Assignment
I. What is the amount of external financing needed, assuming the company is operating at full capacity?Assume Sales grow at 10% and Dividend Payout Rate = 50%.
|
Tasha's Toy Emporium
Income Statement, 2009
|
|
Current
|
Pro Forma
|
|
|
|
|
|
Sales
|
5,000
|
|
|
Less: costs
|
-3,000
|
|
|
EBT
|
2,000
|
|
|
Less: taxes (40% of EBT)
|
-800
|
|
|
Net Income
|
1,200
|
|
|
Dividends
|
600
|
|
|
Add. To RE
|
600
|
|
|
Tasha's Toy Emporium - Balance Sheet
|
|
|
Current
|
Pro Forma
|
|
Current
|
Pro Forma
|
|
ASSETS
|
|
|
Liabilities & Owners' Equity
|
|
|
|
Current Assets
|
|
|
Current Liabilities
|
|
|
|
Cash
|
$500
|
|
A/P
|
$900
|
|
|
A/R
|
2,000
|
|
N/P
|
2,500
|
|
|
Inventory
|
3,000
|
|
Total
|
3,400
|
|
|
Total
|
5,500
|
|
LT Debt
|
2,000
|
|
|
Fixed Assets
|
|
|
Owners' Equity
|
|
|
|
Net PP&E
|
4,000
|
|
CS & APIC
|
2,000
|
|
|
Total Assets
|
9,500
|
|
RE
|
2,100
|
|
|
|
|
|
Total
|
4,100
|
|
|
|
|
|
Total L & OE
|
9,500
|
|
|
EFN
|
|
|
Plug Variable
|
|
II. Cantor's has been busy analyzing a new product. Thus far, management has determined that an OCF of $218,200 will result in a zero net present value for the project, which is the minimum requirement for project acceptance. The fixed costs are $329,000 and the contribution margin per unit is $216.40. The company feels that it can realistically capture 2.5 percent of the 110,000 unit market for this product. The tax rate is 34 percent and the required rate of return is 11 percent. Should the company develop the new product? Why or why not?
III. Tucker's Trucking is considering a project with a discounted payback period just equal to the project's life. The projections include a sales price of $38, variable cost per unit of $18.50, and fixed costs of $32,000. The operating cash flow is $19,700. What is the break-even quantity?
Format your assignment according to the following formatting requirements:
i) The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
ii) The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
iii) Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.