Details and Rubric
- Complete questions:
Define each of the following terms: - Operating plan; financial plan
- Spontaneous liabilities; profit margin; payout ratio
- Additional funds needed (AFN); AFN equation; capital intensity ratio; self-supporting growth rate
- Forecasted financial statement approach using percentage of sales
- Excess capacity; lumpy assets; economies of scale
- Full capacity sales; target fixed assets to sales ratio; required level of fixed assets
- Complete problem: Premium for Financial Risk
XYZ, Inc. has an unlevered beta of 1.0. They are financed with 50% debt and has a levered beta of 1.6. If the risk-free rate is 5.5% and the market risk premium is 6%, how much is the additional premium that
XYZ, Inc. shareholders require to be compensated for financial risk? Show your work.
Prepare this Assignment as a Word document. List each question, followed by your answer.
Once completed, submit your Assignment to the Unit 6 Assignment Dropbox. The Assignment is due
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