finance

Project Description:

1. what is the role of the financial analyst in a large organization? what responsibility does it carry? are there ethical implications?

2. at the end of the year, the long life bulb company announced that it had produced a gross profit of $1,000,000. the company has also established that over the course of this year it has incurred $345,000 in operating expenses and $125,000 in interest expenses. the company is subject to a 30% tax rate and has declared $57,000 total preferred stock dividends.
1. how much is the earnings available for common stockholders?
2. compute the increased retained earnings for 2004 if the company were to declare a $4.25 common stock dividend. the company has 15,000 shares of common stock outstanding.

3. define the following terms:
financial ratios
financial leverage
ratio analysis
common stock equity
breakeven analysis
ebit-eps approach to capital structure

4. darling paper container, inc. has purchased several machines at a total cost of $300,000. the installation cost for this equipment was $25,000. the firm plans to depreciate the equipment using the macrs 5-year normal recovery period. prepare a depreciation schedule showing the depreciation expense for each year.

5. in a meeting with their financial advisor, mr. and mrs. smith concluded that they would need $40,000 per year during the retirement years in order to live comfortably. they will retire ten years from now and expect a 20-year retirement period. how much should mr. and mrs. smith deposit now in an account paying 9 percent to reach financial happiness during retirement?

6. a firm has had the indicated earnings per share over the last three years.
year eps
2004 $3.00
2003 $2.00
2002 $1.00
1. if the firm's dividend policy was based on a constant payout ratio of 50 percent, determine the annual dividend for each year.
2. if the firm's dividend policy was based on a fixed dollar payout policy of 50 cents per share plus an extra dividend equal to 75 percent of earnings per share above $1.00, determine the annual dividend for each year.


e11-4 birkstock is considering an investment in a nylon-knitting machine. the machine requires an initial investment of $25,000, has a 5-year life, and has no residual value at the end of the 5 years. the company’s cost of capital is 12%. known with less certainty are the actual after-tax cash inflows for each of the 5 years. the company has estimated expected cash inflows for three scenarios: pessimistic, most likely, and optimistic. the expected cash inflows are listed in the following table. calculate the range for the npv given in each scenario.
expected cash inflows
year pessimistic most likely optimistic
1 $5,500 $8,000 $10,500
2 6,000 9,000 12,000
3 7,500 10,500 14,000
4 6,500 9,500 11,500
5 4,500 6,500 7,500
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