Questions from Corporate Finance

Q: Using the information in the table below, calculate this company’s:

Using the information in the table below, calculate this company’s: a. Internal growth rate. b. Sustainable growth rate. c. Sustainable growth rate if it pays out 40% of its net inco...

Q: Rumolt Motors has 30 million shares outstanding with a price of $

Rumolt Motors has 30 million shares outstanding with a price of $15 per share. In addition, Rumolt has issued bonds with a total current market value of $150 million. Suppose Rumolt’s equity cost of c...

Q: Did KMS’s expansion plan call for it to grow slower or faster

Did KMS’s expansion plan call for it to grow slower or faster than its sustainable growth rate?

Q: Your firm has an ROE of 12%, a payout ratio of

Your firm has an ROE of 12%, a payout ratio of 25%, $600,000 of stockholders’ equity, and $400,000 of debt. If you grow at your sustainable growth rate this year, how much additional debt will you nee...

Q: IZAX, Co. had the following items on its balance sheet

IZAX, Co. had the following items on its balance sheet at the beginning of the year: Its net income this year is $20,000 and it pays dividends of $5,000. If its assets grew at its internal growth rate...

Q: Forecast KMS’s free cash flows (reproduce Table 18.13),

Forecast KMS’s free cash flows (reproduce Table 18.13), assuming KMS’s market share will increase by 0.25% per year; investment, financing, and depreciation will be adjusted accordingly; and working c...

Q: Calculate the continuation value of KMS using your reproduction of Table 18

Calculate the continuation value of KMS using your reproduction of Table 18.8 from Problem 14, and assuming an EBITDA multiple of 8.5. In Problem 14

Q: Assuming a cost of capital of 10%, compute the value of

Assuming a cost of capital of 10%, compute the value of KMS under the 0.25% growth scenario.

Q: Your company has sales of $100,000 this year and

Your company has sales of $100,000 this year and cost of goods sold of $72,000. You forecast sales to increase to $110,000 next year. Using the percent of sales method, forecast next year’s cost of go...

Q: For the next fiscal year, you forecast net income of $

For the next fiscal year, you forecast net income of $50,000 and ending assets of $500,000. Your firm’s payout ratio is 10%. Your beginning stockholders’ equity is $300,000 and your beginning total li...