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Statement of Cash Flows 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 $700,000 in dividends to common shareholders. Throughout the year, the firm purchased $5.4 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.
A 20-year maturity, 8% coupon bond paying coupons semiannually is callable in 5 years at a call price of $1, 075. The bond currently sells at a yield to maturity of 7.5% (3.75% per half-year). What is the yield to call? At what interest rate in 5 yea..
Which of the following statements about the use of debt financing (financial leverage) is incorrect?
Consider combining investments in three stock markets to create a portfolio. Would an investor prefer portfolio A or B? Discuss why.
What are the components of the nominal interest rate? What does each component pay for - WHat is an Investment Banker? What does he do? Why would a company use one?
Before settling on a final short-term financial plan, the manager needs to ask several questions. Does the plan yield satisfactory financial ratios?
Which of the following stWhich of the following statements concerning these two projects are true? Both projects have the same future value at the end of year 4, given a positive rate of return. Both projects have the same future value given a zero r..
Sam Sharp purchased 100 shares of Electric Lighting Inc. (ELI) one year ago for $70 per share, and he also received dividends of $7 per share since then. Now that ELI's stock price has increased to $73.2, Sam has decided to sell his holdings. What is..
which includes a liquidity premium of 0.8%. What is its default risk premium?
You buy a call with a strike price of $60 on a stock that you have shorted at $60 (this is a "protective" call). The call premium is $2.80. What is the expiration net profit if the stock price ends at $0,$30,$60,$70, and $1000? What is the maximum po..
If the interest rate is 10%, what is the present discounted value of receiving $100 next year? As of 2006, the present discounted value of the long-run fiscal imbalance of Social Security and Medicare programs is approximately: If debt is a nominal o..
Dye Trucking raised $260 million in new debt and used this to buy back stock. After the recap, Dye's stock price is $7.5. If Dye had 80 million shares of stock before the recap, how many shares does it have after the recap? Enter your answer in milli..
You are making plans for your retirement. You have just turned 30 and want to retire on your 65th birthday.
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