kaplan 550 unit 4 assignments

Question # 00004102 Posted By: msmonopoly Updated on: 11/25/2013 04:01 PM Due on: 11/28/2013
Subject Finance Topic Finance Tutorials:
Question
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GB550: Financial Management


There are two Assignments due in Unit 4.
Assignment 1 of 2:
Complete Chapter 25 question, 25-1, p. 1005
Complete Chapter 25 problem, 25-2, p. 1007
Prepare this Assignment as a Word document. List each question, followed by your answer.

Directions for Submitting Assignment 1
Compose your Assignment in a MS Word document and save it as Username-GB550 Assignment 1-Unit#.doc (Example: TAllen- GB550 Assignment 1-Unit 4.doc). Submit your file by selecting the Unit 4: Assignment 1 Dropbox by the end of Unit 4.

Assignment 2 of 2:
Please complete all parts of spreadsheet problem 2-15 on page 89. It is recommended that you complete the problem using the Excel template located in Doc Sharing.
Directions for Submitting Assignment 2
Compose your Assignment in a MS Excel document and save it as Username-GB550 Assignment 2-Unit#.doc (Example: TAllen- GB550 Assignment 2-Unit 4.doc). Submit your file by selecting the Unit 4: Assignment 2 Dropbox by the end of Unit 4.

Assignment 1

25-1) Define the following terms, using graphs or equations to illustrateyour answers wherever feasible:
a) Portfolio; feasible set; efficient portfolio; efficient frontier
b) Indifference curve; optimal portfolio
c) Capital Asset Pricing Model (CAPM); Capital Market Line (CML)
d) Characteristic line; beta coeffiecient, b
e) Arbitrage Pricing Theory (APT)


25-2) An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free is 6%, the expected return on the first factor (r1) is 12%, and the expected return on the second factor (r2) is 8%. If bi1=0.7 and bi2-0.9, what is Crisp's required return?


Assignment 2

problem 2-15 on page 89

a. Using the financial statements shown below, calculate net operating working capital, total net operating capital, net operating profit after taxes, free cash flow, and return on invested capital for the most recent year.







Lan & Chen Technologies: Income Statements for Year Ending December 31
(Thousands of Dollars)

2013 2012
Sales


$945,000 $900,000
Expenses excluding depreciation and amortization 812,700 774,000
EBITDA


$132,300 $126,000
Depreciation and amortization
33,100 31,500
EBIT


$99,200 $94,500
Interest Expense

10,470 8,600
EBT


$88,730 $85,900
Taxes (40%)


35,492 34,360
Net income


$53,238 $51,540







Common dividends

$43,300 $41,230
Addition to retained earnings
$9,938 $10,310







Lan & Chen Technologies: December 31 Balance Sheets

(Thousands of Dollars)




Assets


2013 2012
Cash and cash equivalents

$47,250 $45,000
Short-term investments

3,800 3,600
Accounts Receivable

283,500 270,000
Inventories


141,750 135,000
Total current assets

$476,300 $453,600
Net fixed assets

330,750 315,000
Total assets


$807,050 $768,600







Liabilities and equity




Accounts payable

$94,500 $90,000
Accruals


47,250 45,000
Notes payable

26,262 9,000
Total current liabilities

$168,012 $144,000
Long-term debt

94,500 90,000
Total liabilities

$262,512 $234,000
Common stock

444,600 444,600
Retained Earnings

99,938 90,000
Total common equity

$544,538 $534,600
Total liabilities and equity

$807,050 $768,600







Key Input Data




Tax rate


40%








Net operating working capital



2013 NOWC = Operating current assets - Operating current liabilities

2013 NOWC = -

2013 NOWC =










2012 NOWC = Operating current assets - Operating current liabilities

2012 NOWC = -

2012 NOWC =










Total net operating capital



2013 TOC = NOWC + Fixed assets

2013 TOC = +

2013 TOC =










2012 TOC = NOWC + Fixed assets

2012 TOC = +

2012 TOC =










Investment in total net operating capital




2013
2012

2013 Inv. In TOC = TOC - TOC

2013 Inv. In TOC = -

2013 Inv. In TOC =










Net operating profit after taxes



2013 NOPAT = EBIT x ( 1 - T )

2013 NOPAT = x

2013 NOPAT =










Free cash flow




2013 FCF = NOPAT - Net investment in operating capital
2013 FCF = -

2013 FCF =










Return on invested capital



2013 ROIC = NOPAT / Total net operating capital
2013 ROIC = /

2013 ROIC =










b. Assume that there were 15 million shares outstanding at the end of the year, the year-end closing stock price was $65 per share, and the after-tax cost of capital was 8%. Calculate EVA and MVA for the most recent year.







Additional Input Data




Stock price per share $65.00



# of shares (in thousands) 15,000



After-tax cost of capital 8.0%










Market Value Added




MVA = Stock price x # of shares - Total common equity
MVA = x -
MVA =

-
MVA =











Economic Value Added




EVA = NOPAT - (Operating Capital x After-tax cost of capital)
EVA = - x
EVA = -


EVA =



















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Tutorials for this Question
  1. Tutorial # 00003960 Posted By: neil2103 Posted on: 11/26/2013 02:46 PM
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