公司理财第26章.doc

Chapter 26: Corporate Financial Models and Long-term PlanningCONCEPT QUESTIONS CHAPTER 2626.1What are the two dimensions of the financial-planning process?The time frame and the level of aggregation. Why should firms draw up financial plans?It accomplishes various goals:1. It improves interactions between investment proposals for the different operating activities of the firm. 2. It provides opportunities for the firm to work through various investment and financial alternatives.3. It provides greater flexibility.4. It avoids surprises. When might the goals of growth and value maximization be in conflict and when would they be aligned?They might be in conflict if management is willing to accept negative NPV projects just for the sake of growth. They would be aligned if growth is an indeterminate goal that leads to higher value. What are the determinants of growth?1. Profit margin2. Asset utilization3. Payout ratio4. Debt ratioAnswers to End-of-Chapter Problems26.1 Forecast sales:S = 0.00001 GNP = 0.00001 ($2,050 billion) = $20,500,000Compute the other values:CA = $500,000 + 0.25 ($20,500,000) = $5,625,000FA = $1,000,000 + 0.50 ($20,500,000) = $11,250,000CL = $100,000 + 0.10 ($20,500,000) = $2,150,000NP = 0.02 ($20,500,000) = $410,000Compute the new amount of retained earnings:DRE = NP (1 - 0.34) = $410,000 (0.66) = $270,600RE = $3,400,000 + $270,600 = $3,670,600Compute the new amount of bonds:Debt-to-Asset Ratio = ($1,100,000 + $2,500,000) / ($3,000,000 + $6,000,000) = 0.40Bonds = (CA + FA) x 0.40 - CL = ($5,625,000 + $11,250,000) (0.40) - $2,150,000 = $4,600,000Compute the new amount of stock:Stock = (CA + FA) - (CL + Bonds + RE) = ($5,625,000 + $11,250,000) - ($2,150,000 + 4,600,000 + 3,670,600) = $6,454,400 Balance SheetCurrent Assets5,625,000Current Liabilities$2,150,000Fixed Assets11,250,000Bonds4,600,000Total Assets$16,875,000Common Stock6,454,400Retained Earnings3,670,600Total Liabs & CS$16,875,00026.2 DS = 330 - 330 / (1 + 10%) = $30 milliona. External funds needed = (25% +150%) x 30 - (40% + 45%) x 30 - (12% x 330) (1 - 40%) = $3.24 millionb. Current assets = 25% x 330 / (1 + 10%) = 75Fixed assets = 150% x 330 / (1+10%) = 450Total assets = Current assets + Fixed assets = 75 + 450 = $525 millionShort term debt = 40% x 330 / (1+10%) = 120Long term debt = 45% x 330 / (1 + 10%) = 135Common stock = 50Retained earnings = 220Total liabilities = $525 millionc. Pro Forma Balance SheetCurrent assets = 25% x 330 = 82.5Fixed assets = 150% x 330 = 495Total assets = $577.5 millionShort term debt = 40% x 330 = 132Long term debt = 45% x 330 = 148.5Common stock = 50Retained earnings = 243.76Total liabilities = 574.26External fund needed = 577.5-574.26 = $3.24 million26.3 a. Compute the sustainable growth using the formula from the text.b. Yes, it is possible for the actual growth to differ from the sustainable growth. If any of the actual parameters (P, T, L or d) differ from those used to compute the sustainable growth rate, the actual growth rate will deviate from the sustainable growth rate.c. Stieben Company can increase its growth rate by doing any of the following.i. Sell new stockii. Increase its debt-to-equity ratio by either selling more debt or repurchasing stockiii. Increase its net profit marginiv. Decrease its total assets to sales ratiov. Reduce its dividend payout26.4 a. Since you are making a projection for one year in the future it is reasonable to assume that fixed costs do not change. Thus, if sales grow 20%, then net income will grow 20%. Net income is $2,000,000(1.2) = $2,400,000.Determine total uses of funds.DNWC = 0.20 ($16,000,000 - $10,000,000) = $1,200,000DINV = 0.20 ($16,000,000) + Dep = $3,200,000 + DepDividend = 0.70 ($2,400,000) = $1,680,000Total uses = DNWC + DINV + Dep + Dividend = $6,080,000 + DepOperating sources = Net income + Dep = $2,400,000 + DepNew External Funds = Total uses - Operating sources = ($6,080,000 + Dep) - (2,400,000 + Dep) = $3,680,000To maintain its debt-to-equity ratio, Optimal Scam must issue $2,880,000 of new stock and $800,000 of new long-term debt.b. Pro Forma Balance Sheet Optimal Scam CompanyCurrent assets$19,200,000Fixed assets19,200,000Total assets$38,400,000Current liabilities$12,000,000Long-term debt4,800,000Total liabilities$16,800,000Common stock$16,880,000Accumulated retained earnings4,720,000Total equity$21,600,000Total liabilities and equity$38,400,000 d. Optimal Scam is far below its growth rate objective. Cutting the dividend to zero will not be enough. It could only attain a 12.5% growth rate by eliminating the dividend. Optimal Scam must increase its asset utilization and/or its profit margin substantially to be able to achieve its objective growth rate. Optimal could also increase its debt load; this action will increase ROE.26.5a.b. MBI Company can achieve its zero growth objective by reducing its profit margin to zero or increasing its dividend payout ratio to one. Reduction of the profit margin to zero, however, will hurt stockholders. Thus, a 100% payout ratio would probably be MBIs best choice.26.6 Undertaking positive NPV projects is how companies increase shareholders value. Financial planning allows the company to determine the interrelationships among the different aspects of managerial finance that will ultimately allow management to correctly utilize the NPV approach.26.7 The new MBA is correct though perhaps naively so. The two formulas are essentially the same.26.8a.b. P = 18.67%26.9 The tw