Comparative financial statement data for Carmono Company follow:
| This Year | Last Year | ||||
| Assets | |||||
| Cash and cash equivalents | $ | 7.00 | $ | 13.00 | |
| Accounts receivable | 48.00 | 41.00 | |||
| Inventory | 90.00 | 76.60 | |||
| Total current assets | 145.00 | 130.60 | |||
| Property, plant, and equipment | 228.00 | 192.00 | |||
| Less accumulated depreciation | 44.80 | 33.60 | |||
| Net property, plant, and equipment | 183.20 | 158.40 | |||
| Total assets | $ | 328.20 | $ | 289.00 | |
| Liabilities and Stockholders’ Equity | |||||
| Accounts payable | $ | 54.00 | $ | 45.00 | |
| Common stock | 114.00 | 88.00 | |||
| Retained earnings | 160.20 | 156.00 | |||
| Total liabilities and stockholders’ equity | $ | 328.20 | $ | 289.00 | |
For this year, the company reported net income as follows:
| Sales | $ | 800.00 |
| Cost of goods sold | 480.00 | |
| Gross margin | 320.00 | |
| Selling and administrative expenses | 300.00 | |
| Net income | $ | 20.00 |
This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year.
Required:
1. Using the indirect method, prepare a statement of cash flows for this year.
2. Compute Carmono’s free cash flow for this year.
In: Accounting
Comparative financial statement data for Carmono Company follow:
| This Year | Last Year | ||||
| Assets | |||||
| Cash | $ | 18.00 | $ | 35.00 | |
| Accounts receivable | 92.00 | 85.00 | |||
| Inventory | 145.00 | 133.80 | |||
| Total current assets | 255.00 | 253.80 | |||
| Property, plant, and equipment | 294.00 | 236.00 | |||
| Less accumulated depreciation | 62.40 | 46.80 | |||
| Net property, plant, and equipment | 231.60 | 189.20 | |||
| Total assets | $ | 486.60 | $ | 443.00 | |
| Liabilities and Stockholders’ Equity | |||||
| Accounts payable | $ | 87.00 | $ | 67.00 | |
| Common stock | 202.00 | 154.00 | |||
| Retained earnings | 197.60 | 222.00 | |||
| Total liabilities and stockholders’ equity | $ | 486.60 | $ | 443.00 | |
For this year, the company reported net income as follows:
| Sales | $ | 1,900.00 |
| Cost of goods sold | 1,140.00 | |
| Gross margin | 760.00 | |
| Selling and administrative expenses | 740.00 | |
| Net income | $ | 20.00 |
This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year.
Required:
1. Using the indirect method, prepare a statement of cash flows for this year.
2. Compute Carmono’s free cash flow for this year.
In: Accounting
Consider a 3-year forward contract on stock. The stock will pay $5-dividend every year in years 1 through 3 and currently sells for $80. The forward will expire right after the stock’s dividend payment in year 3. The forward price is $78, and the risk-free interest rate is 4% per annum. We want to make an arbitrage such that net cash flow in year 3 is positive and net cash flows from year 0 through year 2 are zero. In this arbitrage, what position do we need regarding 3-year zero-coupon bonds?
In: Finance
Consider a 3-year forward contract on stock. The stock will pay $5-dividend every year in years 1 through 3 and currently sells for $80. The forward will expire right after the stock’s dividend payment in year 3. The forward price is $78, and the risk-free interest rate is 4% per annum. We want to make an arbitrage such that net cash flow in year 3 is positive and net cash flows from year 0 through year 2 are zero. In this arbitrage, what position do we need regarding 3-year zero-coupon bonds?
(a)buy 3-year bond such that we pay $70.58 now
(b) buy 3-year bond such that we pay $73.61 now
(c) sell 3-year bond such that we receive $70.58 now
(d) sell 3-year bond such that we receive $73.61 now
In: Finance
Evelyn makes $15,000 per year and Tami makes $150,000 per year. They are both buying roast beef at the grocery store. Evelyn asks for $10 worth of roast beef, and Tami asks for 10 pounds of roast beef.
What is each consumer’s price elasticity of demand?
Identify examples of situations that would affect the marginal utility of roast beef for each consumer. Explain how each consumer’s marginal utility of roast beef would be affected by each factor.
In: Economics
Google has paid $2 in dividends one year ago and this year has just paid $4 yesterday. In the next three years the dividends are expected to be $1, $5, and $4 at the end of year three. From there on, the dividend will grow with a yearly growth rate g. What is this implied growth rate that shareholders expect if the stock price today is $40? (The required rate of return for this stock is 10%.)
In: Finance
Google has paid $2 in dividends one year ago and this year has just paid $4 yesterday. In the next three years the dividends are expected to be $1, $5, and $4 at the end of year three. From there on, the dividend will grow with a yearly growth rate g. What is this implied growth rate that shareholders expect if the stock price today is $40? (The required rate of return for this stock is 10%.)
In: Finance
Nicki Corporation (a calendar year corporation) purchased a new machine (7 year property) in July 2015 for $20,000. Nicko did not elect section 179 for this asset but did claim 50% bonus depreciation. In November 2018, Nicko sells the machine. What is the machines adjusted basis at the date of sale?
In: Accounting
A company has two investment possibilities, with the following cash inflows: Investment Year 1 Year 2 Year 3 A $1,600 1,800 2,000 B $1,200 1,200 1,200 If the firm can earn 7 percent in other investments, what is the present value of investments A and B? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. PV(Investment A): $ PV(Investment B): $ If each investment costs $4,000, is the present value of each investment greater than the cost of the investment? The present value of investment A is -Select- the cost. The present value of investment B is -Select- the cost.
In: Finance
|
PROJECT CASH FLOW Colsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project:
The company has a 40% tax rate, and its WACC is 14%. Write out your answers completely. For example, 13 million should be entered as 13,000,000. What is the project's cash flow for the first year (t = 1)?
Round your answer to the nearest dollar. If this project would cannibalize other projects by $1.5 million
of cash flow before taxes per year, how would this change your
answer to part a? Round your answer to the nearest dollar. Ignore part b. If the tax rate dropped to 35%, how would that
change your answer to part a? Round your answer to the nearest
dollar. |
In: Finance