# EXCEL FILE 1 Week 1 Homework Assignment: Chapter 2: 8, 14, 19 8.

### Question Description:

Hello again! You recently helped me with a previous assignment in my class. You did an awesome job. You also told me to reach you directly on your profile. Below is my next assignment. I hope you can help me out again. Thank you for your time. Kevin Please use MS Excel to complete the attached homework problems. There are four pages in the attached document. Please use a separate Excel file for each of the four pages. The answers should be uploaded in four separate Excel files. Thank you! . Homework Assignment.docx EXCEL FILE 1 Week 1 Homework Assignment: Chapter 2: 8, 14, 19 8. Calculating OCF. Hammett, Inc., has sales of $34,630, costs of $10,340, depreciation expense of $2,520, and interest expense of $1,750. If the tax rate is 35 percent, what is the operating cash flow, or OCF? 14. Calculating Cash Flows. Weiland Co. shows the following information on its 2014 income statement: sales = $167,000; costs = $88,600; other expenses = $4,900; depreciation expense = $11,600; interest expense = $8,700; taxes = $18,620; dividends = $9,700. In addition, you’re told that the firm issued $2,900 in new equity during 2014, and redeemed $4,000 in outstanding long-term debt. a. Calculating Cash Flows. What is the 2014 operating cash flow? b. What is the 2014 cash flow to creditors? c. What is the 2014 cash flow to stockholders? d. If net fixed assets increased by $23,140 during the year, what was the addition to NWC? 19. Net Income and OCF. During the year, Belyk Paving Co. had sales of $2,600,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,535,000, $465,000, and $520,000, respectively. In addition, the company had an interest expense of $245,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) a. What is Belyk’s net income? b. What is its operating cash flow? c. Explain your results in (a) and (b). EXCEL FILE 2 Week 3 Homework Assignment: Chapter 6: 16 Chapter 7: 11 and 12 6. Interest Rate Risk. Both Bond Bill and Bond Ted have 7 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 3 years to maturity, whereas Bond Ted has 20 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Bill? Of Bond Ted? If rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of Bond Bill be then? Of Bond Ted? Illustrate your answers by graphing bond prices versus YTM. What does this problem tell you about the interest rate risk of longer-term bonds? 11. Valuing Preferred Stock. E-Eyes.com has a new issue of preferred stock it calls 20/20 preferred. The stock will pay a $20 dividend per year, but the first dividend will not be paid until 20 years from today. If you require a return of 8 percent on this stock, how much should you pay today? 12. Stock Valuation. Alexander Corp. will pay a dividend of $2.72 next year. The company has stated that it will maintain a constant growth rate of 4.5 percent a year forever. If you want a return of 12 percent, how much will you pay for the stock? What if you want a return of 8 percent? What does this tell you about the relationship between the required return and the stock price? EXCEL FILE 3 Topic 1 Directional 2 16. Interest Rate Risk. Both Bond Bill and Bond Ted have 7 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 3 years to maturity, whereas Bond Ted has 20 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Bill? Of Bond Ted? If rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of Bond Bill be then? Of Bond Ted? Illustrate your answers by graphing bond prices versus YTM. What does this problem tell you about the interest rate risk of longer-term bonds? 23. Zero Coupon Bonds. Suppose your company needs to raise $3