Increased level of activities

Reference no: EM13746675

The Podrasky Corporation is considering a $200 million expansion (capital expenditure) program next year. The company wants to know approximately how much additional financing (if any) will be required if it decides to go through with the expansion program. The company currently has $400 million in net fixed assets on its books. Next year, the company expects to earn $80 million after interest and taxes. The company also expects to maintain its present level of dividends, which is $15 million. If the expansion program is accepted, the company expects its inventory and accounts receivable each to increase by approximately $20 million next year. Long-term debt retirement obligations total $10 million for next year, and depreciation is expected to be $80 million. The company does not expect to sell any fixed assets next year. The company maintains a cash balance of $5 million, which is sufficient for its present operations. If the expansion is accepted, the company feels it should increase its year-end cash balance to $8 million because of the increased level of activities. For planning purposes, assume no other cash flow changes for next year.

Reference no: EM13746675

Questions Cloud

Course wrap-up : Summarize two (2) new areas of knowledge you gained during this course. Discuss the manner in which these two (2) new areas of knowledge will benefit you in your current or future career

Write an essay on the hisroty of africa : Write an essay on the Hisroty of africa.

Citing evidence from gilgamesh and explain role of kingship : Citing specific evidence from Gilgamesh, explain role of kingship in ancient Sumerian society. In other words, one might ask, what were the duties of the king or what was a Sumerian king expected to do?

Non-spontaneous financial requirements : Suppose a firm makes the following policy changes. If the change means that external, non-spontaneous financial requirements (AFN) will increase, indicate this by a (=); indicate a decrease by a (=); and indicate indeterminate or no effect by a (0..

Increased level of activities : If the expansion is accepted, the company feels it should increase its year-end cash balance to $8 million because of the increased level of activities. For planning purposes, assume no other cash flow changes for next year.

Determining the percent return on investment : A company will pay a $4.50 per share dividend next year. The company has pledged to increase its dividend by 4.00 percent per year, indefinitely. If you require a 12 percent return on your investment, how much will you pay for the company's stock ..

Biographical information about the artist pollock and warhol : Biographical information about the artist Pollock and Warhol whose work is assigned or (in SLP assignments) chosen for reflection.

Value of stocks households hold : Suppose the household wealth decreases due to a decline in the stock market asset prices - At the long-run macroeconomic equilibrium, the stock market boom occurs and increases the value of stocks households hold.

Problem related to yohe telecommunications : Yohe Telecommunications is a multinational corporation that produces and distributes telecommunications technology. Although its corporate headquarters are located in Maitland, Florida, Yohe usually buys its raw materials in several different fore..

User Account

All Pages