Suppose that Backwoods Chemical's book balance sheet is: Backwoods Chemical Company (Book Values) Debit Net working capital Net fixed assets $ 400 1,600 $ 1,000 1,000 Credit Debt Total assets $ 2,000 $ 2,000 Equity (net worth) Total value The debt has a one-year maturity and a promised interest payment of 9%. Thus, the promised payment to Backwoods's creditors is $1,090. The market value of the assets is $1,200, and the standard deviation of asset value is 45% per year. The risk-free interest rate is 9%. Calculate the value of Backwoods's debt and equity. Note: Do not round intermediate calculations. Round your answers to the nearest whole number. Value of equity Value of debt
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- a. Abc Investment Ltd., plans to borrow Ghc100,000 for a 90-day period from Lloyds Finance Company. Abc investment would repay the principal amount plus Ghc5,000 interest at maturity. Determine and calculate the Annual Percentage Rate of the credit to Abc Company Ltd. b. Belinda Limited has annual credit sales of Ghc5 million and cost of sales of GHC1.8 million. The company’s current assets consist of inventory and trade receivables. Current liabilities consist of accounts payables and an overdraft facility with an average interest rate of 10% per annum. The company gives 60 days credit to its customers and is allowed an average of 30 days credit by trade suppliers. The company has an operating cycle of 90 days. Other relevant information: Current ratio of Ait Ltd 1.5:1 Cost of long-term finance to Ait Ltd is 12% per annum Required: Calculate the, (i) Size of the overdraft of Ait Ltd (ii) Net working capital of the company (iii) Total cost of financing its current assets c.…Suppose the Schoof Company has this book value balance sheet: $30,000,000 Current assets Fixed assets Total assets Short-term debt Long-term debt Common equity Total capital $ 70,000,000 $ $100,000,000 Current liabilities Notes payable The notes payable are to banks, and the interest rate on this debt is 9%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual coupon nterest rate of 7%, and a 25-year maturity. The going rate of interest on new long-term debt, rd, is 12%, and this s the present yield to maturity on the bonds. The common stock sells at a price of $60 per share. Calculate the firm's market value capital structure. Do not round intermediate calculations. Round the monetary values to the nearest dollar and percentage values to two decimal places. Long-term debt Common stock (1…Suppose the Schoof Company has this book value balance sheet: The notes payable are to banks, and the interest rate on this debt is 10%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the companys permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of 1,000, an annual coupon interest rate of 6%, and a 20-year maturity. The going rate of interest on new long-term debt, rd, is 10%, and this is the present yield to maturity on the bonds. The common stock sells at a price of 60 per share. Calculate the firms market value capital structure.
- Vigo Vacations has $200 million in total assets, $5 million in notes payable, and $25 million in long-term debt. What is the debt ratio?The SKC Corporation plans to borrow $1,000 for a 90-day penod. At matunity the firm will repay the $1.000 principal amount plus $45 interest What is the effective annual rate of interest (A/F) for the loan? (Select the best choice below) OA 18.00% OB. 450% OC. 1925 % OD. 4.58%Use the following information about IGI security dealer. Market yields are in parenthesis, and amounts are in millions. Assets Liabilities and Equity Cash $10 Overnight Repos $170 1 month T-bills (7.05%) 75 Subordinated debt 3 month T-bills (7.25%) 75 7-year fixed rate (8.55% 150 2 year T-notes (7.50%) 50 8 year T-notes (8.96%) 100 5 year munis (floating rate) (8.20% reset every 6 months) 25 Equity 15…
- Consider the following balance sheet for ABC Company (in millions): Liabilities and Equity 1-year fixed deposits (interest-rate 6% annually) 3-year fixed deposits (interest-rate 7% annually) Equity Total liabilities & equity Assets Variable-rate mortgages $50 $70 (interest-rate 10% annually) 30-year fixed-rate loans (interest-rate 7% annually) $20 $10 $100 $50 Total assets $100 What is the expected net interest income if interest rates on Rate Sensitive Assets (RSAS) increase by 2 percent but interest rates on Rate Sensitive Liabilities (RSLS) increase by 1 percent?ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 12 years to maturity that is quoted at 111.5 percent of face value. The issue makes semiannual payments and has an embedded cost of 8.4 percent annually. a. What is the company’s pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the tax rate is 25 percent, what is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)Red Corporation had $1,750,000 in total liabilities and $3,000,000 in total assets as of December 31, 2020. Of Red's total liabilities, $600,000 is long-term. Required: Calculate Red's debt to assets ratio and its long-term debt to equity ratio. Round your answers to four decimal places, if required. Debt to Total Assets fill in the blank 1 Long-Term Debt to Total Equity fill in the blank 2
- Level Company's current ratio is 2.5 to 1. Level's current liabilities are $252,000. Loan provisions require that Level's current ratio not drop below 1.5 to 1. What is the maximum additional short-term debt that Level may incur? a. $168,000 b. $378,000 c. $420,000 d. $630,000The statement of financial position as of December 31, 2020, for Taube Corporation follows: (all amounts in thousands) Assets Liabilities and Shareholders' Equity Current assets $62,000 Current liabilities $25,000 Non-current assets 100,000 Long-term liabilities 45,000 Shareholders' equity 92,000 Total liabilities and Total assets $162,000 shareholders' equity $162,000 The company's management is evaluating a couple of options to finance the acquisition of new equipment with a cost of $33 million. Taube has a cash balance of $20 million as of December 31, 2020. Determine the debt to equity ratio and net debt as a percentage of total capitalization ratio. Assume that only the company's long-term liabilities are interest bearing. (Round answers to 2 decimal places, e.g. 1.25.) :1 Debt to Equity :1 Net Debt as a Percentage of Total Capitalization eTextbook and Media blo cemi-annually.The following balance sheet is to be used to answer the questions below Yields for assets & liabilities shown in % in parentheses Assets $M Liabilities & Equity $M Cash & Cash Equivalents 85 Overnight Repurchase Agreements 650 1 - month Treasury Bills (3%) 125 5 - year Fixed-rate Debt (4.5%) 450 3 - month Commercial Paper (3.75 %) 175 2 - year Consumer Loans (4.25 %) 235 Equity 160 5-year Adjustable -Rate Mortgages (3.5% resetting semiannually) 540 5 - year Fixed rate Municipal Bonds (4%) 100 Total Assets 1260 Total Liabilities & Equity 1260 a. Calculate the firm's repricing gap over the following intervals: $M 30 Days 90 Days 2 Years b. Compute the impact over the next 90 days on net interest income under the following changes in interest rates $M +75bps -100bps c. Runoffs on consumer and mortgage loans over the next year above are $30M and $50M, respectively What would be the 1 - year repricing gap? $M d. Taking into account the effect of runoffs, what is the effect on net interest…