Major Manuscripts, Inc., is currently operating at 70 percent of capacity. All costs and net working capital vary directly with
sales. The tax rate, the profit margin, and the dividend payout ratio will remain constant. How much additional debt is required if no new equity is raised and sales are projected to increase by 10 percent
1 answer:
The attached data is required to answer the question
Answer:
$535
Explanation:
In this scenario we need to calculate the additional debt required by Major Manuscript
We expect an increase of 10% of sales
Therefore
Total assets projected = 9,420 * 1.10 = $10,362
Accounts payable projected = 2,200 * 1.10 = $2,420
Current long term debt = $260
Current common stock = $2,400
Retained earnings projected = 4,560 +{(360 - 190) * 1.10} = $4,747
Additional debt required = 10,362 - 2,420 - 260 - 2,400 - 4,747
Additional debt required = $535
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Answer:
Regina: Final amount=$62,769
Will Smith: Present value: $213,216
Explanation:
Regina:
Compound quarterly means that each quarter of the year ( every three months) she will receive a 10% interest rate of her deposit. To convert this periodic rate to an annual rate( because the problem ask you about years) you use this formula :
Annual rate= ((1+Periodic rate)^(# periods))-1
In this case the number of periods means the number of quarters a year have, which is 4
Annual rate= ((1+10%)^(4))-1= 46.41%
To find the final amount Regina has after 3 year we use this formula:
Final Capital (FC)= Initial Capital (IC)*[(1+interest(i))]^(number of periods(n))
FC= $20,000*[(1+46.41%)^3]
FC=$62,769 I attached an excel figure which shows a more detailed data.
Will Smith
Semiannually means that every 6 months Will Smith will receive a 12% interest rate of the initial investment. To convert this periodic rate to an annual rate you use the same above formula:
Annual rate= ((1+Periodic rate)^(# periods))-1
In each year Will will receive twice the interest rate over the initial investment
Annual rate = ((1+12%)^(2))-1
Annual rate= 25.44%
The present value of $80,000 from now to 5 years is calculated using the formula attached, but I used Excel. First you have to copy all the cash flows of the 5 years. Then, you set the interest rate that in this case is the one that you found above( 25.44%). Finally you use the financial formula "NPV" in this way:
"=NPV(25.44%;C4:C8)" I used C4:C8 because in those excel cells i copied the cash flows.
I got that the present value of this amount is $213,216
Answer:
Cost of leasing over buying is $144.59
Explanation:
For computing the cost of leasing the laptop over buying it outright, we have to calculate the present value is shown below:
Given that,
Future value = $0
Rate of interest = 14% ÷ 12 months = 1.17%
NPER = 4 years × 12 month = 48 months
PMT = $75
The formula is shown below:
= PV(Rate;NPER;-PMT;FV;type)
So, after solving this, the present value is $2,744.59
And, the buying amount is $2,600
So, the difference is
= $2,744.59 - $2,600
= $144.59
