You are a major senior executive with a company in an industry you love or would maybe want to join. You and your team are brainstorming a major project or endeavor to add to the company’s operations to improve its financial condition. Using the questions posed below regarding Disney’s Pandora Project, answer them for your project.

Please see the attached PDF file (below) associated with discussion.

Some questions included:

What kind of financial assumptions and metrics do you think mattered to Disney executives?

What were the incremental cash flows (revenue streams and related expenses) Disney executives projected from opening this ride? What were the sources of cash flow? What were some incremental costs associated with adding this land to the park?

How many additional visitors would Walt Disney World receive from this new land in Animal Kingdom?

Would there be any cannibalism at their other “lands” within Walt Disney World (this includes the Magic Kingdom, Hollywood Studios and EPCOT)? How much? Or would it increase visits to all parks?

How long would the Animal Kingdom draw additional visitors due to Pandora? Would there be a point where popularity would taper off over time?

How would this project impact competitors? What would they likely experience? How would they react in terms of their own projects?

What has been the actual results vs. projections made prior to the land being built? (answer this if you research a past project for a company).

QUESTION 1

1.If Company ABC has a 8% ROA and 30% payout ratio, what is its internal growth rate?

10 points

QUESTION 2

1.EFG company has a 16% ROE and a 40% payout ratio, what is its sustainable growth rate?

10 points

QUESTION 3

1.Calculate the sustainable growth rate for XYZ Corporation: Profit margin = 9.2%, Capital intensity ratio = .80, Debt-Equity Ratio = .70, Net Income = $80,000, Dividends = $21,000.

10 points

QUESTION 4

1.Assume the following ratios are constant, what is the sustainable growth rate? Total Asset Turnover = 3.10, Profit margin = 5.4%, Equity Multiplier = 1.5, Payout ratio = 40%.

10 points

QUESTION 5

1.PQR Corporation is currently operating at 85% fixed asset capacity and current sales of $2.5 Million. How fast can sales grow before any new fixed assets are needed?

10 points

QUESTION 6

1.An investment project has annual cash inflows of $3,200, $4,100, $5,300, and $4,500, and a discount rate of 14 percent. What is the discounted payback period for these cash flows if the initial cost is $5,900?

10 points

QUESTION 7

1.A firm evaluates all of its projects by applying the IRR rule. Year 0 = $-28,000, Year 1 = $12,000, Year 2 = $15,000, Year 3 = $11,000. If the required return is 14 percent, should the firm accept the following project?

10 points

QUESTION 8

1.What is the NPV of the following project Year 0: -$16,400, Year 1: $7,100, Year 2: $8,400, Year 3: $6,900. At a discount rate of 10 percent?

10 points

QUESTION 9

1.What is the profitability index for the following cash flows if the relevant discount rate is 15 percent? Year 0: -$18,000, Year 1: $10,300, Year 2: $9,200, Year 3: $5,700.

10 points

QUESTION 10

1.A proposed new investment has projected sales of $750,000. Variable costs are 55 percent of sales, and fixed costs are $164,000; depreciation is $65,000. Prepare a pro forma income statement assuming a tax rate of 35 percent. What is the projected net income?

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