Lecture 2 Net record Value
1. The Siteben Company has determined that the by-line lead be legitimate next year:
T=Ratio of total assets to gross revenue = 1
P = Net profit margin on gross sales = 5%
D = Dividend-payout balance = 50%
L = Debt-equity ratio = 1
a. What is Sitebens sustainable offset appraise in sales?
b. Can Sitebens actual growth rate in sales be different from its sustainable growth rate ? Why or why not?
c. how can Siteben variety show its sustainable growth?
2. Your firm recently hired a clean MBA. She insists that your firm is incorrectly computing its sustainable growth rate. Your firm computes the sustainable growth rate using the following formula:
?[pic]
?P = Net profit margin on sales
d = Dividend-payout ratio
L = Debt-equity ratio
T = Ratio of total assets to sales
Your new employee claims that the correct formula is [pic]where ROE is scratch profit dividend by net worth and d is dividends divided by net profit. Is your new employee correct?
3. What are the shortcomings of financial-planning models that we should be aware of?
4. gamey Pettit is a miser His current income is $50,000; next year he will earn $40,000 He plans to consume only $20,000 this year. The current gratify rate is 12 percent. What will Richs outgo potential be next year?
5. Harry Hernandez has $60,000 this year.
He faces the investment opportunities represented by point B in the following figure. He wants to consume $20,000 this year and $67,500 next year. This anatomy of consumption is represented by point F.
a. What is the market disport rate?
b. How much must Harry invest in financial assets and productive assets today if he follows and optimum schema?
c. What is the NPV of his investment in nonfinancial assets?
[pic]
Lecture 3 some Alternative Investment Rules
1. Fuji Software, Inc., has the following mutually exclusive projects.
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