Reference no: EM133088051

Questions -

Q1. Glo expects sales for 2002 to be P2,000,000, resulting in a return on sales of 10%. The dividend payout rate is 60%. Beginning stockholders' equity was P850,000 and current liabilities are projected to be P300,000 at the end of 2002. What are the total equities available if the ratio of long-term debt to stockholders' equity is 60%?

Q2. Kipling Company has invested in a project that has an eight-year life. It is expected that the annual cash inflow from the project will be P20,000. Assuming that the project has a internal rate of return of 12%, how much was the initial investment in the project if the present value of annuity of 1 for 8 periods is 4.968 and the present value of 1 is 0.404?

Q3. The Premiere Company obtained a short-term bank loan for P1,000,000 at an annual interest rate 12%. As a condition of the loan, Premiere is required to maintain a compensating balance of P300,000 in its checking account. The checking account earns interest at an annual rate of 3%. Premiere would otherwise maintain only P100,000 in its checking account for transactional purposes. Premiere's effective interest costs of the loan is?

Q4. Consider a project that requires cash outflow of P50,000 with a life of eight years and a salvage value of P5,000. Annual before-tax cash inflow amounts to P10,000 assuming a tax rate of 30% and a required rate of return of 8%. Salvage value is ignored in computing depreciation. The project has a payback period of?

Q5. If a firm uses external financing as a plug item, has a new capital budget of P2 million, a net income of P3 million, and a plowback ratio of 40%, how much should be raised in external funds?