What are the country specific factors that should be considered when estimating the cash flow of a foreign target? Why?
In: Finance
Your Christmas ski vacation was great, but it unfortunately ran a bit over budget. All is not lost: You just received an offer in the mail to transfer your $12,000 balance from your current credit card, which charges an annual rate of 19.8 percent, to a new credit card charging a rate of 10.4 percent. How much faster could you pay the loan off by making your planned monthly payments of $225 with the new card? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) What if there was a 2 percent fee charged on any balances transferred? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
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The Shop Right Shopping Complex purchased a delivery van for $33,850. The van has a useful life of five years and an estimated salvage value at $1,250. Prepare a depreciation schedule for the van using the (a) double-declining balance method (b) sum-of-the-year's digit method.
In: Finance
The December 31, 2018, balance sheet of Whelan, Inc., showed long-term debt of $1,455,000, $151,000 in the common stock account, and $2,760,000 in the additional paid-in surplus account. The December 31, 2019, balance sheet showed long-term debt of $1,690,000, $161,000 in the common stock account and $3,060,000 in the additional paid-in surplus account. The 2019 income statement showed an interest expense of $99,500 and the company paid out $156,000 in cash dividends during 2019. The firm’s net capital spending for 2019 was $1,070,000, and the firm reduced its net working capital investment by $136,000.
What was the firm's 2019 operating cash flow, or OCF? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
In: Finance
Yield to maturity The Salem Company bond currently sells for
$1,120.30,has a coupon interest rate of 16%and a $1000 par value,pays interest annually,and has 17
years to maturity.
a. Calculate the yield to maturity (YTM)on this bond.
b. Explain the relationship that exists between the coupon interest rate and yield to maturity and the par value and market value of a bond.
In: Finance
Diamond Corporation has an existing loan in the amount of $ 5 million with an annual interest rate of 5.4 %. The company provides an internal company-prepared financial statement to the bank under the loan agreement. Two competing banks have offered to replace Diamond Corporation's existing loan agreement with a new one. First Capital Bank has offered to loan Diamond $ 5 million at a rate of 4.1 % but requires Diamond to provide financial statements that have been reviewed by a CPA firm. Money Tree Bank has offered to loan Diamond $ 5 million at a rate of 3.1 % but requires Diamond to provide financial statements that have been audited by a CPA firm. Diamond Corporation's controller approached a CPA firm and was given an estimated cost of $ 27 comma 000 to perform a review and $ 62 comma 000 to perform an audit.
A. Explain why the interest rate for the loan that requires a review report is lower than that for the loan that did not require a review. Explain why the interest rate for the loan that requires an audit report is lower than the interest rate for the other two loans.
The interest rate for the loan that requires a review report is___ the loan that did not require a review because of the ___information risk. A review report provides ___assurance to financial statement users. Compared to a review report, an audit provides ___assurance and thus___information risk. As a result, the interest rate is ___ or the loan with the audit report.
In: Finance
| You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak street sweeper accident. In the trial, doctors testified that it will be five years before the plaintiff is able to return to work. The jury has already decided in favor of the plaintiff. You are the foreperson of the jury and propose that the jury give the plaintiff an award to cover the following: (a) The present value of two years’ back pay. The plaintiff’s annual salary for the last two years would have been $43,000 and $46,000, respectively. (b) The present value of five years’ future salary. You assume the salary will be $51,000 per year. (c) $150,000 for pain and suffering. (d) $20,000 for court costs. |
| Assume that the salary payments are equal amounts paid at the end of each month. If the interest rate you choose is an EAR of 6.5 percent, what is the size of the settlement? |
In: Finance
|
Prescott Football Manufacturing had the following operating results for 2019: sales = $30,574; cost of goods sold = $21,884; depreciation expense = $3,568; interest expense = $584; dividends paid = $881. At the beginning of the year, net fixed assets were $20,278, current assets were $2,325, and current liabilities were $4,664. At the end of the year, net fixed assets were $23,197, current assets were $4,535, and current liabilities were $3,205. The tax rate for 2019 was 24 percent. |
| a. | What is net income for 2019? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| b. | What is the operating cash flow for 2019? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| c. | What is the cash flow from assets for 2019? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| d. | Assume no new debt was issued during the year. What is the cash flow to creditors for 2019? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
| e. | Assume no new debt was issued during the year. What is the cash flow to stockholders for 2019? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
In: Finance
Explain, in your own words, the concept of the time value of money in a relationship to both the simple direct investment and timing for maximizing the value of a corporations excess cash as well as for cash flows of projects and capital/project investment analysis. Be sure to discuss the limitation of time value analysis in terms of the component financial data points used in the underlying formulas and financial analysis results.
In: Finance
Locate a peer-reviewed article on waste in the healthcare system (for example, overuse of the emergency room, fraud, poorly managed inventory, or the overuse of the ICU). In your post, summarize the key issues, making sure to cite your sources.
In: Finance
Asset valuation and risk Personal Finance Problem Laura Drake wishes to estimate the value of an asset expected to provide cash inflows of $4,500for each of the next 4 years and $20,724
in 5 years. Her research indicates that she must earn 3% on low-risk assets, 7% on average-risk assets, and 13% on high-risk assets.
a. Determine what is the most Laura should pay for the asset if it is classified as (1) low-risk, (2) average-risk, and (3) high-risk.
b. Suppose Laura is unable to assess the risk of the asset and wants to be certain she's making a good deal. On the basis of your findings in part
a,
what is the most she should pay? Why?
c.All else being the same, what effect does increasing risk have on the value of an asset? Explain in light of your findings in part
In: Finance
Show Work, Please. Excel Preferably. Suppose you are considering investing in a new business that will cost $10 million. A bank is willing to lend you $7 million for the purchase with equity holders having to provide the remainder of the funds. the terms of the loan are: a 20-year loan with yearly payments at a fixed rate of 3%. You will sell the business after year 8. You estimate the business will have the following profits in years 1-8: $100,000 in year 1, $300,000 in year 2, and $400,000 year 3 through year 8. In year 8, and advisor tells you that given the expectation of increased competition that the business will likely only sell for $15 million at the end of year 8( ignore any tax issues).
a.) Calculate the return to equity holders if they provide the funds that the bank does not provide.
b.) Now that your equity investors have heard about the "evils of leverage" and refuse to borrow any money from the bank, calculate the return assuming equity holders put up the entire $10 million purchase price.
c.) Based upon your answers in a) and b), what are the benefits of leverage( borrowing money to finance purchase)? What other benefits of leverage are there to investors? Why might leveraging be bad?
In: Finance
What are the two main financial reporting standards currently being used by companies? Do all companies have to use these financial reporting standards?
APA Format, 4 cited sources
In: Finance
1) Archer Company has total sales of $397,000, costs are $284,000, and depreciation is $35,200. The tax rate is 25 percent. The firm does not have any interest expense. What is the operating cash flow?
|
$97,415 |
||
|
$93,970 |
||
|
$93,550 |
||
|
$92,890 |
||
|
$92,650 |
2)At the beginning of the year, Calpine, Inc. had current assets of $863,000 and current liabilities of $827,000. At the end of the year, the current assets are $978,000 and the current liabilities are $953,000. What is the change in net working capital?
|
-$35,000 |
||
|
$37,000 |
||
|
$25,000 |
||
|
-$58,000 |
||
|
-$11,000 |
3) Corning Company has total sales of $638,000, costs are $471,000, and depreciation is $43,000. The tax rate is 25 percent. The interest expense is $35,000. What is the operating cash flow?
|
$144,750 |
||
|
$137,800 |
||
|
$129,500 |
||
|
$133,750 |
||
|
$152,450 |
4)Dole Food had beginning net fixed assets of $486,000 and ending net fixed assets of $501,000. Assets valued at $42,000 were sold during the year. Depreciation was $35,800. What is the amount of net capital spending?
|
$42,600 |
||
|
$45,800 |
||
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$47,200 |
||
|
$50,800 |
||
|
$53,400 |
5)At the beginning of the year, long-term debt of Healthnet is $595,000 and total debt is $647,000. At the end of the year, long-term debt is $619,000 and total debt is $682,000. The interest paid is $30,100. What is the amount of the cash flow to creditors?
|
$7,300 |
||
|
-$5,400 |
||
|
$6,100 |
||
|
-$6,500 |
||
|
$5,200 |
In: Finance
Prepare a memo to management that explains how and why data analysis is used in the various stages of the audit process, including the risk assessment stage, the determination of sampling method and audit universe, the substantive procedures stage, and the end of the audit.
Specifically, the following critical elements must be addressed:
1. Data Analysis: Risk Assessment Stage: Explain how and why data analysis is used at the risk assessment stage of the audit process.
2. Data Analysis: Determination of sampling method and audit universe: Explain how data analysis is used in the determination of sampling method and audit universe.
3. Data Analysis: Substantive procedures stage: Explain how and why data analysis is used at the substantive procedures stage of the audit.
4. Data Analysis: End of audit: Explain how and why data analysis is used near the end of an audit.
In: Finance