Quantity = 3000 X 120% = 3,600
SP = 50 x 110% = 55
Quantity x SP = 198,000
Less: Returned Sales = (6%x198,000)
Sales Projection = $186,120
Beginning Inventory $21 X 400 = 8400
Production $24 X 800 = 19200
Cost of Goods Sold 700 units
FIFO (21 X 400) + (24 X 300) = $15,600
Beginning Inventory $10 X 725 = 8400
Production $14 X 650 = 19200
Cost of Goods Sold 700 units
LIFO (14 X 650) + (10 X 350) = $12,600
Sales and Cash Collections Budget
Quarter Ending Dec 31st, 2011
Total
Sales:
Total sales
$25,000
$35,000
$30,000
$90,000
Total cash sales (40%)
$5,000
$7,000
$6,000
$18,000
Total credit sales (60%)
$20,000
$28,000
$24,000
$72,000
Cash collections:
Current month cash sales
$5,000
$7,000
$6,000
$18,000
Collection of credit sales
$20,000
$28,000
$24,000
Total cash collections
$5,000
$27,000
$34,000
$42,000
Quarter end receivables
$72,000
Cash Budget
Quarter Ending Dec 31, 2011
October
November
December
Total
Receipts:
Cash, beginning balance
$0
$6,000
$6,000
$12,000
Collections from customers
$5,000
$27,000
$34,000
$66,000
Total cash available
$5,000
$33,000
$40,000
$78,000
Total disbursements
$0
$30,400
$29,800
$60,200
Excess (deficiency) of cash
b. FV = 12000 X (1+ 0.12)15 = $65,682.79
c. FV = 12000 X (1+ 0.10)25 = $130,016.47
13
WACC = Ke [Ve / (Ve + Vd )] + Kd [Vd/(Ve + Vd)]
= 17% [0.5] + 5% [0.5]
= 11%
Project A should be accepted
14. Airborne airlines, Inn. Has a $1,000 par value bond outstanding with 25 years to maturity. The bond carries an annual interest payment of $75 and is currently selling for $875. Airborne is in the 30% tax bracket. The firm wishes to know what the after tax cost of a new bond issue is likely to be. The yield to maturity on the new issue will be the same as yield to maturity on old issue because the risk and maturity date will be similar.
a. compute the approximate yield to maturity and what on the old issue and use this as the yield for the new issue. B. make the appropriate tax adjustment to determine the after tax cost of debt.
15. United Business forms' capital structure is as follows:
a. debt- 35% b. preferred stock - 15 c. common equity- 50.
After tax cost of debt is 7% the cost of preferred stock is 10%, and the cost of common equity in the form of retained earnings is 13%. Calculate United business forms' weighted average cost of capital.
16. Assume a firm has earnings before depreciation and taxes of 500,000 and no depreciation, It is in a 40% tax bracket.
17. Assume a 200,000 investment and the…
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