The most recent financial statements for Burnaby Co.

| March 13, 2016

1)

The most recent financial statements for Burnaby Co. are shown here:

Statement of Comprehensive Income Statement of Financial Position
Sales $ 14,200 Current assets $ 11,100 Debt $ 15,600
Costs 8,500 Fixed assets 26,750 Equity 22,250

Taxable income $ 5,700 Total $ 37,850 Total $ 37,850

Taxes (40%) 2,280

Net income $ 3,420

Assets and costs are proportional to sales. Debt and equity are not. Burnaby Co. maintains a constant 40 percent dividend payout ratio. No external financing is possible.

What is the internal growth rate? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

2)

Malahat Inc. has 6.3 percent coupon bonds on the market that have 10 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 6.15 percent, what is the current bond price? Assume the par value of a bond is $1,000. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Current bond price $

Internal growth rate %

3)

Goulds Corp. pays a constant $7.85 dividend on its stock. The company will maintain this dividend for the next 12 years and will then cease paying dividends forever. If the required return on this stock is 9 percent, what is the current share price? (Round your answer to 2 decimal places. (e.g., 32.16))

4)

The most recent financial statements for Marpole Inc., are shown here (assuming no income taxes):

Statement of Comprehensive Income Statement of Financial Position
Sales $ 9,600 Assets $ 16,000 Debt $ 4,000
Costs 7,470 Equity 12,000

Net income $ 2,130 Total $ 16,000 Total $ 16,000

Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be $11,904.

What is the external financing needed? (Do not round your intermediate calculations. Round your final answer to 2 decimal places. (e.g., 32.16). Negative amount should be indicated by a minus sign.)

External financing needed $

Current share price

$

5)

Airbutus Co. wants to issue new 15-year bonds for some much-needed expansion projects. The company currently has 8 percent coupon bonds on the market that sell for $1,090, make semiannual payments, and mature in 15 years. What coupon rate should the company set on its new bonds if it wants them to sell at par? (Round your answer to 2 decimal places. (e.g., 32.16))

Coupon rate

%

6)

Glenhill Co. is expected to maintain a constant 4.8 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 6.6 percent, what is the required return on the company’s stock? (Round your answer to 2 decimal places. (e.g., 32.16))

Required return

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