Copia de pmf problem solver

© 2003 by Addison Wesley Longman Printed: 05/03/2023

PRINCIPLES OF MANAGERIAL FINANCEBRIEF EDITION

PMF PROBLEM SOLVERIndex By Category

Bond and Stock Valuation Cost of Capital

Financial Statements Capital Budgeting

Time Value of Money General Budgeting

Alphabetical Index

Basic Bond Valuation After Tax Cost of DebtBook Value Cost of Common StockLiquidation Value Cost of Preferred StockP/E Multiplier Weighted Avg. Cost of CapitalConstant Growth Weighted Mrg Cost of Capital

All Ratios Net Present ValueLiquidity Internal Rate of ReturnActivity Payback PeriodDebt Annualized Net Present ValueProfitability Initial Investment

PV - Single Amount Cash BudgetPV - Mixed StreamPV - AnnuityFV - Single AmountFV - AnnuityDeposits to a Sum

Activity Initial InvestmentAfter Tax Cost of Debt Internal Rate of ReturnAll Ratios Liquidation ValueAnnualized Net Present Value LiquidityBasic Bond Valuation Net Present ValueBook Value P/E MultiplierCash Budget Payback PeriodConstant Growth ProfitabilityCost of Common Stock PV - AnnuityCost of Preferred Stock PV - Mixed StreamDebt PV - Single AmountDeposits to a Sum Weighted Avg. Cost of CapitalFV - Annuity Weighted Mrg Cost of CapitalFV - Single Amount

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Basic Bond ValuationPar Value of the Bond $1,000 Years to Maturity 10 Required Rate of Return 12.000%Coupon Rate of Bond 10.000%Payment of interest:Annual Semi-annual

Value of the bond is: $887.00


Book ValueTotal Assets $6,000,000 Total Liabilities $4,500,000 Number of Common Shares Outstanding 100,000

The book value per share is: $15.00


Price/Earnings (P/E) MultipleAverage P/E Ratio for Firms in the Industry 7.0 Earnings per Share $2.60

The value per share is: $18.20


Liquidation ValueLiquidation Value of Assets $5,250,000 Total Liabilities $4,500,000 Book Value of Preferred Stock 0 Number of Common Shares Outstanding 100,000

The liquidation value per share is: $7.50


Constant GrowthEstimated Dividend per Share $1.50 Expected Annual Growth Rate of Dividends 7.00%Investor's Required Rate of Return 15.00%

The value per share is: $18.75


Financial Ratios (All)Income StatementRevenue (Sales) $3,074 Less: Cost of goods sold 2,088 Gross profits $986 Less: Operating Expenses Selling expense $100 General and administrative 194 Lease expenses 35 Depreciation expense 239 OtherTotal operating expenses $568 Operating profits $418 Less: Interest expense 93 Net profits before taxes $325 Less: Taxes 94 Net profits after taxes $231 Less: Preferred stock dividends 10 Earnings available for common stockholders $221

Balance SheetAssetsCurrent assets Cash $363 Marketable securities 68 Accounts receivable 503 Inventories 289 Other Total current assets $1,223 Gross Fixed assets (at cost) Land and buildings $2,072 Machinery and equipment 1,866 Furniture and fixtures 358 Vehicles 275 Other 98 Total gross fixed assets $4,669 Less: Accumulated depreciation 2,295 Net fixed assets $2,374 Total assets $3,597

Liabilities and Stockholders' EquityCurrent liabilities Accounts payable $382 Notes payable 79 Accruals 159 Other Total current liabilities $620 Long-term debts $1,023 Total liabilities $1,643 Stockholders' equity Preferred stock $200 Common stock 191 Paid-in capital 428


Retained earnings $1,135 Total stockholders' equity $1,954 Total liabilities and stockholders' equity $3,597

Additional Data Needed for Ratios Principal Payments made during period $71 Lease Payments made during period $35 Tax Rate 29% Common Shares Outstanding (in 000s) 76 Market Price per Share of Common Stock $32.25

Liquidity Analysis and RatiosNet Working Capital $603 Current Ratio 1.97 Quick Ratio 1.51

Activity RatiosInventory Turnover 7.22 Average Collection Period 58.91 Fixed Asset Turnover 1.29 Total Asset Turnover 0.85

Debt RatiosDebt Ratio 45.7%Debt-equity Ratio 52.4%Times Interest Earned 4.5 Fixed-payment Coverage Ratio 1.9

Profitability RatiosGross Profit Margin 32.1%Operating Profit Margin 13.6%Net Profit Margin 7.5%Return on Assets (ROA) 6.4%Return on Equity (ROE) 11.8%Earnings Per Share (EPS) $2.90 Price/Earnings (P/E) Ratio 11.1


Liquidity Analysis and RatiosNet Working CapitalCurrent Assets $1,223,000 Current Liabilities $620,000

The net working capital is: $ 603,000

Current RatioCurrent Assets $1,223,000 Current Liabilities $620,000

The current ratio is: 1.97

Quick RatioCurrent Assets $1,223,000 Inventory $289,000 Current Liabilities $620,000

The quick ratio is: 1.51


Activity RatiosInventory TurnoverCost of Goods Sold $2,088,000 Inventory $289,000

The inventory turnover is: 7.22

Average Collection PeriodAccounts Receivable $503,000 Annual Sales $3,074,000

The average collection period is: 58.91

Average Payment PeriodAccounts Payable $382,000 Annual Purchases $1,461,600 Days in year 360

The average payment period is: 94.09

Total Asset TurnoverSales $3,074,000 Total Assets $3,597,000

The total asset turnover is: 0.85


Debt RatiosDebt RatioTotal Liabilities $1,643,000 Total Assets $3,597,000

The debt ratio is: 45.7%

Debt-equity RatioLong-term debt $1,023,000 Stockholders' Equity $1,954,000

The debt-equity ratio is: 52.4%

Times Interest EarnedEarnings Before Interest and Taxes $418,000 Interest Expense $93,000

The times interest earned ratio is: 4.5

Fixed-payment Coverage RatioEarnings Before Interest and Taxes $418,000 Interest Expense $93,000 Principal Payments $71,000 Lease Payments $35,000 Total Preferred Dividends $10,000 Tax Rate 29%

The fixed-payment coverage ratio is: 1.87


Profitability RatiosGross Profit MarginSales $3,074,000 Cost of Goods Sold $2,088,000

The gross profit margin is: 32.1%

Operating Profit MarginOperating profit $418,000 Sales $3,074,000

The operating profit margin is: 13.6%

Net Profit MarginNet Profits After Taxes $231,000 Sales $3,074,000

The net profit margin is: 7.5%

Return on Assets (ROA)Net Profits After Taxes $231,000 Total Assets $3,597,000

The return on assets is: 6.4%

Return on Equity (ROE)Net Profits After Taxes $231,000 Stockholders' Equity $1,954,000

The return on equity is: 11.8%

Earnings Per Share (EPS)Earnings Available to Common Stockholders' $221,000 Common Shares Outstanding 76,262

The earnings per share are: $2.90

Price/Earnings (P/E) RatioMarket Price per Share of Common Stock $32.25 Earnings Per Share $2.90

The price/earnings ratio is: 11.1


Present Value - Single AmountFuture Amount (at the end of n periods) $1,700.00 Number of Periods (n) 8Interest Rate Per Period (per n periods) 8.00%

The present value is: $918.46

Calculating an Interest RateFuture Amount (at the end of n periods) $1,700.00 Present Value $918.46 Number of Periods (n) 8

The interest rate per period is: 8.00%

Calculating the Number of PeriodsFuture Amount (at the end of n periods) $1,700.00 Present Value $918.46 Interest Rate Per Period (per n periods) 8.00%

The number of periods are: 8


Present Value of a Mixed StreamPeriodic Discount Rate 9.00%

Cash Period (n) Flow

1 400 2 800 3 500 4 400 5 300 6789

10

The present value is: $1,904.76


Present Value of an AnnuityChoose one of the following options:Ordinary Annuity Annuity Due

Payment Per Period $700.00 Number of Periods 5Interest Rate Per Period (per n periods) 8.00%

The present value of the annuity is: $2,794.90

Calculating an Interest RatePayment Per Period $700.00 Present Value $2,794.90 Number of Periods (n) 5


Calculating the Number of PeriodsPayment Per Period $700.00 Present Value $2,794.90 Interest Rate Per Period (per n periods) 8.00%

The number of periods is: 5


Future Value - Single AmountCompounding Choices (select one):

Present Value $100.00 Number of Periods (n) 2Interest Rate Per Period (per n periods) 8.00%

The future value is: $116.64

Calculating an Effective Interest RateCompounding Frequency (select one):

Nominal Interest Rate 8.00%Number of Years 2

The effective rate per period (per n periods) is: 8.16%

Calculating the Number of PeriodsPresent Value $100.00 Future Value $116.64 Interest Rate Per Period (per n periods) 8.00%

The number of periods is: 2


Future Value of an AnnuityChoose one of the following options:Ordinary Annuity Annuity Due

Payment Per Period $1,000.00 Number of Periods 5Interest Rate Per Period (per n periods) 7.00%

The future value of the annuity is: $5,750.74

Calculating an Interest RatePayment Per Period $1,000.00 Future Value $5,750.74 Number of Periods (n) 5


Calculating the Number of PeriodsPayment Per Period $1,000.00 Future Value $5,750.74 Interest Rate Per Period (per n periods) 7.00%

The number of periods is: 5.00


Deposits to a SumSelect the type of annuity:Ordinary Annuity Annuity Due

Amount to be Accumulated $100,000 Number of years 10 Annual Interest Rate 9.00%

The periodic deposit is: $6,582.01


After Tax Cost of DebtPar value of bond $1,000 Cash inflow from sale (per bond) $960 Coupon rate 9.00%Number of periods to maturity 20 Tax rate 40.0%

The approximate cost is: 9.39%The after tax cost is: 5.63%


Cost of Common

Constant Growth ModelCurrent per Share Market Value of Stock $50.00 Dividend per Share 4Projected Growth Rate of Dividends 5.00%

The cost of common stock is: 13.00%

Capital Asset Pricing ModelRisk Free Rate of Return 7.00%Market Rate of Return 11.00%Beta 1.50


Cost of New IssueCurrent per Share Market Value of Stock $50.00 Dividend per Share $4.00 Growth Rate of Dividends 5.00%Flotation Cost per Share $5.50



Cost of Preferred StockAnnual Preferred Stock Dividend $8.70 Net Proceeds from Sale of Preferred Stock $82.00

The cost of preferred stock is: 10.61%


Weighted Average Cost of CapitalLong-term debt proportion 40.00%Preferred stock proportion 10.00%Common stock/Equity proportion 50.00%

Cost of debt 5.60%Cost of preferred stock 10.60%Cost of equity/stock 13.00%

The weighted average cost of capital is: 9.80%


Weighted Marginal Cost of CapitalLong-term debt proportion 40.00%Preferred stock proportion 10.00%Common stock/Equity proportion 50.00%

Range of New FinancingLower Upper Source of WeightedBound Bound Capital Cost Cost

$0 $600,000 Debt 5.60% 2.24%Preferred 10.60% 1.06%Common 13.00% 6.50%

Weighted average cost of capital 9.80%

Lower Upper Source of WeightedBound Bound Capital Cost Cost

$600,000 $1,000,000 Debt 5.60% 2.24%Preferred 10.60% 1.06%Common 14.00% 7.00%


Lower Upper Source of WeightedBound Bound Capital Cost Cost

$1,000,000 and beyond Debt 8.40% 3.36%Preferred 10.60% 1.06%Common 14.00% 7.00%



Net Present ValueInitial Investment (enter as positive number) $50,000,000 Discount Rate 10%

Years Cash Flows1 6,750,000 2 7,031,250 3 7,312,500 4 7,593,750 5 7,875,000 6 8,156,250 7 8,437,500 8 8,718,750 9 9,000,000

10 9,281,250 11 9,562,500 12 9,843,750 13 - 14 - 15 -

The net present value is: $4,402,138


Internal Rate of ReturnYears Cash Flows

0 Initial Investment --> ($45,000)1 28,000 2 12,000 3 10,000 4 10,000 5 10,000 6789

101112131415

The internal rate of return is: 21.65%


Payback PeriodYears Cash Flows

0 Initial Investment --> ($45,000)1 1,000 2 1,000 3 1,000 4 1,000 5 1,000 6 1,000 7 40,000 8 6,000 9

101112131415

The payback period is: 6.975


Annualized Net Present ValueDiscount Rate 10.00%Number of years 6

Years Cash Flows0 Initial Investment enter as negative --> ($85,000)1 35,000 2 30,000 3 25,000 4 20,000 5 15,000 6 10,000 789

101112131415

The net present value is: $17,285 The annualized NPV is: $3,969


Initial InvestmentCost of new asset $380,000 Installation costs 20,000 After-tax proceeds from sale of old asset 280,000 Tax on sale of present machine 84,160 Change in net working 17,000

The initial investment is: $221,160


Cash Budget(all numbers in $000)

Oct #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!Total cash receipts $210 $320 $340 Less: Total cash disbursements 213 418 305 Net cash flow ($3) ($98) $35 Add: beginning cash $50 $47 ($51)Ending cash $47 ($51) ($16)Less: Minimum cash balance 25 25 25 Required total financing $0 $76 $41 Excess cash balance $22

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