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Finance Homework Problems
Details:
Complete the following problems from chapter 7 in the textbook:
· P7-2
· P7-8
· P7-10
· P7-14
· P7-17
· P7-19
Follow these instructions for completing and submitting your assignment:
1. Do all work in Excel. Do not submit Word files or *.pdf files.
2. Submit a single spreadsheet file for this assignment. Do not submit multiple files.
3. Place each problem on a separate spreadsheet tab.
4. Label all inputs and outputs and highlight your final answer.
5. Follow the directions in “Guidelines for Developing Spreadsheets.”
P7–2 Preferred dividends Slater Lamp Manufacturing has an outstanding issue of preferred
stock with an $80 par value and an 11% annual dividend.
a. What is the annual dollar dividend? If it is paid quarterly, how much will be paid
each quarter?
b. If the preferred stock is noncumulative and the board of directors has passed the
preferred dividend for the last three quarters, how much must be paid to preferred
stockholders in the current quarter before dividends are paid to common
stockholders?
c. If the preferred stock is cumulative and the board of directors has passed the preferred
dividend for the last three quarters, how much must be paid to preferred
stockholders in the current quarter before dividends are paid to common stockholders?
P7–8 Common stock value: Constant growth Use the constant-growth model (Gordon
growth model) to find the value of each firm shown in the following table.
| Firm Dividend expected next year Dividend growth rate Required returnA $1.20 8% 13%B 4.00 5 15C 0.65 10 14D 6.00 8 9E 2.25 8 20 |
P7–10 Common stock value: Constant growth The common stock of Denis and Denis
Research, Inc., trades for $60 per share. Investors expect the company to pay a
$3.90 dividend next year, and they expect that dividend to grow at a constant rate
forever. If investors require a 10% return on this stock, what is the dividend growth
rate that they are anticipating?
P7–14 Common stock value: Variable growth Lawrence Industries’ most recent annual
dividend was $1.80 per share (D0 = $1.80), and the firm’s required return is 11%.
Find the market value of Lawrence’s shares when:
a. Dividends are expected to grow at 8% annually for 3 years, followed by a 5%
constant annual growth rate in years 4 to infinity.
b. Dividends are expected to grow at 8% annually for 3 years, followed by a 0%
constant annual growth rate in years 4 to infinity.
c. Dividends are expected to grow at 8% annually for 3 years, followed by a 10%
constant annual growth rate in years 4 to infinity.
P7–17 Using the free cash flow valuation model to price an IPO Assume that you have an
opportunity to buy the stock of CoolTech, Inc., an IPO being offered for $12.50 per
share. Although you are very much interested in owning the company, you are concerned
about whether it is fairly priced. To determine the value of the shares, you
have decided to apply the free cash flow valuation model to the firm’s financial data
that you’ve developed from a variety of data sources. The key values you have compiled
are summarized in the following table.
| Free cash flowYear (t) FCFt2016 $ 700,0002017 800,0002018 950,0002019 1,100,000 | Other dataGrowth rate of FCF, beyond 2019 to infinity = 2%Weighted average cost of capital = 8%Market value of all debt = $2,700,000Market value of preferred stock = $1,000,000Number of shares of common stock outstanding = 1,100,000 |
a. Use the free cash flow valuation model to estimate CoolTech’s common stock
value per share.
b. Judging on the basis of your finding in part a and the stock’s offering price,
should you buy the stock?
c. On further analysis, you find that the growth rate in FCF beyond 2019 will be
3% rather than 2%. What effect would this finding have on your responses in
parts a and b?
P7–19 Valuation with price/earnings multiples For each of the firms shown in the following
table, use the data given to estimate its common stock value employing price/
earnings (P/E) multiples.
| Firm Expected EPS Price/earnings multipleA $3.00 6.2B 4.50 10.0C 1.80 12.6D 2.40 8.9E 5.10 15.0 |
FIN 3000 Week 2 HW
Problems Chapter 3: P3-5, P3-9 P3-10, P3-22;
Chapter 4: P4-1, P4-4, P4-7, P4-8
Week 2
P3-5 Everdeen Mining, Inc., ended 2015 with a net profit before taxes of $436,000. The company is subject to a 40% tax rate and must pay $64,000 in preferred stock dividends before distributing any earnings on the 170,000 shares of common stock currently outstanding. a. Calculate Philagem’s 2015 earnings per share (EPS)
b. If the firm paid common stock dividends of $0.80 per share, how many dollars would go to retained earnings?
P3-9 Initial sale prince of common stock
Haymitch Corporation has one issue of preferred stock and one issue of common stock outstanding. Given Beck’s stockholders’ equity account that follows, determine the original price per share at which the firm sold its single issue of common stock.
P3-10 Statement of retained earnins
Hayes Enterprises began 2015 with a retained earnings balance of $928,000. During 2015, the firm earned $377,000 after taxes. From this amount, preferred stockholders were paid $47,000 in dividends. At year-end 2015, the firm’s retained earnings totaled $1,048,000. The firm had 140,000 shares of common stock outstanding during 2015.
a. Prepare a statement of retained earnings for the year ended December 31, 2012 for Hayes Enterprises. (Note: be sure to calculate and include the amon of cash dividends paid in 2012.
b. Calculate the firm’s 2015 earnings per share (EPS)
c. How large a per-share cash dividend did the firm pay on common stock during 2015?
P4-1 Depreciation
On March 20, 2015, Norton Systems acquired two new assets. Asset A was research equipment costing $17,000 and having a 3-year recovery period. Asset B was duplicating equipment having an installed cost of $45,000 and a 5-year recovery period. Using the MACRS depreciation percentages in Table 4.2, prepare a depreciation schedule for each of these assets.
P4-4 Depreciation and accounting cash flow
A firm in the third year of depreciating its only asset, which originally cost $180,000 and has a 5-year MACRS recovery period, has gathered the following data relative to the current year’s operations:
Accruals $15,000
Current assets $1,20,000
Interest expense $15,000
Sales revenue $4,00,000
Inventory $70,000
Total costs before depreciation, interest, and taxes $2,90,000
Tax rate on ordinary income 40%
a. Use the relevant data to determine the operating cash flow (see Equation 4.2) for the current year.
P4-7 A firm has actual sales of $65,000 in April and $60,000 in May. It expects sales of $70,000 in June and $100,000 in July and in August. Assuming that sales are the only source of cash inflows and that half of them are for cash and the remainder are collected evenly over the following 2 months, what are the firm’s expected cash receipts for June, July and August?
P4-8 Cash disbursement schedule
Maris Brothers, Inc., needs a cash disbursement schedule for the months of April, May, and June. Use the format of Table 4.9 and the following information in its preparation.
Parker v. State of Oklahoma, 556 P.2d 1298 (Okla. Crim. App. 1976
Section One
10 points
Use Westlaw© to locate the following case and provide the complete citation:
579 F.2d 1200
1. Name the prevailing parties in the trial court proceeding.
2. Name the trial court. Also name the appellate court.
3. What kind of case is it?
4. In your own words, provide a summary of the facts of the case
5. What are the issues on appeal?
6. Who wrote the opinion?
7. What is the docket number?
8. On what date did the court issue the decision and how did the court rule?
9. Provide the text of Headnote [6] as well as the name of the author referenced in the portion of the text which is summarized by that headnote.
10. Provide the name of the attorney or attorneys who represented the appellants.
Section Two
10 points
Using WestlawNext KeyCite the following case:
Parker v. State of Oklahoma, 556 P.2d 1298 (Okla. Crim. App. 1976).
A) How many citing references does the case provide?
B) Has a Maryland case cited the Parker case? If so, provide the case citation for the citing case.
C) Has a Connecticut case cited the Parker case? If so, provide the citation for the citing case.
D) How many of the citing cases are no longer good law? Provide the citation to the case or cases.
E) Have any legal encyclopedias cited Parker? If so, provide the citation to each of the articles.
Section Three
5 points
Your attorney has asked you to determine whether any cases have cited Headnote [6] as referenced in Question 9 of Section One above.
Using proper citation, please provide any citing references you have located.
Please describe your process for locating this information.
Section Four
5 points
If you have the 8th edition of Statsky, complete assignment 11.7 on page 532.
If you have the 7th edition of Statsky, complete assignment 13.1 on pages 633 & 634.
Section Five
5 points
If you have the 8th Edition of Statsky, complete assignment 13.8 on page 586.
If you have the 7th Edition of Statsky, complete the following:
Discuss how the use of Litigation Support, Case Management and Knowledge Management software can protect the attorney from ethical breaches. Cite applicable ABA Model Rules.
Section Six
10 points
Use Your Appellate Brief Scenario to answer this section
- Phrase the legal issue or issues as they will be raised on appeal.
- Using WestlawNext, locate, correctly cite and provide a summary of at least one mandatory court opinion that you can argue in Kant’s appeal.