1) Prepare a balance sheet and income statement as of December 31, 2003, for Preakness, Inc., from the following information.
Inventory $ 6,500 General and administrative expenses 850 Common stock 45,000 Cash 16,550 Operating expenses 1,350 Notes payable 600 Interest expense 900 Depreciation expense 500 Net sales 12,800 Accounts receivable 9,600 Accounts payable 4,800 Long-term debt 55,000 Cost of goods sold 5,750 Buildings and equipment 122,000 Accumulated depreciation 34,000 Taxes 1,440 Retained earnings ?
2) Prepare a balance sheet and income statement for the Tiger Corporation, given the following information: Accumulated depreciation $38,000 Long-term debt ?
Inventory 5,000 General and administrative expenses 1,000 Interest expense 1,200 Common stock 50,000 Cost of goods sold 6,000 Short-term notes 750 Depreciation expense 600 Sales 13,000 Accounts receivable 10,000 Accounts payable 5,000 Buildings and equipment 120,000 Cash 11,000 Taxes 1,300 Retained earnings 10,250
3) Alamo, Inc., bonds have a 9 percent coupon rate. The interest is paid semi-annually and the bonds mature in eight years. Their par value is $1,000. If your required rate of return is 8 percent what is the value of the bond?
4) The market price is $900 for a 10-year bond ($1,000 par value) that pays 8 percent interest (4 percent semi-annually). What is the bond’s expected rate of return?
5) Austin Industries 15-year, $1,000 par value bonds pay 8 percent interest annually. The market price of the bonds is $1,085, and your required rate of return is 10 percent. Compute the bond’s expected rate of return.
6) Philly, Inc., bonds have a 10 percent coupon rate. The interest is paid semi-annually and the bonds mature in 11 years. Their par value is $1,000. If your required rate of return is 9 percent, what is the value of the bond?
7) New Jersey Company’s $1,000 bonds pay 8 percent interest annually and have 25 years until maturity. You can purchase the bond for $915. What return do you expect to earn on this bond?
8) You own 200 shares of Jackson, Inc.’ preferred stock, which currently sells for $40 per share and pays annual dividends of $3.40 per share. What is your expected return?
9) Calhoun, Inc. paid a $3.50 dividend last year. At a constant growth rate of 5 percent, what is the value of the common stock if the investors require a 20 percent rate of return?
10) Salisbury, Inc. paid a $3.75 dividend last year. At a growth rate of 6 percent, what is the value of the common stock if the investors require a 20 percent rate of return?
