Finding the value of the perpetuity


Question 1. During the last year Bruce had Net Income of $150, paid $20 in dividends, and sold new stock for $40. Beginning equity for the year was $700. Ending Equity was?

Question 2. The Beverly's had an operating income (EBIT) of $260,000 last year. The firm had $18,000 in depreciation expenses, $15,000 in interest expenses, and $60,000 in selling, general, and administrative expenses. If the Beverly's has a marginal tax rate of 40 percent, what was its cash flow from operating activities last year?

Question 3. If Hill has a total asset turnover of 1.8, a fixed asset turnover of 3.2, a debt ratio of .5 and a total debt of $200,000, then fixed assets are:

Question 4. What is the return on sales for Michaels Inc. if the current ratio = 2; total asset turnover = 1.5; total assets = $100,000; and EBIT = $30,000? Assume the marginal tax rate for Michaels is 40% and that interest expenses are $10,000.

Question 5. Assuming the following, calculate the return on equity for Mary, Inc.: Return on Sales= 5%; Total asset turnover = 2; Debt ratio = .73

Question 6. A perpetuity has a cash flow of $30 and a discount rate of 10%. What is the value of the perpetuity?

Question 7.Tricia has $3,000 invested in Cingular with an expected return of 11.6 percent; $10,000 in A&T with an expected return of 12.8 percent; and $6,000 in GM with an expected return of 12.2 percent. What is Tricia's expected return on his portfolio?

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Finance Basics: Finding the value of the perpetuity
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