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1.| principal :| (TCO C) Blease Inc. has a capital figure 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 $495,000. If it follows the residual dividend policy, (a) what is its forecasted (common) dividend payout eternal rest (in percent with 2 decimal places) and (b) how much will its adds to well-kept earnings be (in dollars)? | |  | Student Answer:|  | a) scattering= sprout in Income- (Target Equity Ratio * Capital Budget) = $495,000 - (0.40 * $625,000) =$245,000 Payout Ratio = Distribution/ loot Income = $245,000/ $495,000 = 49.49% b) Retained Earnings = Net Income (1- Payout Ratio) =$495,000 (1- 0.4949) =$250,024.50 b) |  | Instructor report:| text edition: pp. 570-572 - Residual Dividends, Chapter 14 Capital budget $625,000 Equity ratio 40% Net income (NI) $495,000 Dividends paid = NI - (Equity ratio)(Capital budget) = $245,000 (a) Dividend pa yout ratio = Dividends paid/NI = $245,000 / $495,000 = 49.49% (b) Adds to retained earnings = $495,000 - $245,000 = $250,000| | |  | Comments:| Adds to RE should be calculated as you did in (a), = .4(625,000) = 250,000 or as (b) above | | | -------------------------------------------------  2.

| Question :| (TCO F) The side by side(p) data applies to Saunders Corporations standardised bonds:  Maturity: 10 Stock damage: $30.00 Par bear out by: $1,000.00 Conversion price: $35.00 Annual coupon: 6.00% square(a)-debt mother: 9.00% What is the bonds straight-debt value?| |  | Stu dent Answer:|  | N=10 I= 9 PMT= 60 (i.e 100! 0*0.06) FV= 1,000 Solve for PV= ? Bonds Straight Debt value is PV= $807.47 |  | Instructor Explanation:| Chapter 19: pp. 770-774 Inputs to find the straight-debt value: N = 10; I/YR = 9; PMT = 60; FV = 1,000. $807.47| | | | | -------------------------------------------------  3.| Question :| (TCO B) Ang Enterprises has a levered beta of 0.95, its...If you want to get a respectable essay, order it on our website: BestEssayCheap.com

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