Kuipers, Inc. 1999 Income Statement ($ in millions) Net sales $1,384
Less: Cost of goods sold 605
Less: Depreciation 180
Earnings before interest and taxes 599
Less: Interest paid 80
Taxable income 519
Less: Taxes 156
Net income $363
Addition to retained earnings $254
Dividends paid 109
Kuipers, Inc.
12/31/98 and 12/31/99 Balance Sheet
($ in millions)
1998 1999
1998 1999
Cash $100 $121 Accounts payable $400 $350
Accounts rec. 350 425 Notes payable 390 370
Inventory 440 410 Total
$790 $720
Total $890 $956 Long-term debt 500 550
Net fixed assets 1,556 1,704 Common stock 600 580
Retained earnings 556 810
Total assets $2,446 $2,660 Total liabilities $2,446 $2,660
What is the firm's operating cash flow for 1999?
a) 359
b) 441
c) 543
d) 589
e) 623

Technology corp. is considering a $238,160 investment in a new marketing campaign that it anticipates will provide annual cash flows of $52,000 for the next five years. the firm has a 6% cost of capital. what should the analysis indicate to the firm's managers?

Pennewell publishing inc. (pp) is a zero growth company. it currently has zero debt and its earnings before interest and taxes (ebit) are $80,000. pp's current cost of equity is 10%, and its tax rate is 40%. the firm has 10,000 shares of common stock outstanding selling at a price per share of $48.00. refer to the data for pennewell publishing inc. (pp). pp is considering changing its capital structure to one with 30% debt and 70% equity, based on market values. the debt would have an interest rate of 8%. the new funds would be used to repurchase stock. it is estimated that the increase in risk resulting from the added leverage would cause the required rate of return on equity to rise to 12%. if this plan were carried out, what would be pp's new value of operations? a. $484,359 b. $521,173 c. $584,653 d. $560,748 e. $487,805

Which of the following best describes why you need to establish goals for your program?