Nombre: Lesewds CostWlo —Ailbewrrewin UNIVERSIDAD DEL PACIFICO DEPARTAMENTO ACADEMICO DE CONTABILIDAD FINANZAS CORPORATIVAS es ANO 2011 - SEGUNDO SEMESTRE Profesor: Samuel Mongrut ( ey RC Tiempo: 02 horas Cx 1. Five years ago Karla Cabellos bought the company “Musique” for 4 million dollars, one million dollar more than its book value at that time. With the Company, Karla hired a research and development team dedicated to producing and manufacturing new types of vinyl capable of reproducing music with high fidelity, such the old vinyl, but at the same time resistant to scratches. During year 2011, they managed to develop such type of vinyl and to put it ready for the market. The following tables show the Balance Sheet and the Profit and Loss Statement of the company for 2011. Cédigo : _ 2909 !/9%15 FINAL EXAM Balance Sheet Company "Musique" (in Thousands of dollars at December 2011) Assets USS Liabilities uss Cash 100 Account Payables 100 ‘Account Receivables 1000 Long-Term Debt 900 Inventory 1500 Goodwill, 3000 Equity Cumulative Amortization -1000 Social Capital 3000 Fixed Assets 1500 Retained Earnings 11600 Cumulative Depreciation -500 Total 5600 Total 5600 Profit and Loss Statement ‘Company "Musique" (in thousands of dollars for the year 2011) uss Sales 6000 Cost of goods sold -3000 Gross Margin 3000 Sales and Administrative Expenses 500 Amortization of Goodwill -200 Depreciation of fixed assets 100 Expenses in Research and Development -1000 Extraordinary gains and losses 500 Earnings before Interests and taxes 700 Interest 100 Earnings before taxes 600 Taxes (30%) 180 Net income 420Given the previous information you are being asked to answer the following questions: 1.1. Estimate the Invested Capital of the Company “Musique” for year 2011 Note: Take into account only the accounts that reflect invested capital with a cost for the company in order to generate the profit from the core business. (02 points) Answer: Tce wwe + AF + Cane - Pc) WEL RE-PE = 19041000 +1500 -190 2500 AF = 1500-S0q = 1900 ANC-PNC = 3000 gAMFR-G0d = 2100 VV 00 FC= 2S00 +1009 +2100 = 1.2 Estimate the corresponding Net Operating Profit Less Adjusted Taxes (NOPAT) for year 2011 (02 points) Answer: NoPAT = 709 (1-9.3) 5) \ wore > 4991.3 If the unlevered cost of equity is 15%, the cost of debt is 10% and the total market capitalization of the company is US$ 5100 dollars, what is the levered cost of equity for the company? Note: The company long- term is quoted in the capital market with a rating AAA (02 points) Answer: Acciomes Devde, Porsdorireach 83.617, 16.397 Cost. Isy, iby, WK [2.54 7 oue (4197. x iL WACe = 1.4 Estimate the company economic value added (EVA) for the year 2011. Interpret the result (02 points) Answer: evap = NoeAt - LEC) (waccd] 50 puAs 490 — CGeoe) ( 14,137. a EVA S - 304.081.5 Do you agree with the following statement from Prof. Damodaran (2001, p. 821) *...Economic Value Added is an approach skewed toward assets-in- place and away from future growth...” Explain your answer. (02 points) | Answer: El EVA ade ol surplus ew vevsledles morcforiag of es oreedle Por yd, Byngrtiq, pr ss oth ves en tao © EXIM gy UY pUttooe determi. Bayo este AS es armel la od pnts ACL te Resor Deyradlone ye ya qe ot OVA st anu, en les ms MN vsp Para asi evifne ser el mredely de PcF gr pume, fect datos emupulads, sim ombigs ma form el ormavrd fubre Ac le empresa eo} BVA 2. Mrs. Cabellos hired Mr. Sergio Medina to help her to establish a proper dividend policy for the company. During the last five years, the Company “Musique” had a net income annual growth rate of 15% and Mr. Medina is thinking that this growth rate could be kept into the future. If the dividend payout ratio was 25% for 2011, you are being ask to answer the following questions: 2.1 What will be the distributed dividends in year 2012 if the company follows a policy of growing dividends? (01 point) Answer: paho 2011 > 287. durdydes 2012 = (0.25 7 Ss) g= 1S¥. ek vrcome = 420 a OS fh! = 120-752.2 What will be the distributed dividends in year 2012 if the company follows a policy of constant dividend payout? (04 point) Answer: Pividewdos Lol2 = 10S SN oeene y 4p 0.28 x 483 = \20.4 nf 2.3. If the company is facing a capital budget of US$ 426,000 dollars for the year 2012 and it is operating at its optimal capital structure, what would be the distributed dividends in year 2012 if the company follows a residual approach? (01 point) Answer: Dividewdas 20% Uv oly = HS 420, 463 = Opertumualodss de nverson = “126 D WWidbedos residual es 2.4 Which of the previous dividend policies is the better for the company? Explain your answer. (01 point) Answer: \ La Zera poldkea gave Ttpowls de Rividenows 9 sea or s) See se ye rope aberDuring the last year, Mrs. Ima Tam financial manager of “Papelito Company” has been worried about the decreasing level of monthly credit sales, which on average are about US$ 80,000 dollars and also with a decreasing market share due to the entrance of its main competitor “Arts Company”. According to the new sales manager, Mr. Victor Quispe, “Arts Company” has “stolen” customers due to an aggressive credit policy that goes with a discount for early payment of 10/30, 1/60. Given this situation, Mrs. Tam has decided ease the company credit policy by changing its current discount for early payment from 5/30, n/60 to 20/30, n/60. The new credit policy for “Papelito Company” is expected to raise the level of monthly credit sales to USS 120,000 dollars and to increase the proportion of credit sales that will take the discount for early payment from 40% to 60% of the average monthly credit sales. In the other hand, Mrs. Tam has decided to avoid the opportunity cost of having cash in the company and she has established the policy of investing any excess of cash in short-term fixed income securities with a variable cost of US$ 0.002 and a fixed cost of US$ 30 dollars per deposit. However, whenever she has to withdraw part of this investment, her broker will charge a variable cost of US$ 0.004 dollars and a fixed cost of US$ 40 dollars per withdrawal. Given this information you are asked to: 3.1. Determine the monthly opportunity cost of having cash for “Papelito Company” assuming that its providers are offering a discount for early payment of 20/30, n/60. (02 points) Answer: 60-30 ( 1-0-2) C14 Co/38) = ES) (\ + Cos)= Neorie Oe {4 oso = ybzs eee L Coste Au.2s) = 1) 365 ae pete on deste 36S 2,3250382 ) ‘ eee u TER: (le V4 403293.2 What is the minimum monthly cost of managing cash for “Papelito Company"? (02 points) Answer: \ A C= LC2.« 120,900 x40) = 6,149,998 /~ a Be R= Iza 000 x [@.01 uous GIN8.Mhaé 9, 904 4 9.2539 oe = 120,00~ 8984.76, 015.24 Be We 3.3 If the annual effective opportunity cost for “Papelito Company” with the Previous discount for early payment was 7%, it is convenient or not for the company to implement the new discount for early payment equal to 2s 20/30, n/60? (02 points) ‘Answer: 1 Bo TED = [i+ 0.2539) J 1+ 0.00853 : Win — onl eee eos Ge sg) = 0.000186 VP = (9-6) (0-8) (120,099) (1.00459) + (0.4) {120,295) (1) Doase) 6 = ©-4) (0.95)(129, 020) (1,009 86"? + ee Si es tonvenltite trplenremkor le mwtve, pow, de peel yr oe od UP a Gesihvg