Challenges Does the study identify challenge(s) that resulted from the best practice(s) adopted? List the challenge(s) or copy and paste the passage(s) that refers to challenge(s). Always include the page number. ? Drivers Does the study identify driver(s) from the adoption of best practice(s)? List the driver(s) or copy and paste the passage(s) that refers to driver(s). Always include the page number. ? Costs Does the study the cost(s) associated with the best practice(s) adopted? List the driver(s) or copy and paste the passage(s) that refers to the cost(s) of the best practice(s). Always include the page number. ? Types of Sustainability Practices What types of sustainability practices does the study mention ? environmental, social and/or economic? List the type of practice or copy and paste the passage(s) that refers to the different types of sustainability practice. Always include the page number. ? Detailed Instructions for Completing the Data Extraction Worksheet Important: Not all papers will have information on all of these topics. Read the paper carefully, identify which of these topics are present in the paper and extract the relevant information. Date: Include the date in which you completed the form Title: Include the title of the paper you are analyzing Year: Include the year of publication of the paper you are analyzing Country: If data for the paper you are analyzing was collected in a particular country (or countries), please list all country (countries). Region: If you identified a country (or countries) related to the paper, please list the appropriate region(s) that country or countries belong to. Sometimes papers talk about best practices in a specific region, instead of a specific country. Identify the region(s) from the following list: ? Africa, Asia, Europe, Latin America, North America, and/or Oceania Economy: Based on the country/region you specified, please identify whether the paper has a developed or developing economy. Sometimes papers relate studies that took place in a diversity of countries. If the study took place in South Africa and England, for example, you would list ?developing? and ?developed?. Industry sector: If applicable please list all industry sectors cited in the study you are analyzing. Methodology: Please list the methodology used in the paper. You will find this information in the methodology (or methods) section of the paper. Sustainability Practices: Please identify whether the paper addresses social, environmental and/or economic sustainability practices. Best Practices: Identify best practices on sustainability in supply chains mentioned in the paper. ?A best practice is a method or technique that has consistently shown results superior to those achieved with other means, and that is used as a benchmark? (Wikipedia, 2012). An example of a best practice would be environmental certification, such as ISO 14000. Drivers: Identify the motivation(s) that led companies to adopt best practices in SSCs. Costs: Implementing sustainable best practices in supply chains can be costly and some studies have tried to identify the costs related to the adoption and implementation of these practices. Identify any passages that mention the costs associated with the adoption of best practices. Types of Sustainability Practice: Please list the practices in each of the three dimensions of sustainability (economic, social, and/or environmental) mentioned in this paper. Examples of practices in each of these dimensions include, but are not limited to: Social ? work conditions, engagement with local community, social certification (e.g. SA 8000), etc. Environmental ? energy efficiency, pollution control, water treatment, waste reduction, protection of biodiversity, reduction of carbon emissions, environmental certification (e.g. ISO 14000, FSC certification), etc. Economic ? job creations, payment of taxes, micro-loans provided to smaller companies, promotion of economic development, etc.
