### How much does cartwright need to borrow and when

Assignment Help Financial Management
##### Reference no: EM13865981

Case study: Cartwright Lumbeer Campany

Part -1:

Q1a Discuss how the interest expense (row 25) calculation works and whether or not it includes the short term borrowing on the Cartwright balance sheet. HINT: What is the source of the data used in the ratio on row 14?

Q1b How much does Cartwright need to borrow and when? Explain by citing specifics from the forecast.

Q1c Does Cartwright have the ability to pay the interest expense? Explain by citing specifics from the forecast.

Q1d Does Cartwright have the ability to repay the loan principal? Explain by citing specifics from the forecast.

Part -2:

Q2a Explain how the table from the Cohen Finance Workbook, shown above starting on row 47, works and its significance to Cartwright's (and most other businesses too) external financing needs problem.

Q2b Revise the short-form forecast model from Q1, using the 'input cells zeroed' model at the top of this tab.

As the banker, assume a lower growth rate in sales, and explain, showing specifics from the revised forecast, how it helps Cartwright solve his external financing needed problem. Enter revised data in the blue cells, using your judgment.

Verified Expert

#### Compute the present value of this annuity one year from now

The term structure is defined by s_t = 0.05 + 0.005 t, for t = 1, 2, 3, 4. A three year annuity-immediate will be issued one year from now with annual payments of 1000. Using

#### What would the purchase price have to be

A investor has purchased 10-year bonds, with a face value of \$11,000. Interest at 8% is paid quarterly. If she desires to earn 12% nominal interest (compounded quarterly), wha

#### Value of share of common stock depends on the cash flows

The value of a share of common stock depends on the cash flows it is expected to provide, and those flows consist of the dividends the investor receives each year while holdin

#### What is her cash flow under the current capital structure

Desert Rose, Inc., a prominent consumer products firm, is debating whether to convert its all-equity capital structure to one that is 30 percent debt. Currently, there are 20,

#### What is the net advantage to leasing

Lease or Buy Assume that the tax rate is 35 percent. You can borrow at 8 percent before taxes. Should the company lease or buy? (Calculate the Net Advantage to Leasing vs. Buy

#### Proposed expansion of an existing subsidiary

You are evaluating a proposed expansion of an existing subsidiary located in Switzerland. The cost of the expansion would be Fr 15 million. The cash flows from the project wou

#### Firm operating cash flow for this replacement

A replacement project will annually generate additional revenues of \$800,000. It has fixed and variable cost total \$500,000. It will increase depreciation costs by \$220,000. T

#### Maximum price per share schultz should pay for arras

Schultz Industries is considering the purchase of Arras Manufacturing. Arras is currently a supplier for Schultz, and the acquisition would allow Schultz to better control its