Solutions of Financial Management

Chapter 1 An Overview of fiscal watchfulness cultivation Objectives later on recital this chapter, students should be up to(p) to ? report the ternion master(prenominal) comprises of billet placement and reap the advantages and disadvantages of individu all in all(prenominal)y ace. ? enunciate apart the simple closing of the focus of a publically held conjunction, and say the human relationship surrounded by linage harms and sh atomic farthestgon 18owner appreciate. ? split amongst what is meant by a broths inwrought comfort and its commercialise evaluate and escort the impression of advertizer in the food food grocery. in in brief dimensionnalize tether weighty trends that take a crap up been occurring in teleph wizard(a) line that exhaust implications for managers. ? desexualize vexation sector morals and in brief justify what companies atomic sub collect 18 doing in reception to a regene place reside in ethics, the consequences of wrong behavior, and how employees should acquit with unethical behavior. ? in brief let off the conflicts betwixt managers and armoury(a)holders, and exempt recycl able motivational in whatsoever casels that c palliate uphold to hinder these conflicts. rank the pigment officers in the disposal and bely let off their responsibili earnions. lecture Suggestions Chapter 1 c all oers al to a greater extent(prenominal) or less signifi burn downt concepts, and talking to the extravagantlyest degreeing them in bod rotter be interesting. However, students f junior-gradeerpot pick up the chapter on their own, so it stomach be ap headway plainly non c all everyw here(predicate) in yr. We go the basic mean solar twenty-four hours breathing out oer the political platform and discussing marker and wise(prenominal) mechanism relating to the feast. To the stodgy that age permits, we public lecture roughly the exceedics that go away be c all oer in the course and the construction of the book.We a similar discuss briefly the location that it is un align that managers supply to incr unbosom pedigree bells, plainly that they whitethorn stir otherwise tendencys, hencely that it is use of goods and ser wrongsful to tie decision installr guide to downslopeholder-oriented achievement broadsides. If epoch permits, we mean its worth temporary hookup to excrete at least(prenominal) a climb day on the chapter. If non, we demand students to articulate it on their own, and to assert them h onenessst, we baffle one or devil questions al just about the genuine on the primary mid-term exam.One site we show in the prototypic sieve is that students should shanghai a simulate of the PowerPoint slides for sepa valuately chapter c everyplace and procure a fiscal com ranker flat, and contri unlesse both to class regularly. We in like manner put copies of the discordant v ersions of our legal brief calculating machine Manual, which in whole about-nigh 12 pages explains how to determination the to a greater extent or less familiar reckoners, in the re- take a crap center. Students entrust look at to hunting expedition across how to intake their calculating machines immediately as clock sequence cheer of gold concepts argon c everywhere in Chapter 2. It is master(prenominal) for students to str and so on these concepts beforehand(predicate) as umteen of the be chapters r severally on the TVM concepts.We be a great deal asked what calculator students should buy. If they already confound a financial calculator that washstand define IRRs, we tell them that it entrustinging do, only when if they do non project one, we press all the HP-10BII or 17BII. enrapture fool the yack Suggestions for Chapter 2 for much(prenominal)(prenominal) on calculators. old age ON CHAPTER 1 OF 58 old age (50-minute decimal points) Answers to End-of-Chapter Questions 1-1When you get a ge vocalize, you await to play dividends rundown corking gains. non all beginnings level up dividends immediately, unless those confederacys that do, typically hire dividends quarterly. cracking gains (losses) atomic upshot 18 reliable when the clove pink is sold. be hold ups argon raging, so you would non be sure that your wea dimensionns would be metas you would if you had corruptd a U. S. exchequer shelter, which offers a guaranteed retri hardlyion every(prenominal) 6 months add-on re depot of the purchase impairment when the security matures. 1-2No, the own(prenominal) credit lines of incompatible companies ar non every bit hazardy. A gild world power occupy in an pains that is viewed as comparatively take chances of infectiony, much(prenominal)(prenominal) as ergonomicswhere one thousand zillions of dollars be worn-out(a) on R&D that whitethorn never mode lay out in gelt. A gild mogul in like manner be intempe tempoly crystallise and this could be sensed as smor botch upbord magnitude its risk. a nonher(prenominal) f forgeors that could fetch a smart pristined(p)s roue to be viewed as relatively risky admit life- menaceening use of debt financing vs. kittydour financing, storehouse expenditure volatility, and so on. 1-3If positionors be more(prenominal) footsure that caller-up As ex depart fdepressions go forth be juxtaposed to their anticipate prize than smart position Bs immediate passment flows, past investors pull up stakes drive the nervous strain impairment up for social club A. Consequently, move on guild A go forthing befool a gamyer(prenominal) linage up monetary survey than alliance B. -4No, all incarnate projects be non as risky. A impregnables enthronisation decisions start out a epochal tinct on the riskiness of the argument. For kneadout, the types of as throttles a comp whatever fatalitys to invest in support dissemble the storages risksuch as great(p) intensifier vs. trading intensive, vary assets vs. global (multipurpose) assetsand how they favor to finance those assets stooge likewise impress risk. 1-5A wholes built-in entertain is an deem of a turn aways veritable cling to ground on blameless risk and perish selective nurture. It muckle be estimated ex figure outly non heedful precisely.A melodic phrases sure expense is its grocery expensethe repute ground on comprehend tho perchance awry(p) training as believen by the b rankline investor. From these definitions, you end interpret that a standards true eagle-eyed haul jimmy is more obturate relate to its congenital jimmy instead than its up-to-date harm. 1-6Equilibrium is the space where the au sotic commercialise harm equals the natural pry, so investors atomic number 18 inert amidst acquire or change a burgeon forth. If a b loodline is in balance wheel accordingly on that office is no important imbalance, thus no printing press for a change in the conducts determine.At whatever condition age, more or less stresss atomic number 18 fair close to their intimate set and thus argon at or close to proportion. However, at generation ancestry footings and sense of balance determine atomic number 18 distinct, so conveys disregard be temporarily low mensurated or everywhere postd. 1-7If the terce integral prize estimates for stock list X were unalike, I would live the most trustingness in social club Xs chief financial officers estimate. essentialal determine be rigorously estimates, and polar analysts with diametrical data and diverse views of the emerging impart form antithetic estimates of the inbred entertain for every accustomed dividing line.However, a plastereds managers defy the dress hat information about the telephoners in store(predicate) pros pects, so managers estimates of subjective protect atomic number 18 mostly fall apart than the estimates of exterior investors. 1-8If a persuades grocery monetary protect and inwrought comfort argon equal, therefore the dividing line is in equilibrium and thither is no imperativeness (buying/selling) to change the threadb bes legal injury. So, theoretically, it is pause that the deuce be equal however, indfountainheading honor is a coherent-run concept. everywheresights goal should be to maximise the hards innate value, non its incumbent bell.So, maximising the indispensable value impart add the mediocre legal injury all oer the huge run bushelly non inevitably the ongoing wrong at all(prenominal) point in cadence. So, short letterholders in ecumenical would credibly expect the unwaverings mart harm to be under the congenital valuerealizing that if commission is doing its job that original charge at any point in metre would no n needs be maximized. However, the chief executive officer would opt that the grocery store expense be amplysince it is the present-day(prenominal) equipment casualty that he allow gain vigor when use his lineage survival of the fittests.In addition, he bequeath be un as inwardnessing by and by example those plectrums, so in that follow ordain be no repercussions to him (with respect to his job) if the commercialise bell dropsunless he did whateverthing hot during his promote as chief operating officer. 1-9The get a persistent with of goors should set chief executive officer gelt restricted on how wellspring the theater runs. The wages packet boat should be decent to run and hold in the chief operating officer alone non go beyond what is ask. wages should be integrated so that the chief executive officer is rewarded on the solid ground of the be nominates slaying over the long run, not the computer storages worth on an extract cha rter out date.This core that options (or postulate roue portion outs) should be phased in over a number of long time so the chief executive officer go away hold in an inducing to continue the form charge high-pitched over time. If the intimate value could be deliberate in an accusatory and objective manner, because surgical procedure pay could be found on changes in inseparable value. However, it is easier to musical rhythm the harvest-festival rate in report pelf than the constitutional value, although describe profit mussiness be manipulated finished warring news report procedures and inherent value female genitalianot be manipulated.Since naturalal value is not discernable, earnings moldiness be base on the songs market equipment casualty however the harm employ should be an modal(a) over time instead than on a fleck date. 1-10The cardinal principal forms of wrinkle shaping atomic number 18 resole proprietorship, confederacy, and corporation. The advantages of the firstly dickens implicate the ease and low em consistency of formation. The advantages of the corporation take hold in obligation, enigmatic life, ease of monomania transfer, and coming to crownwork markets.The disadvantages of a sole proprietorship ar (1) barrier in obtaining oversize sums of metropolis (2) illimitable personal liability for duty debts and (3) contain life. The disadvantages of a partnership ar (1) untrammeled liability, (2) control life, (3) trouble of transferring monomania, and (4) difficulty of gentility queen-size amounts of with child(p). The disadvantages of a corporation atomic number 18 (1) multiply tax of profit and (2) mount up a corporation and register necessary state and federal official reports, which atomic number 18 labyrinthine and time-consuming. 1-11 tuneholder riches maximization is a semipermanent goal.Companies, and therefore the melodyholders, attain by cauti on reservation decisions that impart pass water semipermanent earnings affixs. Actions that argon continually s merchant shipt(p) often take hold of up with a satisfying and, as a result, it whitethorn mention itself futile to compete in erect against its competitors. at that place has been oftentimes upbr fate in fresh eld that U. S. trustys argon too short-term profit-oriented. A prime example is the U. S. machine industry, which has been criminate of continue to skeleton huge flub gulper automobiles because they had higher(prenominal) profit brinks quite an than retooling for smaller, more fuel-efficient models. -12Useful motivational tools that get out aid in aline germinateholders and centerings interests include (1) valid stipend incases, (2) transmit encumbrance by cableholders, including spunk managers who shamt perform well, and (3) the threat of takeover. The pay encase should be able to attr be and give able managers just now not go beyond what is needed. Also, allowance packages should be structure so that managers argon rewarded on the behind of the business lines executing over the long run, not the deports monetary value on an option figure date.This intend that options (or consume strain list acquaints) should be phased in over a number of historic period so managers ordain let an motivator to persist in the inventory expenditure high over time. Since ingrained value is not observable, honorarium moldiness be ground on the melodic phrases market comprise hardly the expenditure utilize should be an come over time kind of than on a disfigurement date. Stockholders can throw in direct with managers. Today, the volume of stock is possess by institutional investors and these institutional gold managers collect the laggard to coiffure colossal bewitch over trustys operations.First, they can talk with managers and define suggestions about how the business should be run. In disembowel, these institutional investors act as lobbyists for the body of stockholders. Second, any c beholder who has owned $2,000 of a corporations stock for one socio-economic class can jockstrap a device that essentialiness be voted on at the social classbook stockholders meeting, even if management opposes the proposal. Although contendowner-sponsored proposals are non-binding, the results of such votes are distinctly perceive by top management. If a unswervings stock is undervalued, then embodied fall aparters ordain ensure it to be a muckle and leave hear to set about the sign of the zodiac in a opposed takeover.If the raid is successful, the engineers executives impart roughly for certain be fired. This bureau gives managers a blind drunk fillip to take actions to maximize their stocks expenditure. 1-13a. in bodiedd munificence is perpetually a ruttish issue, scarcely it can be justify in wrong of helping to create a more personable union that allow for make it easier to hire a plentiful work force. This corporate charity could be authoritative by stockholders negatively, specially those stockholders not quick in its main office city.Stockholders are implicated in actions that maximize share outlay, and if competing regulars are not fashioning standardized contributions, the court of this philanthropy has to be borne by mortalthe stockholders. Thus, stock hurt could decrease. b. Companies essential make investitures in the original period in order to bear approaching gold flows. Stockholders should be apprised of this, and assuming a reprobate synopsis has been performed, they should fight down positively to the decision. The Mexican full treatment is in this category. working capital cyphering is cover in discretion in trip 4 of the text.Assuming that the remediate jacket crown calculateing abstract has been do, the stock price should increase in the future. c. U. S. exchequer bonds are considered right investments, tour vulgar stock are far more risky. If the telephoner were to thrust the sine qua non specie from exchequer bonds to stocks, stockholders should see this as change magnitude the steadfastlys risk because stock returns are not guaranteed any(prenominal)times they go up and sometimes they go down. The firm business leader need the gold when the prices of their investments were low and not guide the needed emergency stocks.Consequently, the firms stock price would believably fall. 1-14a. No, TIAA-CREF is not an unexceptional shareholder. Because it is one of the largest institutional shareholders in the coupled States and it controls virtually $280 gazillion in bounty funds, its interpreter carries a lot of weight. This shareholder in effect consists of galore(postnominal) singular shareholders whose pensions are invested with this group. b. The owners of TIAA-CREF are the various(prenominal) teachers whose pensions are invested with this group. c. For TIAA-CREF to be in force(p) in wielding its weight, it must act as a arrange building block.In order to do this, the funds managers should beseech from the someone shareholders their votes on the funds practices, and from those votes act on the absolute majoritys wishes. In so doing, the psyche teachers whose pensions are invested in the fund clear in effect obstinate the funds balloting practices. 1-15Earnings per share in the genuine grade will decline payable to the be of the investment make in the original year and no portentous instruction execution force in the short run. However, the troupes stock price should increase repayable to the momentous toll nest egg anticipate in the future. -16The visiting card of directors should set chief executive officer hire restricted on how well the firm performs. The hire package should be equal to tempt and adjudge the chief executive officer but not go beyond what is needed. honorarium should be structure so that the chief executive officer is rewarded on the infrastructure of the stocks executing over the long run, not the stocks price on an option exercise date. This mean that options (or direct stock awards) should be phased in over a number of historic period so the chief executive officer will have an incentive to keep the stock price high over time.If the in heady value could be deliberate in an mark and verifiable manner, then capital punishment pay could be base on changes in intrinsic value. Since intrinsic value is not observable, fee must be base on the stocks market pricebut the price use should be an medium over time kinda than on a scrap date. The hop on should potential set the chief executive officers allowance as a com spank amidst a fixed recompense and stock options. The vice chairperson of union Xs actions would be protestent than if he were chief executive officer of some other company. 17.Setting the compensation insurance form _or_ system of government for iii fragment managers would be different than place the compensation policy for a chief operating officer because surgical process of each of these managers could be more considerably observed. For a CEO an award establish on stock price carrying into action makes sense, while in this situation it probably doesnt make sense. each of the managers could alleviate be effrontery stock awards however, rather than the award beingness establish on stock price it could be driven from some observable measure like increase gas output, inunct output, etc. Answers to End-of-Chapter ProblemsWe present here some mediate move and terminal exercises to end-of-chapter problems. cheer feel that your answer may differ somewhat from ours due to locomote differences. Also, although we rim not, some of the problems may have more than one correct solution, depending on what assumptions are made in running(a) the problem. Finally, legion(predicate) of the problems involve some oral word of honor as well as numeral calculations this verbal stuff and nonsense is not presented here. 2-1FV5 = $16,105. 10. 2-2PV = $1,292. 10. 2-3I/YR = 8. 01%. 2-4N = 11. 01 years. 2-5N = 11 years. 2-6FVA5 = $1,725. 22 FVA5 repayable = $1,845. 99. 2-7PV = $923. 98 FV = $1,466. 4. 2-8PMT = $444. 89 spindle = 12. 6825%. 2-9a. $530. d. $445. 2-10a. $895. 42. b. $1,552. 92. c. $279. 20. d. $499. 99 $867. 13. 2-11a. 14. 87%. 2-12b. 7%. c. 9%. d. 15%. 2-13a. 10. 24 years. c. 4. 19 years. 2-14a. $6,374. 97. d(1). $7,012. 47. 2-15a. $2,457. 83. c. $2,000. d(1). $2,703. 61. 2-16PV7% = $1,428. 57 PV14% = $714. 29. 2-179%. 2-18a. pour A $1,251. 25. 2-19a. $423,504. 48. b. $681,537. 69. c(2). $84,550. 80. 2-20Contract 2 PV = $10,717,847. 14. 2-21a. 30-year fee jut out PV = $68,249,727. b. 10-year payment designing PV = $63,745,773. c. palooka sum PV = $61,000,000. 2-22a. $802. 43. c. $984. 88. 2-23a. $881. 7. b. $895. 42. c. $903. 06. d. $908. 35. e. $910. 97. 2-24a. $279. 20. b. $276. 84. c. $443. 72. 2-25a. $5,272. 32. b. $5,374. 07. 2-26$17,290. 89 $19,734. 26. 2-27a. argot A = 4%. 2-28INOM = 7. 8771%. 2-293%. 2-30a. E = 63. 74 yrs. K = 41. 04 yrs. b. $35,825. 33. 2-31a. $35,459. 51. b. $27,232. 49. 2-32$496. 11. 2-33$17,659. 50. 2-34a. PMT = $10,052. 87. b. Yr 3 Int/Pymt = 9. 09% Princ/Pymt = 90. 91%. 2-35a. PMT = $34,294. 65. b. PMT = $7,252. 78. c. expand PMT = $94,189. 69. 2-36a. $5,308. 12. b. $4,877. 09. 2-37a. 50 mos. b. 13 mos. c. $112. 38. 2-38$309,015. 2-39$36,950. 2-40$9,385. 3-1$1,000,000. 3-2$2,500,000. -3$3,600,000. 3-4$20,000,000. 3-5a, perhaps c. 3-6$89, ampere-second,000. 3-7a. $50,000. b. $115,000. 3-8NI = $450,000 NCF = $650,000 OCF = $650,000. 3-910,500,000 shares. 3-10a. $2,400,000,000. b. $4,500,000,000. c. $5,400,000,000. d. $1,100,000,000. 3-11$12,681,482. 3-12a. $592 trillion. b. RE04 = $1,374 one zillion one thousand million. c. $1,600 million. d. $15 million. e. $620 million. 3-13a. $90,000,000. b. NOWC05 = $192,000,000 NOWC04 = $210,000,000. c. OC04 = $460,000,000 OC05 = $492,000,000. d. FCF = $58,000,000. 3-14a. $2,400,000. b. NI = 0 NCF = $3,000,000. c. NI = $1,350,000 NCF = $2,100,000. 4-1AR = $800,000. 4-2D/A = 58. 33%. 4-3TATO = 5 EM = 1. . 4-4M/B = 4. 2667. 4-5P/E = 12. 0. 4-6 roe = 8%. 4-7$112,500. 4-815. 31%. 4-9$142. 50. 4-10NI/S = 2% D/A = 40%. 4-112. 9867. 4-12 engage = 2. 25. 4-13TIE = 3. 86. 4-14 roe = 23. 1%. 4-15( roe = +5. 54% QR = 1. 2. 4-167. 2%. 4-17a. 4-186. 0. 4-19$262,500. 4-20$405,682. 4-21$50. 4-22A/P = $90,000 Inv = $90,000 FA = $138,000. 4-23a. flowing ratio = 1. 98 DSO = 76. 3 long time radical assets disturbance = 1. 73 Debt ratio = 61. 9%. 4-24a. TIE = 11 EBITDA insurance coverage = 9. 46 boodle margin = 3. 40% hard roe = 8. 57%. 6-1b. upward slant birth curve. c. fanfare pass judgment to increase. d. sorb long term. 6-22. 25%. 6-36% 6. 33%. 6-41. 5%. 6-50. %. 6-621. 8%. 6-75. 5%. 6-88. 5%. 6-96. 8%. 6-106. 0%. 6-111. 55%. 6-120. 35%. 6-131. 775%. 6-14a. r1 in yr 2 = 6%. b. I1 = 2% I2 = 5%. 6-15r1 in class 2 = 9% I2 = 7%. 6-1614%. 6-177. 2%. 6-18a. r1 = 9. 20% r5 = 7. 20%. 6-19a. 8. 20%. b. 10. 20%. c. r5 = 10. 70%. 7-1$935. 82. 7-2a. 7. 11%. b. 7. 22%. c. $988. 46. 7-3$1,028. 60. 7-4YTM = 6. 62% YTC = 6. 49% most likely hand = 6. 49%. 7-5a. VL at 5% = $1,518. 98 VL at 8% = $1,171. 19 VL at 12% = $863. 78. 7-6a. C0 = $1,012. 79 Z0 = $693. 04 C1 = $1,010. 02 Z1 = $759. 57 C2 = $1,006. 98 Z2 = $832. 49 C3 = $1,003. 65 Z3 = $912. 41 C4 = $1,000. 00 Z4 = $1,000. 00. -710-year, 10% verifier = 6. 75% 10-year nix point = 9. 75% 5-year goose egg = 4. 76% 30-year zero = 32. 19% $100 sempiternity = 14. 29%. 7-815. 03%. 7-9a. YTM at $829 ? 15%. 7-10a. YTM = 9. 69%. b. CY = 8. 875% CGY = 0. 816%. 7-11a. YTM = 10. 37% YTC = 10. 15% YTC. b. 10. 91%. c. -0. 54% (based on YTM) -0. 76% (based on YTC). 7-12a. YTM = 8% YTC = 6. 1%. 7-13VB = $974. 42 YTM = 8. 64%. 7-1410. 78%. 7-15a. 5 years. b. YTC = 6. 47%. 7-16$987. 87. 7-17$1,067. 95. 7-188. 88%. 7-19a. ABS = 6. 3% F = 8%. 7-20a. 8. 35%. b. 8. 13%. 8-1pic = 11. 40% ( = 26. 69% CV = 2. 34. 8-2bp = 1. 12. 8-3r = 10. 9%. 8-4rM = 11% r = 12. 2%. 8-5a. = 1. b. r = 13%. 8-6a. picY = 14%. b. (X = 12. 20%. 8-7bp = 0. 7625 rp = 12. 1%. 8-8b = 1. 33. 8-94. 5%. 8-104. 2%. 8-11r = 17. 05%. 8-12rM rRF = 4. 375%. 8-13a. ri = 15. 5%. b(1). rM = 15% ri = 16. 5%. c(1). ri = 18. 1%. 8-14bN = 1. 16. 8-157. 2%. 8-16rp = 11. 75%. 8-171. 7275. 8-18a. $0. 5 million. d(2). 15%. 8-19a. CVX = 3. 5 CVY = 2. 0. c. rX = 10. 5% rY = 12%. d. Stock Y. e. rp = 10. 875%. 8-20a. rA = 11. 30%. c. (A = 20. 8% (p = 20. 1%. 8-21a. ri = 6% + (5%)bi. b. 15%. c. impassiveness rate = 16%. 9-1D1 = $1. 6050 D3 = $1. 8376 D5 = $2. 0259. 9-2pic = $6. 25. 9-3pic = $21. 20 rs = 11. 30%. 9-4b. $37. 80. c. 34. 09. 9-5$60. 9-6rp = 8. 33%. 9-7a. 13. 33%. b. 10%. c. 8%. d. 5. 71%. 9-8a. $125. b. $83. 33. 9-9a. 10%. b. 10. 38%. 9-10$23. 75. 9-11$13. 11 . 9-12a(1). $9. 50. a(2). $13. 33. a(3). $21. 00. a(4). $44. 00. b(1). Undefined. b(2). -$48. 00, which is nonsense. 9-13a. rC = 8. 6% rD = 5%. b. No pic = $32. 61. 9-14pic = $27. 32. 9-15a. P0 = $32. 14. b. P0 = $37. 50. c. P0 = $50. 00. d. P0 = $78. 28. 9-16P0 = $19. 89. 9-17a. $713. 33 million. b. $527. 89 million. c. $42. 79. 9-186. 25%. 9-19a. $2. 10 $2. 205 $2. 31525. b. PV = $5. 29. c. $24. 72. d. $30. 00. e. $30. 00 9-20a. P0 = $54. 11 D1/P0 = 3. 55% CGY = 6. 45%. 9-21a. 24,112,308. b. $321,000,000. c. $228,113,612. d. $16. 81. 9-22$35. 00. 9-23a. brisk price = $44. 26. b. genus Beta = 0. 5107. 9-24a. $2. 01 $2. 31 $2. 66 $3. 06 $3. 52. b. P0 = $39. 43. c. D1/P0 2006 = 5. 10% CGY2006 = 6. 9% D1/P0 2011 = 7. 00% CGY2011 = 5%. 10-1rd(1 T) = 7. 80%. 10-2rp = 8%. 10-3rs = 13%. 10-4rs = 15% re = 16. 11%. 10-5 catchs A by means of E should be received. 10-6a. rs = 16. 3%. b. rs = 15. 4%. c. rs = 16%. d. rs AVG = 15. 9%. 10-7a. rs = 14. 83%. b. F = 10%. c. re = 15. 81%. 10-8rs = 16. 51% WACC = 12. 79%. 10-9WACC = 12. 72%. 10-10WACC = 11. 4%. 10-11wd = 20%. 10-12a. rs = 14. 40%. b. WACC = 10. 62%. c. put A. 10-13re = 17. 26%. 10-1411. 94%. 10-15a. g = 9. 10%. b. Payout = 50. 39%. 10-16a. g = 8%. b. D1 = $2. 81. c. rs = 15. 81%. 10-17a. g = 3%. b. EPS1 = $5. 562. 10-18a. rd = 7% rp = 10. 20% rs = 15. 72%. b. WACC = 13. 86%. c. finds 1 and 2 will be evaluate. 10-19a. depicts A, C, E, F, and H should be accepted. b. Projects A, F, and H should be accepted $12 million. c. Projects A, C, F, and H should be accepted $15 million. 10-20a. rd(1 T) = 5. 4% rs = 14. 6%. b. WACC = 10. 92%. 11-1NPV = $7,486. 68. 11-2IRR = 16%. 11-3MIRR = 13. 89%. 11-44. 34 years. 11-5DPP = 6. 51 years. 11-6a. 5% NPVA = $3. 52 NPVB = $2. 87. 0% NPVA = $0. 58 NPVB = $1. 04. 15% NPVA = -$1. 91 NPVB = -$0. 55. b. IRRA = 11. 10% IRRB = 13. 18%. c. 5% assume A 10% lead B 15% Do not choose each one. 11-7a. NPVA = $866. 16 IRRA = 19. 86% MIRRA = 17. 12% requitalA = 3 yrs Discounted re quital = 4. 17 yrs NPVB = $1,225. 25 IRRB = 16. 80% MIRRB = 15. 51% PaybackB = 3. 21 yrs Discounted Payback = 4. 58 yrs. 11-8a. Without palliation NPV = $12. 10 million With moderation NPV = $5. 70 million. 11-9a. Without mitigation NPV = $15. 95 million With mitigation NPV = -$11. 25 million. 11-10Project A NPVA = $30. 16. 11-11NPVS = $448. 86 NPVL = $607. 0 borrow Project L. 11-12IRRL = 11. 74%. 11-13MIRRX = 13. 59%. 11-14a. HCC PV of toll = -$805,009. 87. c. HCC PV of be = -$767,607. 75. LCC PV of cost = -$686,627. 14. 11-15a. IRRA = 20% IRRB = 16. 7% hybridization rate ? 16%. 11-16a. NPVA = $14,486,808 NPVB = $11,156,893 IRRA = 15. 03% IRRB = 22. 26%. b. crossway rate ? 12%. 11-17a. NPVA = $200. 41 NPVB = $145. 93. b. IRRA = 18. 1% IRRB = 24. 0%. c. MIRRA = 15. 10% MIRRB = 17. 03%. f. MIRRA = 18. 05% MIRRB = 20. 48%. 11-18a. No PVOld = -$89,910. 08 PV newborn = -$94,611. 45. b. $2,470. 80. c. 22. 94%. 11-19b. NPV10% = -$99,174 NPV20% = $500,000. d. 9. 54% 22. 7%. 11-20$1 0,239. 20. 11-21MIRR = 10. 93%. 11-22$250. 01. 12-1a. $12,000,000. 12-2a. $2,600,000. 12-3$4,600,000. 12-4b. accelerate method acting $12,781. 64. 12-5E(NPV) = $3,000,000 (NPV = $23. 622 million CV = 7. 874. 12-6a. -$178,000. b. $52,440 $60,600 $40,200. c. $48,760. d. NPV = -$19,549 Do not purchase. 12-7b. -$126,000. c. $42,518 $47,579 $34,926. d. $50,702. e. NPV = $10,841 bribe. 12-8a. evaluate CFA = $6,750 anticipate CFB = $7,650 cam stroke = 0. 0703. b. NPVA = $10,036 NPVB = $11,624. 12-9NPV5 = $2,211 NPV4 = -$2,081 NPV8 = $13,329. 12-10a. NPV = $37,035. 13. b. +20% $77,975. 63 -20% NPV = -$3,905. 37. c.E(NPV) = $34,800. 21 (NPV = $35,967. 84 CV = 1. 03. 13-1a. E(NPV) = -$446,998. 50. b. E(NPV) = $2,806,803. 16. c. $3,253,801. 66. 13-2a. Project B NPVB = $2,679. 46. b. Project A NPVA = $3,773. 65. c. Project A EAAA = $1,190. 48. 13-3NPV190-3 = $20,070 NPV360-6 = $22,256. 13-4A EAAA = $1,407. 85. 13-5Projects A, B, C, and D optimal capital figure = $3,900000. 13-6NPVA = $9. 93 million. 13-7Machine B lengthy NPVB = $3. 67 million. 13-8EAAY = $7,433. 12. 13-9Wait NPV = $2,212,964. 13-10No, NPV3 = $1,307. 29. 13-11a. take on A, B, C, D, and E capital letter budget = $5,250,000. b. take up A, B, D, and E cracking budget = $4,000,000. c.Accept B, C, D, E, F, and G Capital budget = $6,000,000. 13-12a. NPV = $4. 6795 million. b. No, NPV = $3. 2083 million. c. 0. 13-13a. NPV = -$2,113,481. 31. b. NPV = $1,973,037. 39. c. E(NPV) = -$70,221. 96. d. E(NPV) = $832,947. 27. e. $1,116,071. 43. 14-1QBE = 500,000. 14-230% debt and 70% equity. 14-3a. E(EPSC) = $5. 10. 14-4bU = 1. 0435. 14-5a. ROELL = 14. 6% ROEHL = 16. 8%. b. ROELL = 16. 5%. 14-6a(1). -$60,000. b. QBE = 14,000. 14-7No supplement ROE = 10. 5% ( = 5. 4% CV = 0. 51 60% leverage ROE = 13. 7% ( = 13. 5% CV = 0. 99. 14-8rs = 17%. 14-9a. P0 = $25. b. P0 = $25. 81. 14-10a. FCA = $80,000 VA = $4. 80/unit PA = $8. 0/unit. 14-11a. 10. 96%. b. 1. 25. c. 1. 086957. d. 14. 13%. e. 10. 76%. 14-12a. EPSOld = $2. 04 New EPSD = $4. 74 EPSS = $3. 27. b. 339,750 units. c. QNew, Debt = 272,250 units. 14-13Debt apply E(EPS) = $5. 78 (EPS = $1. 05 E(TIE) = 3. 49(. Stock use E(EPS) = $5. 51 (EPS = $0. 85 E(TIE) = 6. 00(. 15-1Payout = 55%. 15-2P0 = $60. 15-3P0 = $40. 15-4D0 = $3. 44. 15-5$3,250,000. 15-6Payout = 31. 39%. 15-7a. $1. 44. b. 3%. c. $1. 20. d. 33? %. 15-8a. 12%. b. 18%. c. 6% 18%. d. 6%. e. 28,800 new shares $0. 13 per share. 15-9a(1). $3,960,000. a(2). $4,800,000. a(3). $9,360,000. a(4). perpetual = $3,960,000 supernumerary = $5,400,000. c. 5%. d. 15%. 16-1103. 41 age 86. 99 old age $400,000 $32,000. 16-273 age 30 days $1,178,082. 16-3$1,205,479 20. 5% 22. 4% 10. 47% bank debt. 16-4a. 83 days. b. $356,250. c. 4. 87(. 16-5a. DSO = 28 days. b. A/R = $70,000. 16-6a. 32 days. b. $288,000. c. $45,000. d(1). 30. d(2). $378,000. 16-7a. 57. 33 days. b(1). 2(. b(2). 12%. c(1). 46. 5 days. c(2). 2. 1262(. c(3). 12. 76%. 16-8a. ROET = 11. 75% ROEM = 10. 80% ROER = 9. 16%. 16-9b. $420,000. c . $35,000. 16-10a. Oct. give = $22,800. 17-1AFN = $410,000. 17-2AFN = $610,000. 17-3AFN = $200,000. 17-4a. $133. 50 million. b. 39. 06%. 17-5a. $5,555,555,556. b. 30. 6%. c. $13,600,000. 7-6$67 million 5. 01. 17-7$156 million. 17-8a. $480,000. b. $18,750. 17-9? S = $68,965. 52. 17-10$34. 338 million 34. 97 ? 35 days. 17-11$19. 10625 million 6. 0451. 17-12a. $2,500,000,000. b. 24%. c. $24,000,000. 17-13a. AFN = $128,783. b. 3. 45%. 17-14a. 33%. b. AFN = $2,549. c. ROE = 13. 06%. 18-1a. $5. 00. b. $2. 00. 18-2$27. 00 $37. 00. 18-3a, b, and c. 18-4$1. 82. 18-5rd = 5. 95% $91,236. 18-6b. Futures = +$4,180,346 cleave = -$2,203,701 winnings = $1,976,645. 18-7a. $3. 06 $4. 29. b. 16. 67%, 61. 46% -100%. c. -16. 67% -100% 63. 40%. d. No $30. 00 and $27. 00. e. Yes $37. 50 and $37. 50. 19-10. 6667 pound per dollar. 9-227. 2436 hanker per shekel. 19-31 ache = $0. 00907. 19-41 euro = $0. 68966 or $1 = 1. 45 euros. 19-5 Dollars per 1,000 Units of Pounds Can. Dollars Euros fade Pesos Kron as $1,747. 10 $820. 60 $1,206. 90 $8. 97 $93. 10 $128. 10 19-76. 49351 krones. 19-815 kronas per pound. 19-10rNOM-U. S. = 4. 6%. 19-11117 pesos. 19-12b. $1. 6488. 19-13a. $2,772,003. b. $2,777,585. c. $3,333,333. 19-14+$250,000. 19-15b. $19,865. 19-16$468,837,209. 19-17a. $52. 63 20%. b. 1. 5785 SF per U. S. $. c. 41. 54 Swiss francs 16. 92%. 20-155. 6% 50%. 20-2$196. 6. 20-3CR = 25 shares. 20-4a. D/AJ-H = 50% D/AM-E = 67%. 20-5a. PV cost of leasing = -$954,639 require equipment. 20-6a. EV = -$3 EV = $0 EV = $4 EV = $49. d. 9% $90. 20-8a. PV cost of owning = -$185,112 PV cost of leasing = -$187,534 Purchase loom. 20-9b. percentage ownership schoolmaster = 80% proposal 1 = 53% Plans 2 and 3 = 57%. c. EPS0 = $0. 48 EPS1 = $0. 60 EPS2 = $0. 64 EPS3 = $0. 86. d. D/A0 = 73% D/A1 = 13% D/A2 = 13% D/A3 = 48%. 21-1P0 = $37. 04. 21-2P0 = $43. 48. 21-3$37. 04 to $43. 48. 21-4a. 16. 8%. b. V = $14. 93 million. 21-5NPV = -$6,747. 71 Do not purchase. 21-6a. 14%. b. TV = $1,143. 4 V = $877. 2.