What effect will growth have on funds

Assignment Help Finance Basics
Reference no: EM133070846

Galehouse Gas Stations Inc. expects sales to increase from $1,680,000 to $1,880,000 next year. Galehouse believes that net assets (Assets - Liabilities) will represent 60 percent of sales. His firm has an 10 percent return on sales and pays 30 percent of profits out as dividends.

a. What effect will this growth have on funds?

b. If the dividend payout is only 10 percent, what effect will this growth have on funds?

Reference no: EM133070846

Questions Cloud

What is the ytm of west corp : West Corp. issued 25-year bonds two years ago at a coupon rate of 5.3 percent. The bonds make semiannual payments. If these bonds currently sell for 105 percent
Explain the cgt concessions : Yvonne, 53, and Frank, 56, are married and run a partnership together.
Interest tax shields : 1) Calculate the Interest Tax Shields incorporating the target capital structure used for your
What is the beta of strategy a : Suppose that the market expected return is 10% with standard deviation of 20%. Assume further the risk-free rate is 5%. You are considering an active investment
What effect will growth have on funds : Galehouse Gas Stations Inc. expects sales to increase from $1,680,000 to $1,880,000 next year. Galehouse believes that net assets (Assets - Liabilities) will re
Compare the levels of the interest rates : The interest rate of a two-year Negotiable Certificate of Deposit (NCD) of a US bank is usually higher than that of the three-month US Government Treasury Bills
What is the value of the share : Melbourne Ltd is now on a fast-growth phase and expects its dividends to grow at a rate of 15 per cent for the next 4 years. The dividends will then settle to a
Estimate the company cost of capital : The total market value of Biz Tech shares is $60 million, and the total market value of its debt is $40 million. The treasurer estimates that the beta of the sh
Investing in sub-optimal projects : Debt finance is considered to be a solution to encourage managers to distribute excess cash to investors rather than investing in sub-optimal projects".

Reviews

Write a Review

Finance Basics Questions & Answers

  Main challenges to global financial management

What are the main challenges of global financial management? What is foreign exchange risk management? Is it important for companies going international? Why?

  What are the disadvantages of a private placement sale

what are the disadvantages of a private placement sale compared with a public

  Describe the terms control premium and illiquid discount

Describe the terms  (a) “Control premium” and  (b) “Illiquidity discount” when discussing possible external or outside buyers of a venture.

  What is the total equity of the business after the write-off

Now assume that $20,000 of net fixed assets (net plant and equipment) are written off due to technological obsolescence. All else the same, what is the total equity of the business after the write-off?

  Calculate the wacc of given tax rate

The effect of tax rate on WACC K. Bell Jewelers wishes to explore the effect on its cost of capital of the rate at which the company pays taxes.

  Repaid in equal monthly payments at the end of the month

A commercial bank will loan you $49,514 for 5 years to buy a car. The loan must be repaid in equal monthly payments at the end of the month. The annual interest rate on the loan is 17.41 percent of the unpaid balance. What is the amount of the mon..

  What is the degree of operating leverage

A project has the following estimated data: price = $800 per unit; variable costs = $650 per unit; fixed costs = $900,000; required return = 8%; initial investm

  Calculate the effective annual rates

2. Calculate the effective annual rates for each of the following cases: Stated Rate (APR) Number of Times Compounded Effective Rate (EAR)

  What is financial planning

What is Financial Planning? Importance of Financial Planning Process of Financial Planning

  Calculate the total cost in usd

Without a forward contract, what is the dollar-cost of the shipment if the spot exchange rate at the time of purchase is $0.75?

  Strayer university all rights reserved this document

2013 strayer university. all rights reserved. this document contains strayer university confidential and proprietary

  Discusses about a condition where the couple desires

Michelle and Ken Dunn, both in their mid-20s, have been married for 4 years and have two preschool-age children.  Ken has an accounting degree and is employed as a cost accountant at an annual salary of $62,000.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd