1. (TCO C) Blease Inc. has a capital budget of $625,000, and it wants to maintain a target capital structure of 60 percent debt and 40 percent equity. The company forecasts a net income of $475,000. If it follows the residual dividend policy, what is its forecasted dividend payout ratio? (a) 40.61% (b) 42.75% (c) 45.00% (d) 47.37% (e) 49.74% (Points : 10) | Question 2.2. (TCO F) Chocolate Factory's convertible debentures were issued at their $1,000 par value in 2009. At
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approval of the board of directors audit committee. All financial activities and transactions in the company are run by its CFO, Lee Marchetti. He is recognized as a trustworthy executive who ensures tight internal checks and controls on company’s finances. Current situation: In the process of reviewing the company’s financial statements, Nick recognized some issues with software revenue recognition. He had a feeling that there was a possibility that the company was creating “cookie jar” reserves
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When the automotive industry began to fail, the US Treasury increased the interest rate on Treasury bills as a way to bring more money back to the government. As you can see from the graph, in 2009 a 1 year Treasury bill had an average interest rate of 0.55%. Throughout the short recession, the interest rate remained above 0.20% because Treasury bills were not in high demand. People had their own financial troubles, so very few could afford to send money to the government. In the first few quarters
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Week 7 Exercise As an entrepreneur I would be very concerned about the amount of power that investors would have in my company. This legally binding document states that not only will the investors own a certain percentage of the company, but are given a set number of seats on the board of the company. The investors should definitely make there money back and should definitely have equity in the company but I would argue that they shouldn’t have as much control within the company in respects
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Chapter 1 * Cash flow from assets (CFA) = OCF – NCS – ΔNWC * OCF= Operational cash flow = EBIT + Dep – taxes = EBIT (1 – T) + Dep * NCS= Net Capital Spending NFAEnd – NFABeg + Dep * NWC= Net Operating Working Capital = NOWCEnd - NOWCBeg * Free Cash Flow (FCF) = (Revenues – Costs) (1- Tc) – Cap. Expenditures – ΔNWC + (Dep) (Tc) Chapter 4 * Financial Planning has three important uses: 1. Forecast the amount of external financing that will be required 2. Evaluate
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A frequent criticism of the management for publically-owned American companies is that they are too short term oriented, too focused on fast returns, and that this negatively impacts their long term capital budgeting. Can you suggest a company, or industry, where this appears to be true? Why? How? Do the recent problems at Toyota suggest that the problem is spreading to other countries? How do we keep an emphasis on the “long-term” from becoming an excuse for continued poor results is the “short-term
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progresses, financial intermediaries must increase other activities such as providing short-term liquidity to consumers and small business, and financial services. 4. Financial assets make it easy for large firms to raise the capital needed to finance their investments in real assets. If Ford, for example, could not issue stocks or bonds to the general public, it would have a far more difficult time raising capital. Contraction of the supply of financial assets would make financing more
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The Chapter discusses the dividend policy or payout policy. Many companies choose to reinvest their returns back into the company when interested in growth or looking for tax cuts. Companies concerned with income opted for the payout of dividends. Stock or cash can be paid to current shareholders in the form of dividends. I have had an open account with Sharebuilder.com for several years now. I have three accounts with them. One account has: Nanometrics, Apple, an Energy Co, a Gold Co, and
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After the death of my client, the finance company contacted me, as his attorney to provide his next of kin who should inherit his fortune this according to them is their policy in sure circumstances. Since the death of my client, I have written several letters to the embassy with intent to locate any of his extended relatives whom shall be claimants/beneficiaries of his abandoned personal estate and all such efforts have been to no avail. I had to inform the finance company about my fruitless effort
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banks cannot invest their surplus fund so their profit will be affected. The ability of Islamic bank in Bangladesh to use tradable financial instrument is also not clear because the absence of suitable long term assets. The progression of Islamic finance in Bangladesh has growth in positive value in last few decades. It is because the demand for this kind of financial services is always there. Today, from 48 banks that run in Bangladesh, six are fully based on shariah principle. Besides that, about
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