Explain the purpose of the financial statements

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-Explain the purpose of the following financial statements: balance sheet, income statement, and statement of cash flows. Discuss the value that each of these items provides your organization.

-What operational and strategic decisions can be made by reviewing these reports? In your discussion, please incorporate the requirement to meet Generally Accepted Accounting Principles (GAAP).

-Your company is planning to borrow $1 million on a 5-year, 15%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal?

-What is an opportunity cost rate? How is this rate used in discounted cash flow analysis, and where is it shown on a time line? Is the opportunity rate a single number that is used to evaluate all potential investments?

-Suppose a firm estimates its overall cost of capital for the coming year to be 10%. What might be reasonable costs of capital for average-risk, high-risk, and low-risk projects?

Reference no: EM132682212

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