Pearson Motors has a target capital structure of 30% debt and 70% common equity, with no preferred stock. The yield to maturity on the company s outstanding bonds is 9%, and its tax rate is 40%. Pearson’s CFO estimates that the company’s WACC is 10.50%. What is Pearson’s cost of common equity?
Category: Finance
COST OF PREFERRED STOCK
Torch Industries can issue perpetual preferred stock at a price of $57.00 a share. The stock would pay a constant annual dividend of $6.00 a share. What is the company’s cost of preferred stock, rp?
AFTER-TAX COST OF DEBT
The Holmes Company’s currently outstanding bonds have an 8% coupon and a 10% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 40%, what is Holmes’ after-tax cost of debt?
Capital Budgeting
write a 3-4 page paper, double spaced, 12 point font in Times New Roman about the topic ‘Capital Budgeting’ that you chose and incorporates financial terms and identifies the risks and rewards associated with decision-making. You should incorporate information and examples from the book, which may include but not limited to: the Federal Reserve, inflation, financial processes, history of monetary policy, regulatory reform, international trade, stocks and bonds, markets, currency, stock valuation, etc.
Comparative Horizontal
Show your ability to create and understand the following financial analyses:
Comparative Horizontal
Common-Size Vertical
Averages
Trend
The data required for the assignment is here:https://fgcu.instructure.com/courses/537908/files/48649830/download?wrap=1
Comparative horizontal analyses of the P&L, Balance Sheet, and Cash Flows from 2017 to 2018 including both absolute and relative changes for each line item. For all of these analyses, you can include them on the same worksheet that the data is located. Be sure to label and give titles to be clear what you are presenting. Be sure all numbers are formatted correctly!
Start by conducting the following analyses in the excel workbook. You will turn this in!
Comparative horizontal analyses of the P&L, Balance Sheet, and Cash Flows from 2017 to 2018 including both absolute and relative changes for each line item. For all of these analyses, you can include them on the same worksheet that the data is located. Be sure to label and give titles to be clear what you are presenting. Be sure all numbers are formatted correctly!
Common-size vertical analysis of the P&L, Balance Sheet, and Cash Flows for both 2017 and 2018. Use Net Revenue for the P&L common-size, Total Assets for the Balance Sheet common-size, and Beginning of Year Total Cash for the Cash Flows. For all of these analyses, you can include them on the same worksheet that the data is located. Be sure to label and give titles to be clear what you are presenting. Be sure all numbers are formatted correctly!
In the fourth worksheet “Company Specific Metrics”, calculate the average number of rides per active rider for each of the three month periods. In addition, conduct trend analyses (both absolute and relative) for all four of these metrics (the three originally provided and the fourth you just created). For all of these analyses, you can include them on the same worksheet that the data is located. Be sure to label and give titles to be clear what you are presenting. Be sure all numbers are formatted correctly!
In a separate word document, answer the following questions:
For the P&L:
What absolute or relative changes stand out in the horizontal analysis?
What are some important ideas from the vertical analysis?
Based on both the horizontal and vertical analyses, how has the company done in terms of Gross Revenue and Gross Profit? Cite the analyses to back up your ideas.
For the Balance Sheet:
What absolute or relative changes stand out in the horizontal analysis?
What are some important ideas from the vertical analysis?
Based on both the horizontal and vertical analyses, make sense of the total assets, total liabilities, and total equity of the company. How exactly has the company been increasing its assets with the accumulated losses (deficits)? Cite the analyses to back up your ideas.
For the Cash Flows:
What absolute or relative changes stand out in the horizontal analysis?
What are some important ideas from the vertical analysis?
Evaluate the beginning and end of year cash for both years. Are these changes good or bad? Point to other line items and cite the analyses to back up your ideas.
For the Company Specific Metrics:
Explain what the metric you created means, how might the company use it?
For all four metrics, explain if the trend of the metric is good or bad.
The roles of a CFO
Explain the roles of a CFO.
A&F’s stock price
A&F’s stock price has been going down for weeks. An analyst investigating the company discovers that A&F has a healthy current ratio of 2.79, a strong quick ratio of 1.79, and a quickening receivable collection period of 43 days. The analyst decides to predict a relatively positive outlook for A&F based largely on these three ratios. Do you agree with the analysts’ assessment? Explain why or why not.
please see note from the professor:
you are required to support your position by using at least two references from an academic journal or prominent business publication (e.g., The Wall Street Journal, Barron’s, Fortune, Investor’s Business Daily, etc.). Additionally, one of these references must be recent. A recent reference is one that has a publication date that is less than one year old as of the beginning of the semester (mar 13, 2023). Importantly, references from websites do not qualify unless those websites are part of a reputable print publication. For example, Investopedia.com can be used, but it does not count as a reference that satisfies the criteria of a recent reference.
Financial plan for Amazon company
The company to use is Amazon.
Prepare a financial plan for the company you selected for your business plan (in OPSCB/574 and MGTCB/574). This financial plan will be included
in your final business plan in your capstone course, STRCB/581.
Review the company you chose to work with for your business plan that you will complete for your Integrative Business Capstone.
Describe the business, including the type of business.
Create the business case:
• Determine why funding is needed for the company.
• Determine the sources of funding. Consider self-funding, borrowing, equity, venture capital, and so on.
o Evaluate the requirements of each funding source you determined appropriate.
o Analyze the associated risks of each funding source.
o Decide which sources are the best fit for your company based on the requirements of each. Justify your decision.
• Estimate the cost of capital for both short-term and long-term funding sources. Research current estimated APRs for your selected sources of funding. Consider creating a table or chart to display this information.
Create a profit-and-loss statement for a 3-year period. Project revenue. State any realistic assumptions, such as growth per year, in your projections.
Estimate direct costs, including capital, marketing, labor, and supply costs.
Cite references to support your assignment
Financial statements
Financial statements are based on generally accepted accounting principles (GAAP) and are audited by CPA firms. Do investors need to worry about the validity of those statements? Explain your answer.
Forward contracts
Assume that the 1-year forward exchange rate is currently traded at $1.25/E. The spot pound to US dollar exchange rate is $1.21/E.
An investor decides to undertake the following trade today:
o Borrow $1000 at the prevailing interest rate (0.425%)
o Use the borrowed funds to buy GBP in the spot market
o Invest the funds nominated in GBP at the prevailing interest rate (1.2%)
o Enter the forward contract to sell the expected proceeds for dollars one year from now.
Calculate the returns (profits) from this trade to the investor one year from now. (Calculation 6 marks) Comment on your results. ( appropriateness of comment, 7 marks)