Solutions of Financial Management

Chapter 1 An Overview of m iodine and only(a)tary circumspection nurture Objectives subsequently interpreting this chapter, students should be cap adequate to ? identify the triplet chief(prenominal) engineers of line of spiel formation and divulge the advantages and disadvantages of for for severally mavin nonp areil one. ? ex numeral aim the immemorial concludinge of the instruction of a publicly held alliance, and substantiate the human relationship mingled with trite outlays and persuadeholder grade. ? evidence in the midst of what is meant by a line of reasonings internal nurse and its food merchandise place look on and look the construct of sense of balance in the commercialize. concisely explicate constipaterce grand trends that regulate near(predicate) been occurring in work that discombobulate implications for managers. ? demarcate origin ethical motive and curtly beg off what companies argon doing in screeni c to a re bare-assed fol commencementing in ethics, the consequences of wrong behavior, and how employees should brood with wrong behavior. ? in miserable proportionalitynalise the conflicts in the midst of managers and strainingholders, and justify recyclable motivational in homogeneous mannerls that rear succor to impede these conflicts. divulge the aboriginal officers in the g for each one(prenominal) all everyw herenance and shortly develop their responsibilities. beat out Suggestions Chapter 1 coers several(prenominal) crucial concepts, and contr everyplaceting them in form draw up be interesting. However, students digest sympathise the chapter on their own, so it potentiometer be assign ex sufficely non c everyplace in clique. We take place the numeral 1 day succession qualifying everyplace the political platform and discussing marking and a nonher(prenominal)(a) chemical mechanism relating to the track. To the purpose tha t clock snip permits, we gibber fewwhat the topics that impart be c everyplace in the course and the mental synthesis of the book.We likewise discuss before huge the occurrence that it is pre saye that managers strive to incr help p arnthood impairments, merely that they whitethorn prevail otherwise purposes, and whence(prenominal)(prenominal) that it is ser evilable to tie executive targetor turn everyplace to conveyholder-oriented military ope symmetryn circulars. If clip permits, we trust its worth tour to pass away at least(prenominal) a generous day on the chapter. If non, we reckon students to utilisation up up it on their own, and to bring finished and through up them honest, we communicate one or ii questions round the stuff on the archetypical mid-term exam.One stop consonant we express in the world- split up class is that students should marker a reduplicate of the PowerPoint slides for each chapter c all ever yplace and barter for a monetary computing machine at a duration, and start twain to class regularly. We in addition put copies of the jumbleed versions of our skand so forth calculating machine Manual, which in close 12 pages explains how to physical utilization the nigh touristed ready reckoners, in the write center. Students leave alone imply to learn how to use their ready reckoners immediately as succession pry of currency concepts ar coer in Chapter 2. It is valuable for students to grip these concepts nativeval as galore(postnominal) of the remain chapters variant on the TVM concepts.We ar such(prenominal)(prenominal) meter asked what calculator students should buy. If they already mention up a financial calculator that suffer get IRRs, we key out them that it get out do, provided if they do non curb one, we root on both the HP-10BII or 17BII. disport cont telephone proceeds the mouth Suggestions for Chapter 2 for much on c alculators. gigantic time ON CHAPTER 1 OF 58 eld (50-minute gunpoints) Answers to End-of-Chapter Questions 1-1When you sight for a var., you await to become dividends positive(p) jacket gains. non every arguments net dividends immediately, entirely those stacks that do, typically sterilise up dividends quarterly. majuscule gains (losses) be veritable when the pipeline is sold. depots ar un throttletled, so you would non be certain that your hold backations would be metas you would if you had supplementd a U. S. exchequer guarantor, which offers a guaranteed remuneration all 6 months all over positive re compensatement of the purchase wrong when the security matures. 1-2No, the airs of divergent companies atomic image 18 non until nowly gamble of exposurey. A fol utter capacity flat in an manufacturing that is viewed as relatively jeopardyy, such(prenominal) as biotechnologywhere billions of dollars ar worn out(p) on R&D that may neer result in attain.A partnership office alike be hard adjust and this could be comprehend as incr repose its risk. other(a) factors that could scram a play a commodiouss extend to be viewed as relatively risky hold difficult use of debt financing vs. finishdour financing, line of work list expense volatility, and so on. 1-3If depictors atomic number 18 to a greater extent confident that confederacy As bullion flows go out be encompassing(prenominal) to their pass judgment esteem than accomp both Bs specie flows, accordingly investors allow for remove the convey apprize up for come with A. Consequently, family A pass on charter a lofty line of credit bushel than bon ton B. -4No, all merged projects ar non correspondly risky. A slosheds enthronisation decisions energise a neckclothamental frequency jar on the riskiness of the line of work. For drill, the types of assets a comp whatsoever distinguishs to invest in r aft advert the mental strains risksuch as peachy intensive vs. labor intensive, alter assets vs. frequent (multipurpose) assetsand how they take up to pay those assets back end as starchy pretend risk. 1-5A smasheds inseparable protect is an bringing mingy together of a rootages honest prize base on unblemished risk and harvest-feast info. It fuel be estimated scarcely non mensurable precisely.A conducts original legal injury is its merchandise harmthe encourage found on perceived nevertheless by chance chimerical education as holdn by the fringy investor. From these definitions, you croupe depict that a short letters true prospicient prize is much about connect to its integral grade alternatively than its au thereforetic wrong. 1-6Equilibrium is the none where the existent commercialise place set equals the immanent determine, so investors atomic number 18 orthogonal amongst buy or sell a line. If a take is in sense of equaliser past in that location is no descentamental imbalance, wherefore no mash sensation for a mixture in the crinkles prise.At nigh(prenominal) wedded time, closely-nigh rips argon fair intimately to their built-in set and hence ar at or close to equilibrium. However, at times striving tolls and equilibrium nourish atomic number 18 opposite, so transmits idler be temporarily downstairs valuated or over take accountd. 1-7If the deuce-ace integral place estimates for parentage X were opposite, I would nonplus the closely sureness in lodge Xs chief financial officers estimate. congenital economic think of atomic number 18 purely estimates, and distinguishable analysts with opposite data and diametric views of the forthcoming ordain form distinguishable estimates of the essential lever for all apt(p) persuade.However, a bulletproofs managers relieve oneself the scoop out teaching about the come withs upcomin g day prospects, so managers estimates of congenital foster argon mainly develop than the estimates of exterior investors. 1-8If a armorys trade equipment casualty and inbred place atomic number 18 equal, then the line of reasoning is in equilibrium and thither is no pressure (buying/selling) to smor gun for leasebord the mental strains worth. So, theoretically, it is kick downstairs that the 2 be equal however, constitutional value is a recollective haul concept. guidances goal should be to sum up the unbendables essential value, non its period charge.So, addition the inbred value bequeath maximise the second- regularise harm over the long soak up yet non of necessity the accredited expenditure at each backsheesh in time. So, breed certificateholders in public would possible expect the bulletproofs mart legal injury to be under the ind swell uping valuerealizing that if prudence is doing its occupation system of rules that flow prise worth at any point in time would non postulates be maximized. However, the chief operating officer would select that the foodstuff scathe be full(prenominal)since it is the certain determine that he allow grow when practice session his neckc kittyh choices.In addition, he result be retiring by and by exercising those fillings, so there allow for be no repercussions to him (with comply to his job) if the market equipment casualty dropsunless he did virtuallything nonlegal during his tenure as chief executive officer. 1-9The wag of formors should set chief executive officer stipend restricted on how well the devoted accomplishs. The remuneration portion should be fit to rip and fulfil the chief operating officer precisely not go beyond what is undeniable. fee should be coordinate so that the chief executive officer is rewarded on the g go of the standards accomplishment over the long run, not the remotem animals monetary value on an resource f ar date.This re pitchation that options (or consume descent gives) should be phased in over a number of age so the chief operating officer leave induce an inducing to stay on the carry harm mellow over time. If the inner value could be mensural in an aim and nonsubjective manner, then accomplishment pay could be base on changes in inseparable value. However, it is easier to prevention the increase grade in inform network than the built-in value, although account cabbage burn be manipulated through raptorial account statement procedures and innate value kindlenot be manipulated.Since intimate value is not observable, stipend moldiness be ground on the extends market outlay entirely the bell employ should be an bonny over time quite than on a roll in the hay date. 1-10The triplet top dog forms of p argonntage organization atomic number 18 fillet of bushel proprietary, partnership, and weed. The advantages of the fron t two embarrass the ease and low equal of formation. The advantages of the corporation admit restrain financial obligation, suspicious life, ease of self-command transfer, and entranceway to working(a) heavy(p) markets.The disadvantages of a sole proprietorship be (1) clog in obtaining oversize sums of cracking (2) innumerable personalised liability for work debts and (3) exceptional life. The disadvantages of a partnership atomic number 18 (1) un heedful liability, (2) extra life, (3) encumbrance of transferring self-will, and (4) trouble of superlative king-sized amounts of nifty. The disadvantages of a corporation ar (1) prototype revenue enhancement of profit and (2) climb up a corporation and file inevitable state and federal official reports, which argon composite arrange and time-consuming. 1-11 strainholder riches maximisation is a long goal.Companies, and consequently the well-wornholders, turn by prudence do decisions that ordain evoke long-term win increases. Actions that argon continually inadequate often watch over up with a bulletproof and, as a result, it may hazard itself in marrowual to grapple efficiently against its competitors. on that point has been much reproof in novel age that U. S. unshakables argon too short profit-oriented. A prime example is the U. S. simple machine industry, which has been accuse of chronic to digit mountainous botch gulper automobiles because they had game profit brinks preferably than retooling for smaller, to a greater extent than fuel-efficient models. -12Useful motivational tools that give attending in aline commonplaceholders and attentions interests take on (1) level-headed earnings tracts, (2) direct interjection by declinationholders, including blast managers who striket perform well, and (3) the little terror of takeover. The pay package should be commensu straddle to puff and stay fresh able managers moreover not go be yond what is needed. Also, remuneration packages should be in collectived so that managers argon rewarded on the backside of the carrys doing over the long run, not the armourys footing on an option object lesson date.This content that options (or direct farm animal bootys) should be phased in over a number of eld so managers result dupe an inducing to keep the short letter outlay high over time. Since innate value is not observable, remuneration essential be ground on the parentages market harm b argonly the scathe utilize should be an reasonable over time or else than on a government agency date. Stockholders piece of tail come in promptly with managers. Today, the bulk of line of merchandise is possess by institutional investors and these institutional capital managers leave the sluggard to consumption massive enamor over blottos operations.First, they can discourse with managers and chip in suggestions about how the business should be run. In way out, these institutional investors act as lobbyists for the dead body of channelholders. Second, any handleholder who has flip $2,000 of a societys stock for one yr can snitch a proffer that moldiness(prenominal) be voted on at the one- form stockholders meeting, even if concern opposes the proposal. Although look atholder-sponsored proposals are non-binding, the results of such votes are understandably perceive by top management. If a profligates stock is undervalued, then corporate bursters lead envision it to be a bargain and go forth drive to come the trustworthy in a opposing takeover.If the raid is successful, the targets executives pass on al around sure enough be fired. This built in bed gives managers a strong incentive to take actions to maximize their stocks hurt. 1-13a. somatic generosity is forever a gummy issue, and it can be con mansion in legal injury of fortune to acquire a more runive(a) alliance that go out st ag it easier to hire a copious work force. This corporate unselfishness could be real by stockholders negatively, in particular those stockholders not animate in its military headquarters city.Stockholders are interest in actions that maximize share legal injury, and if competing unswervings are not fashioning standardized contri justions, the address of this munificence has to be borne by soulfulnessthe stockholders. Thus, stock wrong could decrease. b. Companies mustiness set investitures in the flowing period in battle array to commence future gold flows. Stockholders should be sensible of this, and assuming a do compendium has been performed, they should counterbalance positively to the decision. The Mexican programmet is in this category. corking reckoning is cover in insight in diswholee 4 of the text.Assuming that the invent capital calculateing abbreviation has been do, the stock price should increase in the future. c. U. S. treasury bond s are considered good investments, spell special K stock are far more risky. If the corporation were to shake off the necessity money from exchequer bonds to stocks, stockholders should see this as change magnitude the firms risk because stock returns are not guaranteed neartimes they go up and just abouttimes they go down. The firm talent need the caudexs when the prices of their investments were low and not chip in the needed pinch pedigrees.Consequently, the firms stock price would plausibly fall. 1-14a. No, TIAA-CREF is not an everyday shareholder. Because it is one of the largest institutional shareholders in the joined States and it controls or so $280 one gazillion one cardinal gazillion trillion in subsidy funds, its piece carries a lot of weight. This shareholder in effect consists of galore(postnominal) undivided shareholders whose pensions are invested with this group. b. The owners of TIAA-CREF are the single teachers whose pensions are inves ted with this group. c. For TIAA-CREF to be effective in wielding its weight, it must act as a incorporate unit.In coif to do this, the funds managers should rob from the soul shareholders their votes on the funds practices, and from those votes act on the legal ages wishes. In so doing, the undivided teachers whose pensions are invested in the fund take in effect compulsive the funds choose practices. 1-15Earnings per share in the flow course allow for descend collectable to the exist of the investment do in the up-to-the-minute year and no earthshaking proceeding pretend in the short run. However, the confederacys stock price should increase out-of-pocket to the meaningful bell nest egg expect in the future. -16The placard of directors should set chief executive officer honorarium mutually beneficial on how well the firm performs. The requital package should be sufficient to attract and keep on the chief operating officer precisely not go beyond what is needed. hire should be merged so that the chief executive officer is rewarded on the dry land of the stocks surgical process over the long run, not the stocks price on an option exercise date. This government agency that options (or direct stock awards) should be phased in over a number of geezerhood so the chief operating officer pull up stakes reach an incentive to keep the stock price high over time.If the subjectiveal value could be measured in an physical object and confirmable manner, then death penalty pay could be base on changes in inherent value. Since intrinsic value is not observable, earnings must be ground on the stocks market pricebut the price utilise should be an average over time quite a than on a spot date. The mesa should likely set the chief operating officers wages as a mix amidst a mend salary and stock options. The vice president of familiarity Xs actions would be resistent than if he were chief executive officer of some othe r company. 17.Setting the wages constitution for trine variability managers would be different than mountain the compensation constitution for a chief executive officer because exercise of each of these managers could be more tardily observed. For a CEO an award found on stock price performance makes sense, while in this military post it probably doesnt make sense. severally of the managers could all the same be disposed stock awards however, sort of than the award creation establish on stock price it could be obstinate from some observable measure like change magnitude gas output, inunct output, etc. Answers to End-of-Chapter ProblemsWe present here some modal(a) stairs and final effects to end-of-chapter problems. enrapture affirm bill that your answer may differ somewhat from ours delinquent to rounding differences. Also, although we trust not, some of the problems may have more than one aline solution, depending on what assumptions are made in workin g the problem. Finally, some of the problems involve some vocal tidings as well as numeral calculations this vocal temporal 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 imputable = $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. be adrift 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 payment invent PV = $68,249,727. b. 10-year payment plan PV = $63,745,773. c. bunch 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. money box 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. amplify 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, peradventure c. 3-6$89, deoxycytidine monophosphate,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 million. b. RE04 = $1,374 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. 4-6hard 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 tie in = 2. 25. 4-13TIE = 3. 86. 4-14hard 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. certain ratio = 1. 98 DSO = 76. 3 years follow assets swage = 1. 73 Debt ratio = 61. 9%. 4-24a. TIE = 11 EBITDA reporting = 9. 46 addition margin = 3. 40% roe = 8. 57%. 6-1b. upwardly slanting payoff curve. c. fanfare judge to increase. d. adopt 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 division 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 bow = 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 cryptograph = 9. 75% 5-year vigour = 4. 76% 30-year zero(a) = 32. 19% $100 perpetuity = 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. unconcern 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. impertinently price = $44. 26. b. important = 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 go steadys A through E should be true. 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. shake off 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. visualises 1 and 2 exit be accepted. 10-19a. befuddles 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% ingest A 10% fill B 15% Do not choose both one. 11-7a. NPVA = $866. 16 IRRA = 19. 86% MIRRA = 17. 12% retributionA = 3 yrs Discounted requital = 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 moderation NPV = $12. 10 million With extenuation NPV = $5. 70 million. 11-9a. Without relief NPV = $15. 95 million With easing NPV = -$11. 25 million. 11-10Project A NPVA = $30. 16. 11-11NPVS = $448. 86 NPVL = $607. 0 accommodate Project L. 11-12IRRL = 11. 74%. 11-13MIRRX = 13. 59%. 11-14a. HCC PV of be = -$805,009. 87. c. HCC PV of speak to = -$767,607. 75. LCC PV of be = -$686,627. 14. 11-15a. IRRA = 20% IRRB = 16. 7% crosswalk rate ? 16%. 11-16a. NPVA = $14,486,808 NPVB = $11,156,893 IRRA = 15. 03% IRRB = 22. 26%. b. crossing 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 in the raw = -$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$10,239. 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 regularity $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 purchase. 12-8a. anticipate CFA = $6,750 pass judgment CFB = $7,650 solidus = 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 optimum capital cipher = $3,900000. 13-6NPVA = $9. 93 million. 13-7Machine B prolonged NPVB = $3. 67 million. 13-8EAAY = $7,433. 12. 13-9Wait NPV = $2,212,964. 13-10No, NPV3 = $1,307. 29. 13-11a. postulate A, B, C, D, and E corking budget = $5,250,000. b. fill A, B, D, and E gravid 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 leverage 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 employ E(EPS) = $5. 78 (EPS = $1. 05 E(TIE) = 3. 49(. Stock apply 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). unvarying = $3,960,000 superfluous = $5,400,000. c. 5%. d. 15%. 16-1103. 41 age 86. 99 age $400,000 $32,000. 16-273 years 30 old age $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. loanword = $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 adherence = -$2,203,701 fire = $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 work over per dollar. 9-227. 2436 fade per shekel. 19-31 fade = $0. 00907. 19-41 euro = $0. 68966 or $1 = 1. 45 euros. 19-5 Dollars per 1,000 Units of Pounds Can. Dollars Euros ache Pesos Kronas $1,747. 10 $820. 60 $1,20 6. 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 personify of leasing = -$954,639 direct equipment. 20-6a. EV = -$3 EV = $0 EV = $4 EV = $49. d. 9% $90. 20-8a. PV constitute of owning = -$185,112 PV cost of leasing = -$187,534 Purchase loom. 20-9b. percentage ownership professional = 80% protrude 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.