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Balance Sheet (Millions of $) Assets 2014 2013 Cash and securities 2,500 Account

ID: 2649107 • Letter: B

Question

Balance Sheet (Millions of $)

Assets

2014

2013

Cash and securities

2,500

Accounts receivable

11,500

Inventories

16,000

Total current assets

30,000

Net plant and equipment

30,000

Total assets

60,000

50,000

Liabilities and Equity

Accounts payable

9,500

Notes payable

7,000

Accruals

5,500

Total current liabilities

22,000

Long-term bonds

25,000

Total Liabilities

47,000

Common stock

2,000

Retained earnings

11,000

Total common equity

13,000

10,000

Total liabilities and equity

60,000

50,000

Income Statement (Millions of $)

2014

2013

Net sales

97,500

90,000

Operating costs except depreciation

91,813

Depreciation

1,531

Earnings before interest and taxes (EBIT)

$4,156

Less interest

1,375

Earnings before taxes (EBT)

$2,781

Taxes

973

Net income

1,808

1,500

Other Data

Shares outstanding (millions)

500.00

Year-end stock price

$50.00

Common dividends

$632.73

Coupon rate on notes payable & L-T bonds

6.25%

Yield to maturity on debt

6.75%

Interest rate on 20-year U.S. Treasury Bonds

5.00%

Expected annual return on the S&P 500 Index

11.00%

Federal plus state income tax rate

35%

Koski's Beta

1.20


Part A

Balance Sheet (Millions of $)

Assets

2014

2013

Cash and securities

2,500

Accounts receivable

11,500

Inventories

16,000

Total current assets

30,000

Net plant and equipment

30,000

Total assets

60,000

50,000

Liabilities and Equity

Accounts payable

9,500

Notes payable

7,000

Accruals

5,500

Total current liabilities

22,000

Long-term bonds

25,000

Total Liabilities

47,000

Common stock

2,000

Retained earnings

11,000

Total common equity

13,000

10,000

Total liabilities and equity

60,000

50,000

Income Statement (Millions of $)

2014

2013

Net sales

97,500

90,000

Operating costs except depreciation

91,813

Depreciation

1,531

Earnings before interest and taxes (EBIT)

$4,156

Less interest

1,375

Earnings before taxes (EBT)

$2,781

Taxes

973

Net income

1,808

1,500

Other Data

Shares outstanding (millions)

500.00

Year-end stock price

$50.00

Common dividends

$632.73

Coupon rate on notes payable & L-T bonds

6.25%

Yield to maturity on debt

6.75%

Interest rate on 20-year U.S. Treasury Bonds

5.00%

Expected annual return on the S&P 500 Index

11.00%

Federal plus state income tax rate

35%

Koski's Beta

1.20

Explanation / Answer

Part A

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