Questions from Corporate Finance

Q: Financial analysts forecast Safeco Corp.’s (SAF) growth rate

Financial analysts forecast Safeco Corp.’s (SAF) growth rate for the future to be 8 percent. Safeco’s recent dividend was $0.88. What is the value of Safeco stock when the required return is 12 percen...

Q: Tiggie’s Dog Toys, Inc. reported a debt-to-

Tiggie’s Dog Toys, Inc. reported a debt-to-equity ratio of 1.75 times at the end of 2018. If the firm’s total debt at year-end was $25 million, how much equity does Tiggie’s have on its balance sheet?...

Q: You are considering a stock investment in one of two firms (

You are considering a stock investment in one of two firms (Lots of Debt, Inc. and Lots of Equity, Inc.), both of which operate in the same industry. Lots of Debt, Inc. finances its $30 million in ass...

Q: You are considering an investment in Roxie’s Bed & Breakfast Corp.

You are considering an investment in Roxie’s Bed & Breakfast Corp. During the last year the firm’s income statement listed an addition to retained earnings of $4.8 million and common stock dividends o...

Q: Suppose that the 2016 actual and 2017 projected financial statements for your

Suppose that the 2016 actual and 2017 projected financial statements for your firm are initially shown as follows. In these tables, sales are projected to rise by 18 percent in the coming year, and th...

Q: Dudley Hill Golf Club’s market-to-book ratio is currently

Dudley Hill Golf Club’s market-to-book ratio is currently 2.5 times and the PE ratio is 6.75 times. If Dudley Hill Golf Club’s common stock is currently selling at $22.50 per share, what is the book v...

Q: If Silas 4-Wheeler, Inc. has an ROE of

If Silas 4-Wheeler, Inc. has an ROE of 18 percent, equity multiplier of 2, and a profit margin of 18.75 percent, what is the total asset turnover and the capital intensity?

Q: Last year, Hassan’s Mad hatter, Inc. had an ROA

Last year, Hassan’s Mad hatter, Inc. had an ROA of 7.5 percent, a profit margin of 12 percent, and sales of $25 million. Calculate Hassan’s Mad hatter’s total assets.

Q: Last year, Lakesha’s Lounge Furniture Corporation had an ROA of 7

Last year, Lakesha’s Lounge Furniture Corporation had an ROA of 7.5 percent and a dividend payout ratio of 25 percent. What is the internal growth rate?

Q: Last year, Lakesha’s Lounge Furniture Corporation had an ROE of 17

Last year, Lakesha’s Lounge Furniture Corporation had an ROE of 17.5 percent and a dividend payout ratio of 20 percent. What is the sustainable growth rate?