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Take Home Assignment Manajemen Keuangan II Kelas C Dosen: Setiyono, Dr., M.

Si Jumlah peserta 60 mahasiswa Tanggal Pengumpulan: paling lambat 14 April 2012, pukul 24:00 wib Pengumpulan via imil

Yogyakarta, 04 April 2012

1. Compare the after-tax rates of return for a corporate investor from the following two investments: A 20-year corporate bond that sells for par and offers a 9% coupon versus an investment in preferred stock that sells for $40.00 per share and pays a $3.60 dividend. The corporation has a 35% tax rate. 2. Ajax Corporation has received a firm commitment from its underwriter to purchase million shares of stock that will be marketed to the general public at $23 per share. The underwriter's spread is $1.90 per share and the issuing firm will pay an additional $1.65 million in legal and other fees. The issue was fully sold on the first day and the stock closed at $27.50 on that day. Calculate both the direct expense of issuance and the indirect (i.e., underpricing) expense. What percentage of the market value of the shares is represented by these costs? 3. Equity, Inc. is currently an all-equity-financed firm. It has 10,000 shares outstanding that sell for $20 each. The firm has an operating income of $30,000 and pays no taxes. The firm contemplates a restructuring that would issue $50,000 in 8% debt which will be used to repurchase stock. Show the value of the firm, EPS, and rate of return on the stock before and after the proposed restructuring. What changed? 4. Show that a stock repurchase is conceptually the same as a cash dividend using the following example: Repo Corp. has 1,000 shares outstanding at a market price of $20 per share. In debating whether to declare a 5% cash dividend, the directors instead chose to repurchase 50 of the outstanding shares. 5. Calculate the sustainable growth rate for a firm with an 8% profit margin, an asset turnover of 1.25, a total debt ratio of 45%, and a plowback ratio of 65%. Assuming that the ROE remains constant, how large can the sustainable growth rate become? 6. A firm is considering the following changes: increasing inventory variety, which will increase inventory to $60,000, and offering more liberal sales terms, which will result in average receivables increasing to $65,000. These actions are expected to increase sales to $800,000 per year, and cost of goods will

remain at 75%. Because of the increased purchases, average payables will increase to $35,000. What effect will these changes have on the cash conversion cycle?