What is the total value of the cash flows today

Assignment Help Financial Accounting
Reference no: EM131068775

Introduction to Finance Assignment

1. Company A has the following incomplete balance sheet and income statement, and the company's tax rate is 35%.

Balance Sheet As of year End (Figures in millions of dollars)







 Current Assets



 Current Liabilities



Net Fixed Assets



Long-Term Debt



Income Statement, 2012 (Figures in millions of dollars)

Revenue 2280
Cost of Goods Sold 1060
Depreciation 360
Interest Expense 240

a. What does Company A earn before interest and taxes if Company A's expenses only include cost of goods sold, depreciation and interest expenses?

b. What is Company A's net income?

c. What is Company A's investment in fixed assets in 2012?

d. What is the operating cash flow of Company A in 2012?

e. What is the addition to net working capital in 2012?

f. What is the cash flow from assets?

g. What is the cash flow to creditors?

h. What is the cash flow to shareholders?

2. a. Fill in the table using the following information:

The Edwards School of Business has just bought new equipment at a total cost (including installation) of $160,000. The school expects them to last 4 years before they will need to be replaced and expects to sell them for $40,000 after the four years. The equipment is considered Class 10 or 30 percent for CCA purposes.


Beginning UCC


Ending UCC

















b. If the school sells them for $40,000 after the four years, will there be a terminal loss, a CCA recapture, or neither? If so, how much will the amount of loss or recapture be?


ABC Company
Financial Statements
Balance Sheet (in thousands)



Current assets


$  300

Accounts Receivable






Fixed Assets

Net plant and equipment's


Total Assets


Liabilities and Owners' Equity

Current liabilities

Accounts payable

$  400

Notes Payable




Long-term debt


Owners' equity

Common stock and paid-in surplus


Retained Earnings




Total liabilities and owners' equity


Income Statement (in thousands)



Cost of goods sold




Earnings before interest and taxes


Interest paid


Taxable income

$ 500

Taxes (35%


Net income

$ 325


$    75

Addition to retained earnings


a. Based on the financial statements above, calculate the following list of financial ratios. (5 marks)

1.Current ratio
2.Cash ratio
3.Days' sales in inventory
4.Days' sales in receivables
5.Total debt ratio
6.Times interest earned ratio
7.Return on Assets
8.Return on Equity
9.Fixed asset turnover
10.Profit Margin

b. Construct the Du Pont identity for ABC Company.

c. ABC Company has 200,000 shares of common stock outstanding and the market price for a share of stock at the end of 2012 was $26.

i. What are the additions to retained earnings?

ii. What is the price-earnings ratio?

iii. What are the dividends per share?

iv. What is the market-to-book ratio at the end of 2012?

4. Based on the following information for Swine Corp., classify each even as a source or use of cash, by how much and the total change in cash?

Decrease in inventory                 $400
Decrease in accounts payable        160
Increase in notes payable             580
Decrease in accounts receivable    210

5. The most recent financial statements for ABC Inc. are shown here:

Income Statement                                  Balance Sheet

Sales                   $3,400      Current Assets $4,400         Current Liabilities $880
Costs Fixed                          Assets 5,700                      Long-term debt 3,580
Taxable Income    $600                                                  Equity $5,640
Taxes (34%)         204         Total $10,100                      Total $10,100
Net income          $396

Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. ABC Inc. maintains a constant 40% dividend payout ratio. Like every other firm in its industry, next year's sales are projected to increase by exactly 20%. What is the external financing needed?

6. What is the future value of $25,000 received today if it is invested at 6.5% compounded annually for six years?

7. You are supposed to receive $2,000 five years from now. At an interest rate of 6%, what is that $2,000 worth today?

8. Granny puts $35,000 into a bank account earning 4%. You can't withdraw the money until the balance has doubled. How long will you have to leave the money in the account?

9. Your grandfather placed $2,000 in a trust fund for you. In 10 years the fund will be worth $5,000. What is the rate of return on the trust fund?

10. Suppose you are looking at the following possible cash flows (CF): Year 2 CF = $100; Year
3 CF =$200; Year 5 CF = $300; Year 6 CF=$400. The required discount rate is 5%

1) Draw the time line, mark out the time point and cash flows
2) What is the total value of the cash flows today? (keep two decimal points)
3) What is the total value of the cash flows at year 7? (keep two decimal points)

Reference no: EM131068775

What are major regulatory bodies and their functions

Post your response to the following question, using 250 to 300 words: What are the major regulatory bodies and their functions?

Purpose entries for bosio for the office improvements

Purpose entries for Bosio to record (a) its payments to Harper for the right to sublease the building space (b) its payment of the 2009 annual rent to the building owner, an

What factors would influence managers of larimer

Windsor Division of Widgetco is developing a new product for which X47 would be an input. What factors would influence the managers of Larimer and Windsor as they negotiate

Prepare statement of partnership equity for the year

The partnership of Angel Investor Associates began operations on January 1, 2014, with contributions from two partners as follows: The partners' withdrawals are equal to half

Cause the trial balance totals to be unequal

For each of the following errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal. If the error would cause the trial ba

Compute a new break-even point in units

Using the original data in the problem, compute a new break-even point in units if the unit sales price is increased 20%, unit variable cost is increased by 10%, and total f

Calculate the After-Tax Cash Flow and NPV

Calculate the After-Tax Cash Flow, NPV (at minimum ROR=20%) and ROR for the following investment with 6 years life time: Equipment depreciation will be based on MACRS 5-years

How will total dividend be divided between common stock

The company declares a total dividend of $ 200,000. If the dividends on preferred stock are one year in arrears ( in addition to the current year), how will total dividend


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd