Vigo vacations has $200 million

Corporate Finance

Complete the following graded homework assignments from the textbook. This homework assignment is to be submitted in an Excel workbook titled "FIN510_Homework2_yourname ."

The assignments are:

Chapter 3 Problems (p.128-129)

(3-1) DSO

· Greene Sisters has a DSO of 20 days. The company’s average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year.

(3-2) Debt Ratio

· Vigo Vacations has $200 million in total assets, $5 million in notes payable, and $25 million in long-term debt. What is the debt ratio?

(3-3) Market/Book Ratio

· Winston Watch’s stock price is $75 per share. Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt, and $6 billion in common equity. It has 800 million shares of common stock outstanding. What is Winston’s market/book ratio?

(3-4) Price/Earnings Ratio

· Reno Revolvers has an EPS of $1.50, a cash flow per share of $3.00, and a price/cash flow ratio of 8.0. What is its P/E ratio?

(3-5) ROE

· Needham Pharmaceuticals has a profit margin of 3% and an equity multiplier of 2.0. Its sales are $100 million and it has total assets of $50 million. What is its ROE?

(3-6) DuPont Analysis

· Gardial & Son has an ROA of 12%, a 5% profit margin, and a return on equity equal to 20%. What is the company’s total assets turnover? What is the firm’s equity multiplier?

(3-7) Current and Quick Ratios

· Ace Industries has current assets equal to $3 million. The company’s current ratio is 1.5, and its quick ratio is 1.0. What is the firm’s level of current liabilities? What is the firm’s level of inventories?

Chapter 4 Problems (pp. 184-186)

(4-1). Future Value of a Single Payment
· If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?

(4-2). Present Value of a Single Payment
· What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually?

(4-6). Future Value: Ordinary Annuity versus Annuity Due
· What is the future value of a 7%, 5-year ordinary annuity that pays $300 each year? If this were an annuity due, what would its future value be?

(4-13). Present Value of an Annuity
· Find the present value of the following ordinary annuities (see the Notes to Problem 4-12).

a. $400 per year for 10 years at 10%

b. $200 per year for 5 years at 5%

c. $400 per year for 5 years at 0%

d. Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due.

Uneven Cash Flow Stream

·

a. Find the present values of the following cash flow streams. The appropriate interest rate is 8%. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note that, when working with the calculator’s cash flow register, you must enter CF0=0CF0=0. Note also that it is quite easy to work the problem with Excel, using procedures described in the file Ch04 Tool Kit.xlsx .)

Year

Cash Stream A

Cash Stream B

1

$100

$300

2

400

400

3

400

400

4

400

400

5

300

100

b. What is the value of each cash flow stream at a 0% interest rate?