Market Value Assignment | Homework For You

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1) Recently, the owner of Martha’s Wares encountered severe legal problems and is trying to sell her business. The company built a building at a cost of $1,120,000 that is currently appraised at $1,320,000. The equipment originally cost $600,000 and is currently valued at $347,000. The inventory is valued on the balance sheet at $290,000 but has a market value of only one-half of that amount. The owner expects to collect 99 percent of the $165,200 in accounts receivable. The firm has $11,900 in cash and owes a total of $1,320,000. The legal problems are personal and unrelated to the actual business. What is the market value of this firm?

A) $812,448

B) $977,648

C) $667,448

D) $492,000

E) $1,267,648

2) The tax rates are as shown below: Taxable Income Tax Rate $0 – 50,000 15 % 50,001 – 75,000 25 % 75,001 – 100,000 34 % 100,001 – 335,000 39 % Your firm currently has taxable income of $80,000. How much additional tax will you owe if you increase your taxable income by $21,200?

A) $6,888

B) $8,268

C) $7,208

D) $7,268

E) $6,878

3) At the beginning of the year, a firm has current assets of $319 and current liabilities of $223. At the end of the year, the current assets are $475 and the current liabilities are $263. What is the change in net working capital?

A) $156

B) $116

C) $0

D) –$116

E) $196

4) You are examining a company's balance sheet and find that it has total assets of $20,791, a cash balance of $2,289, inventory of $5,009, current liabilities of $6,021 and accounts receivable of $2,805. What is the company’s net working capital? A) $4,082 B) $5,936 C) $927 D) $14,770 E) $1,793

5) Micro, Inc., started the year with net fixed assets of $74,550. At the end of the year, there was $95,650 in the same account, and the company’s income statement showed depreciation expense of $12,700 for the year. What was the company's net capital spending for the year?

A) $33,800 B) $21,100 C) $82,950 D) $41,695 E) $39,285

6) A firm has sales of $1,080, net income of $212, net fixed assets of $516, and current assets of $272. The firm has $87 in inventory. What is the common-size balance sheet value of inventory? Version 1 3

A) 16.86% B) 8.06% C) 41.04% D) 31.99% E) 11.04%

7) A firm has sales of $4,730, costs of $2,530, interest paid of $168, and depreciation of $471. The tax rate is 34 percent. What is the cash coverage ratio?

A) 13.10 times B) 6.13 times C) 10.29 times D) 8.94 times E) 17.19 times

8) Lee Sun’s has sales of $4,250, total assets of $3,950, and a profit margin of 6 percent. The firm has a total debt ratio of 42 percent. What is the return on equity?

A) 11.13 percent B) 6.00 percent C) 6.07 percent D) 8.98 percent E) 6.46 percent

9) A firm has a return on equity of 17 percent. The total asset turnover is 1.6 and the profit margin is 5 percent. The total equity is $5,200. What is the net income?

A) $260 B) $553 C) $884 D) $416 E) $1,414

10) Use the following information to answer this question. Windswept, Inc. 2017 Income Statement ($ in millions) Net sales $ 9,300 Cost of goods sold 7,600 Depreciation 375 Earnings before interest and taxes $ 1,325 Interest paid 99 Taxable income $ 1,226 Taxes 429 Net income $ 797 Windswept, Inc. 2016 and 2017 Balance Sheets ($ in millions) 2016 2017 2016 2017 Cash $ 200 $ 230 Accounts payable $ 1,480 $ 1,557 Accounts rec. 970 870 Long-term debt 1,000 1,313 Inventory 1,640 1,650 Common stock 3,220 2,960 Total $ 2,810 $ 2,750 Retained earnings 520 770 Net fixed assets 3,410 3,850 Total assets $ 6,220 $ 6,600 Total liability & equity $ 6,220 $ 6,600 What is the cash coverage ratio for 2017? Version 1 5

A) 13.38 times B) 2.32 times C) 17.17 times D) 7.39 times E) 3.80 times

11) The Green Giant has a 6 percent profit margin and a 37 percent dividend payout ratio. The total asset turnover is 1.2 times and the equity multiplier is 1.4 times. What is the sustainable rate of growth?

A) 6.78% B) 9.49% C) 10.08% D) 1.68% E) 10.36%

12) A firm wants a sustainable growth rate of 3.68 percent while maintaining a dividend payout ratio of 38 percent and a profit margin of 7 percent. The firm has a capital intensity ratio of 2. What is the debt-equity ratio that is required to achieve the firm’s desired rate of growth?

A) .36 times B) .24 times C) .82 times D) .62 times E) .64 times

13) The plowback ratio is: Version 1 6 ‘

A) equal to net income divided by the change in total equity.

B) the percentage of net income available to the firm to fund future growth.

C) equal to one minus the retention ratio.

D) the change in retained earnings divided by the dividends paid.

E) the dollar increase in net income divided by the dollar increase in sales.

14) Fresno Salads has current sales of $6,000 and a profit margin of 6.5 percent. The firm estimates that sales will increase by 4 percent next year and that all costs will vary in direct relationship to sales. What is the pro forma net income?

A) $303.33 B) $327.18 C) $405.60 D) $438.70 E) $441.10

15) Assume a firm is currently operating at 98 percent of capacity with sales of $28,400. Next year, sales are projected to increase to $35,000. What is the projected addition to fixed assets if the firm currently has fixed assets of $16,900 and total assets of $24,600?

A) $0 B) $3,511 C) $2,629 D) $580 E) $1,688

16) What is the future value of $3,018 invested for 8 years at 5.4 percent compounded annually? Version 1 7

A) $3,734.93 B) $7,001.14 C) $4,596.68 D) $3,724.62 E) $6,855.47

17) You need to have $25,000 for a down payment on a house 5 in years. If you can earn an annual interest rate of 4.7 percent, how much will you have to deposit today?

A) $19,870.40 B) $16,535.60 C) $18,978.41 D) $19,128.36 E) $19,402.66

18) You need to have $31,250 in 7 years. You can earn an annual interest rate of 4 percent for the first 4 years, and 4.6 percent for the next 3 years. How much do you have to deposit today?

A) $22,810.15 B) $23,747.43 C) $23,207.23 D) $23,341.12 E) $22,349.91

19) An investor who was not as astute as he believed invested $279,500 into an account 7 years ago. Today, that account is worth $216,000. What was the annual rate of return on this account?

A) −3.61 percent B) −3.16 percent C) 3.75 percent D) 4.38 percent E) −3.37 percent) $4,039. Get Finance homework help today