FINC 5000 Entire Course New

Question 1

FINC 5000 Week 1 HomeWork NEW

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FINC 5000 Week 1 HomeWork NEW

For the remaining questions in this assignment, base your answers on the following information for Joe’s Fly-By-Night Oil Company, whose latest income statement and balance sheet are shown below.

11. What was Joe’s average, or effective tax rate in 2013?
12. What was Joe’s NOPAT in 2013?
13. What was Joe’s Free Cash Flow (FCF) in 2013?
14. Suppose you were an investor and you were considering whether to buy a corporate bond from Joe’s Corporation or a Municipal Bond from the city of St. Louis. Joe’s corporate bond has a yield of 8%. The St Louis city bond has a yield of 6%. The income from Joe’s bond is taxable. The income from the St Louis city bond is tax-free. If your effective tax rate is 20%, which bond would give you the higher after-tax yield?
15. What was Joe’s Net Worth at the end of 2013?
16. Calculate Joe’s ROE for 2013. Then construct a Du Pont equation (use the extended, or modified version shown in the Week 1, chapters 2 & 3 lesson notes) and comment on the sources of Joe’s ROE as revealed by the extended Du Pont equation.

Answer 1

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