Orient Airline

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Frequently Asked Questions...

10 points to anyone who can help me with these finance questions! Please and Thankss?

1 Brammer Corp.'s projected capital budget is $1,000,000, its target capital structure is 60% debt and 40% equity, and its forecasted net income is $550,000. If the company follows a residual dividend policy, what total dividends, if any, will it pay out?

#2 Orient Airlines’ common stock currently sells for $33, and its 8% convertible debentures (issued at par, or $1,000) sell for $850. Each debenture can be converted into 25 shares of common stock at any time before 2017. What is the conversion value of the bond?

#3 Bello Inc. had sales of $2,500,000 per year (all credit,) and its days sales outstanding was DSO = 35 days. What was its average amount of accounts receivable outstanding, based on a 365-day year?

I have an exam tomorrow on how to do these type questions except the book doesnt give me the answers so idk if im doing them right??
These are financial management questions.


Best Answer...

Answer:

1)
Equity capital budget = 1'000'000•0.4 = 400'000
Projected max dividend = 550'000-400'000 = 150'000

2) Current conversion value: = $33•25 = $825

3) Average = 35•2'500'000/365 ≈ $239'726.03