# FIN 405- PROBLEMS

1. Your company has sales of \$100,000 this year and cost of goods sold of \$72,000. You forecast sales to increase to \$110,000 next year. Using the percent of sales method, forecast next year’s cost of goods sold.

2. For the next fiscal year, you forecast net income of \$50,000 and ending assets of \$500,000. Your firm’s payout ratio is 10%. Your beginning stockholders’ equity is \$300,000 and your beginning total liabilities are \$120,000. Your non-debt liabilities such as accounts payable are forecasted to increase by \$10,000. What is your net new financing needed for next year?

3. Using the information in the following table, calculate this company’s:

Net Income                                      50,000

Beginning Total Assets                  400,000

Beginning Stockholders’ Equity   250,000

Payout Ratio                                     0%

a. Internal growth rate?

b. Sustainable  growth rate?

c. Sustainable growth rate if it pays out 40% of its net income as a dividend.

4. You have just landed in London with \$500 in your wallet. Stopping at the foreign exchange booth, you see that pounds are being quoted at \$1.95/£. For how many pounds can you exchange your \$500?

5. Your firm needs to pay its French supplier €500,000. If the exchange rate is €0.65/\$, how many dollars will you need to make the exchange?

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