Академический Документы
Профессиональный Документы
Культура Документы
Soal UAS
Mata Kuliah : Manajemen Keuangan Lanjutan
Dosen
: Endri, SE., MA
Problem 1 ( 25 points)
Early in the spring of 2003, the Jonesboro Steel Corporation (JSC) decided to purchase a
small computer. The computer is designed to handle the inventory, payroll, shipping, and
general clerical functions for small manufacturers like JSC. The firm estimates that the
computer will cost $60,000 to purchase and will last four years, at which time it can be
salvaged for $10,000. The firms marginal tax rate is 50 percent, and its cost of capital for
projects of this type is estimated to be 12 percent. Over the next four years, the
management of JSC thinks the computer will reduce operating expenses by $27,000 a
year before depreciation and taxes. JSC uses straight-line depreciation.
JSC is also considering the possibility of leasing the computer. The computer sales firm
has offered JSC a four-year lease contract with annual payments of $18,000. In addition,
if JSC leases the computer, the lessor will absorb insurance and maintenance expenses
valued at $2,000 per year. Thus JSC will save $2,000 per year if it leases the asset (on a
before-tax basis).
1. Evaluate the net present value of the computer purchase. Should the computer be
acquired via purchase?
2. If JSC uses a 40 percent target debt to total assets ratio, evaluate the net present
value advantage of leasing. JSC can borrow at a rate of 8 percent with annual
installments paid over the next four years. (Hint: Recall that the interest tax
shelter lost through leasing is based on a loan equal to the full purchase price of
the asset, or $60,000.)
3. Should JSC lease the asset?
Problem 2 ( 25 points)
A group of college professors has decided to form a small manufacturing corporation.
The company will produce a full line of contemporary furniture. Two financing plans
have been proposed by the investors. Plan A is an all-common-equity alternative. Under
this arrangement 1,200,000 common shares will be sold to net the firm &10 per share.
Plan B involves the use of financial leverage. A debt issue with a 20-year maturity period
will be privately placed. The debt issue will carry an interest rate of 9 percent and the
principal borrowed will amount to $3.5 million. Under this alternative, another $8.5
million would be raised by selling 850,000 shares of common stock. The corporate tax
rate is 50 percent.
a. Find the EBIT indifference level associated with the two financing proposals.
b. Prepare an analytical income statement that proves EPS will be the same
regardless of the plan chosen at the EBIT level found in part (a)
c. Prepare an EBIT-EPS analysis chart for this situation
d. If a detailed financial analysis projects that long-term EBIT will always be close
to $1,500,000 annualy, which plan will provide for the higher EPS?