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F. Naz, Chartered Accountant

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Experience: Experience with chartered accountancy

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Click here to download the selected financial statements for

Customer Question

Click here to download the selected financial statements for Micro Chip Computer Corporation. Answer questions 1 and 2 below based on the financial data.

Determine the year-to-year percentage annual growth in total net sales. Based only on your answers to question #1, do you think the company acheived its sales goal of +10% annual revenue growth in 2009? Determine the target revenue figure, and explain why you do or do not feel that the company hit its target. Next, consider Micro Chip's Consolidated Statement of Operations for the year ended September 25, 2008. Download the file here and answer questions 1 and 2.

Use the Percentage Sales Method and a 20% increase in sales to forecast Micro Chip's Consolidated Statement of Operations for the period of September 26, 2008 through September 25, 2009. Assume a 15% tax rate and restructuring costs of 2% of the new sales figure. Discuss your results from question number #1. What assumptions have you made? Do any of your assumptions seem unreasonable? To receive full credit on this assignment, please show all work, including formulae and calculations used to arrive at the financial values. Students using Microsoft Excel must provide an adequate explanation of the methodology used to arrive at that answer.

Assignment Guidelines:

Download the financial statements and consolidated statement of operations by clicking on the links above in the assignment description. Analyze the statements and then answer the four questions listed in the assignment description. Show all work including calculations and formulas. If applicable, provide a detailed explanation of how you used Microsoft Excel to arrive at your answers. Organize your answers, mathematical calculations, and Microsoft Excel data into a Word document of 1–2 pages.

It will be my pleasure to do the assingment, but the link has not been provided for downloading the financial statements of the company, please also mention your deadline, thanks.

Click here for solution Please do not hesitate to ask further and if you are satisfied do not forget to click on ACCEPT button so I get paid for my efforts, thanks

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Find an estimate of the risk-free rate of interest (krf). To obtain this value, go to Bloomberg.com: Market Data and use the "U.S. 10-year Treasury" bond rate (middle column) as the risk-free rate. In addition, you also need a value for the market risk premium. Use an assumed market risk premium of 7.5%.

Using the information from the XYZ Stock Information document, record the following values:

XYZ's beta (ß)

XYZ's current annual dividend

XYZ's 3-year dividend growth rate (g)

Industry P/E

XYZ's EPS

With the information you recorded, use the CAPM to calculate XYZ's required rate of return (ks).

Use the CGM to find the current stock price for XYZ. We will call this the theoretical price (Po).

Now use the XYZ Stock Information to find XYZ's current stock quote (P). Compare Po and P and answer the following questions:

Are there any differences?

What factors may be at work for such a difference in the two prices?

Now assume the market risk premium has increased from 7.5% to 10% and this increase is due only to the increased risk in the market. In other words, assume the krf and the stock's beta remain the same for this exercise.

What will the new price be? Explain.

Recalculate XYZ's stock price using the P/E ratio model and the needed info found in the XYZ Stock Information file.

Why is the present stock price different from the price arrived at using CGM (Constant Growth Model)?

If you used Microsoft Word to arrive at your answers, then you must provide an explanation of the formulas and calculations.

Your submitted assignment (125 points) must include the following:

A double-spaced Word document of 2-3 pages that contains the following:

All of the numerical values listed in the assignment guidelines.

Your answers to the four questions in the assignment guidelines.

The formulas and calculations that you used to arrive at your answers

You must include your explanation of how you used Microsoft Excel for your calculations if applicable.

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