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You have just been hired as a financial analyst for Basel Industries. Unfortunately, company headquarters (where all of the firm's records are kept) has been destroyed by fire. So, your first job will be to recreate the firm's cash flow statement for the year just ended. The firm had $100,000 in the bank at the end of the prior year and its working capital accounts except cash remained constant during the year. It earned $5 million in net income during the year but paid $750,000 in dividends to common shareholders. Throughout the year, the firm purchased $5.5 million of machinery that was needed for a new project. You have just spoken to the firm's accountants and annual depreciation expense for the year is $460,000; however, the purchase price for the machinery represents additions to property, plant, and equipment before depreciation. Finally, you have determined that the only financing done by the firm was to issue long-term debt of $1 million at a 6% interest rate. What was the firm's end-of-year cash balance? Recreate the firm's cash flow statement to arrive at your answer. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar, if necessary.
The Jones Company has decided to undertake a large project. Consequently, there is a need for additional funds. The CFO plans to issue preferred stock with a perpetual annual dividend of $5 per share and a par value of $30. If the required rate of re..
Hometown Builders is borrowing $150,000 today for five years. The loan is an interest-only with an APR of 8.5 percent. Payments are to be made annually. What is the amount of the first annual payment?
If you deposit money today in an account that pays 14.5% annual interest, how long will it take to double your money? Round your answer to two decimal place
The Tattle Teller has a printing press sitting idly in its back room. The press has no market value to another printer because the machine utilizes old technology. The firm could get $250 for the press as scrap metal. The president of the firm is con..
A car dealership is having a sale where every car is reduced by 10% of its original value. The dealership has a tax rate of 8.2%. You have a voucher for a further reduction of 13% on the price that the car is being sold for. If your total including t..
Find the internal rate of return (IRR) for the following series of future cash flows. The initial outlay is $744,700.
Warmack Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $390,000 is estimated to result in $150,000 in annual pretax cost savings.
Calculate and discuss the importance of the following ratios: Liquidity Ratios—working capital, current ratio, quick/acid-test ratio, receivable turnover, average day's sales uncollected, inventory turnover, average day's inventory on hand, operating..
The Poseidon Swim company produces swim trunks. The average selling price for one of their swim trunks is $38. The variable cost per unit is $25. Poseidon swim has average fixed costs per year of $35,194.
The elasticity of demand is: Whether buyer or sellers pays more of a commodity tax depends on:
You have a choice of borrowing money from a finance company at 19 percent compounded dailty or borrowing money from a bank at 21 percent compounded semiannually. Which alternative is the most attractive? If you can borrow funds from a finance company..
A clinic has obtained the following estimates for its costs of debt and equity at various capital structures: What is the firm’s optimal capital structure? Calculate its corporate cost of capital at each structure.
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