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3 years ago

If Newble paid dividends of $100 million in 2016 and made no stock issues, what must have been net income during the year?

Business

1 answer:

Arisa [49]3 years ago

8 0

Answer: $310 million

Explanation:

The net income is used to pay dividends as well as being added to equity at the end of the period. If no new stock was issued then the net income would be the increase in equity plus dividends.

Increase in Equity = Equity 2016 - Equity 2015

Equity 2016 = Total assets 2016 - total liabilities 2016

= ( 420 + 1,420) - ( 240 + 920)

= $680 million

Equity 2015 = Total assets 2015 - total liabilities 2015

= ( 310 + 1,200) - ( 210 + 830)

= $470 million

Increase in Equity = 680 - 470

= $210 million

Net Income = Increase in equity + dividends

= 210 + 100

= $310 million

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Purpose of Assignment The purpose of this assignment is for students to employ capital budgeting techniques using time value of

garik1379 [7]

Answer:

Present Value 5,715,331.32

We are going to accept the project only if the initial investment is at 5,715,331 or below in order to achieve the return to support the cost of capital structure of the company

Accepting a project with a higher cost will not generate enought cashflow to sustain the patyment of debt and the return expected from the stockholders therefore, will generate a economic result and investor will leave the company for other which can sustain their desired return.

Explanation:

We are going to discount the yearly cash-flow at the given rate of 12.50%

then, the terminal value which is the present value of the future period will also be discounted at this rate.

The sum of all this will be the present value of the firm.

$\left[\begin{array}{ccc}$Year&$Cash Flow&$Discounted\\1&575000&511111.11\\2&625000&493827.16\\3&650000&456515.77\\4&725000&452613.93\\5&850000&471689.61\\$terminal&6000000&3329573.74\\Present&Value&5715331.32\\\end{array}\right]$

The formula we use the present value of a lump sum:

$\frac{Maturity}{(1 + rate)^{time} } = PV$

We are going to accept the project only if the initial investment is at 5,715,331 or below in order to achieve the return to support the cost of capital estructure of the company

3 0

3 years ago

1. You have a portfolio that is invested 21% in Stock A, 34% in Stock B, and 45% in Stock C. The betas of the stocks are .66, 1.

MrMuchimi

Answer:

Portfolio Beta = 1.225 rounded off to 1.23

Option e is the correct answer.

r = 0.13338 or 13.338% rounded off to 13.34%

Explanation:

The portfolio beta is a function of the weighted average of the individual stocks' betas that form up the portfolio. To calculate the beta of a portfolio, we use the following formula,

Portfolio Beta = wA * Beta of A + wB * Beta of B + ... + wN * Beta of N

Where,

w is the weight of each stock

Portfolio Beta = 0.21 * 0.66 + 0.34 * 1.21 + 0.45 * 1.5

Portfolio Beta = 1.225 rounded off to 1.23

Using the CAPM, we can calculate the required rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.

The formula for required rate of return under CAPM is,

r = rRF + Beta * (rM - rRF)

Where,

rRF is the risk free rate

rM is the market return

r = 0.037 + 1.22 * (0.116 - 0.037)

r = 0.13338 or 13.338% rounded off to 13.34%

3 0

3 years ago

Sinclair Manufacturing Company experienced the following accounting events during its first year of operation. With the exceptio

matrenka [14]

Answer:

Please see the attached image for the Horizontal Financial Statements of Sinclair Manufacturing Company.

Explanation:

5. FURNITURE - Straight Line Method

Book Value of Furniture = Cost of Acquisition - Residual Value

Cost of Acquisition = $9,600

Residual Value = $1,600

Book Value of Furniture = $9,600 - $1,600

Book Value of Furniture = $8,000

Useful Life = 4 years

Depreciation Expense = $8,000 / 4 years

Depreciation Expense = $2,000 per year

6. EQUIPMENT - Straight Line Method

Book Value of Equipment = Cost of Acquisition - Residual Value

Cost of Acquisition = $16,000

Residual Value = $1,000

Book Value of Furniture = $16,000 - $1,000

Book Value of Furniture = $15,000

Useful Life = 5 years

Depreciation Expense = $15,000 / 5 years

Depreciation Expense = $3,000 per year

6 0

3 years ago

Suppose that an industry is characterized as follows: C  100  2q2 each firm’s total cost function MC  4q firm’s marginal cost

hjlf

Answer:

Explanation:

find the attached solution below

5 0

3 years ago

Travis borrowed $10,000 four years ago at an annual interest rate of 7 percent. The loan term is six years. Since he borrowed th

likoan [24]

Answer:

The answer is A

Explanation:

The loan is an interest only loan since he is only paying the interest potion of 7%

Interest only loan is when the borrower pays only the interest for some or all the term of the loan with no changes in the borrowed amount

5 0

3 years ago