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Sara Togas sells all its output to Federal Stores. The following table shows selected financial data, in millions, for the two firms: Sales Interest Payment Net Income Assets at Start of Year Federal Stores $100 $4 $10 $50 Sara Togas 20 1 4 20 a. Calculate the sales-to-assets ratio, the operating profit margin, and the return on assets for the two firms. (Do not round intermediate calculations. Round the sales-to-assets ratio answers to 2 decimal places. Enter the operating profit margin and return on assets answers as a percent rounded to 2 decimal places.) Federal Stores Sara Togas Sales-to-assets ratio Operating profit margin % % Return on assets % % b. Now assume that the two companies merge. If Federal continues to sell goods worth $100 million, how will the three ratios change? (Do not round intermediate calculations. Round the sales-to-assets ratio answer to 2 decimal places. Enter the operating profit margin and return on assets answers as a percent rounded to 2 decimal places.) Merged Firm Sales-to-assets ratio Operating profit margin % Return on assets %
Suppose that you have a choice to receive one of the two annuities. How large would your payments be?
Mark Young has just won the state lottery, paying $50,000 a year for 20 years. He is to receive his first payment a year from now. The state advertises this as the Million Dollar Lottery because $1,000,000 = $50,000*20. What is the present value of t..
Hickock Mining is evaluating when to open a gold mine. The mine has 39,000 ounces of gold left that can be mined, and mining operations will produce 6,500 ounces per year. The required return on the gold mine is 10 percent, and it will cost $34.5 mil..
What are the advantages and disadvantages of sales promotions and public relations?
Fargo North is considering the purchase of some new equipment costing $78,000. This equipment has a 2-year life after which time it will be worthless. The firm uses straight-line depreciation and borrows funds at a 8 percent rate of interest. The com..
What is your effective annual interest rate (an opportunity cost) on the revolving credit arrangement if your firm does not use it during the year?
Compute the Macaulay duration using the semiannual compounded rate of interest of 5% for a semiannual 4% coupon bond that matures in 2 years.
Identify an example of when a Small Business or Big Corporation alleged to have committed Employee Theft.
Derive the limiting marginal effects of the five variables K, Pt, T - t, σ, and r on a European put option contingent on a stock.
Rick Rueta purchased a $77,000 home at 8.5% for 30 years with a down payment of $15,000. His annual real estate tax is $1,692 along with an annual insurance premium of $852. Rick’s bank requires that his monthly payment include an escrow deposit for ..
Hart Venture Capital (HVC) specializes in provding venture capital for software devlopment and Internet applications. Currently HVC has two investment opportunities: Security Systems, a firm that needs additional capital to develop an Internet securi..
you should use 12% as the discount rate for the discounted cash flow (DCF) analyses for this new project.
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