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Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. Upton’s balance sheet as of December 31, 2013, is shown here (millions of dollars): Cash $5.45 Accounts payable 10.25 Receivable 21.00 Notes payable 13.00 Inventories 57.00 Line of credit 0.00 Total current assets 83.45 Accruals 8.30 Net fixed assets 65.00 Total current liabilities 31.55 mortgage 4.00 Common stock 16.75 Retained earnings 96.15 Total assets 148.45 Total liabilities and equity 148.45 Sales for 2013 were $361.00 million and net income for the year was $20.20 million, so the firm’s profit margin was 5.5956%. Upton paid dividends of $4.20 million to common stockholders, so its payout ratio was 33.75%. Its tax rate was 40%, and it operated at full capacity. Assume that all assets/sales ratios, spontaneous liabilities/sales ratios, the profit margin, and the payout ratio remain constant in 2014. b. Using the AFN equation, determine Upton’s self-supporting growth rate. That is, what is the maximum growth rate the firm can achieve without having to employ nonspontaneous external funds? Below are answer choices. choose one 13.44% 12.29% 11.49% 12.86% 11.94%
Suppose one of the suppliers to Banner offers terms of 3/20, net 60. What is the approximate cost of the costly trade credit offered by this supplier? (Assume 360 days per year)
[Bonus Points Problem] In 40 years, you would like to retire on $150,000 a year in today's dollars. If the inflation rate = 4% a year for the next 40 years, how much must you have to equal today's $150,000?
Consider a stock which just paid a dividend of $2.50. If the firm expects earnings and dividends to grow at a rate of 4%, what price would you pay for the stock if you require a rate of return equal to 9%? Please show work.
You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of .4 percent per year, compounded monthly for the first six months, increasing thereafter to 16.7 percent compounded monthly. Assume you transfer t..
18,109,000 total assets, 13,682000 Current Liabilities 4,427000 working capital with a 20% increase in revenue in this next year calculate and discuss the effect of the revenue increase on the firms working capital policy and provide the calculations
If you deposit money today in an account that pays 4.5% annual interest compounded annually, how long will it take to double your money? More challenging: Solve the same problem, only assume interest compounds quarterly instead of annually
Assume that you are considering the purchase of a 20-year, noncallable bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 10.8% nominal yield to maturity on this ..
Excel Assignment: What and Where Decisions The Big U operates a coal-fired power plant that burns 4,300 tons of coal per year. Coals from four regions of the country can be burned in the plant. The amount of pollution produced depends on the amount o..
Suppose the dividends for the Seger Corporation over the past six years were $1.15, $1.23, $1.32, $1.40, $1.50, and $1.55, respectively. Compute the expected share price at the end of 2014 using the perpetual growth method. Assume the market risk pre..
Your local travel agent is advertising an extravagant global vacation. The package deal requires that you pay $5,000 today, $15,000 one year from today, and a final payment of $25,000 on the day you leave two years from today. What is the cost of thi..
Carl and Dorothy-Helen Huprich raise Arabian horses for breeding and selling. In 1989, they purchased corn from farmer David Bitto to feed to their horses after having it tested for aflatoxin, a toxin often present in horse feed. The huprichs sued Bi..
You have purchased a put option on Pfizer common stock. The option has an exercise price of $44 and Pfizer’s stock currently trades at $46. The option premium is $0.50 per contract. What is your net profit on the option if Pfizer’s stock price does n..
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