A friend who started a business during the last year has come to you with the following statement: "My accountant is preparing our first financial report and she told me one of the statements was a Statement of Cash Flows. She also told me that my business is facing cash flow problems."
Instructions
Prepare a reply to your friend. Include three causes of cash flow
problems and solutions to solve the cash flow problems. Explain how
the Statement of Cash Flows will assist in managing the
business.
In: Accounting
In: Finance
In: Accounting
In: Finance
Derek will deposit $5,287.00 per year for 15.00 years into an account that earns 4.00%, The first deposit is made next year. How much will be in the account 44.00 years from today?
Derek will deposit $1,311.00 per year for 18.00 years into an account that earns 6.00%, The first deposit is made next year. He has $14,490.00 in his account today. How much will be in the account 47.00 years from today?
Derek will deposit $3,239.00 per year for 11.00 years into an account that earns 9.00%. Assuming the first deposit is made 6.00 years from today, how much will be in the account 37.00 years from today?
In: Finance
What is the end of year wealth for Jane Christine if she receives an annual interest rate of 24% compounded monthly on a $1 investment?
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$ 1.6531 |
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$ 1.2682 |
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$1.24 |
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$ 1.987 |
Your firm is purchasing a new telephone system that will last for four years. You can purchase the system for an up-front cost of $150,000, or you can lease the system from the manufacturer for $4,000 paid at the end of each month. The lease price is offered for a 48-month lease with no early termination – you cannot end the lease early. Your firm can borrow at an interest rate of 6% APR with monthly compounding. Should you purchase the system outright by paying $150,000 now or pay $4,000 per month?
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You should choose to pay $4,000 per month. |
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You should choose to purchase the system outright by paying the upfront cost of $150,000. |
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You can either choose to purchase the system outright by paying the upfront cost of $150,000 or choose to pay $4,000 per month, because the present values of these two choices are the same. |
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None |
In: Finance
Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy, with each outcome being equally likely. The initial investment required for the project is $80,000, and the project's cost of capital is 15%. The risk-free interest rate is 5% . The firm has only this project and $80,000 cash. (Assuming perfect capital market)
(For Q 1-3, please round your answer to the dollar, write as a number, e.g. write "$2,123.45" as "2123")
1. The NPV for this project is $_____;
2. Suppose the firm does not have enough cash, to raise the funds for the initial investment the firm borrows $40,000 at the risk free rate, then the cash flow that equity holders will receive in one year in a weak economy is $_____;
3. Under the same condition as question
2, the initial value of the firm's levered equity is
$______;
4. Under the same condition as question 2, the cost of capital for the firm's levered equity is ______%. (Please round to an integer, e.g., write "12.34%" as "12")
In: Finance
On the following projects, calculate the difference VPN (A) - VPN (B): YEAR PROJECT A PROJECT B 0 - ($ 50,000) - ($ 50,000) 1 25,625 0 2 15,625 0 3 15,625 0 4 5,625 +75,500
| AÑO | PROYECTO A | PROYECTO B |
| 0 | -($50,000) | -($50,000) |
| 1 | 25,625 | 0 |
| 2 | 15,625 | 0 |
| 3 | 15,625 | 0 |
| 4 | 5,625 | +75,500 |
Note: Discount rate = 10%; Given flows are net flows after taxes.
In: Finance
Fredonia Inc. had a bad year in 2013. For the first time in its
history, it operated at a loss. The company’s income statement
showed the following results from selling 76,700 units of product:
Net sales $1,518,660; total costs and expenses $1,744,400; and net
loss $225,740. Costs and expenses consisted of the
following.
|
Total |
Variable |
Fixed |
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| Cost of goods sold | $1,200,800 | $776,900 | $423,900 | |||
| Selling expenses | 419,900 | 78,600 | 341,300 | |||
| Administrative expenses | 123,700 | 43,700 | 80,000 | |||
| $1,744,400 | $899,200 | $845,200 |
Management is considering the following independent alternatives
for 2014.
| 1. | Increase unit selling price 22% with no change in costs and expenses. | |||
| 2. | Change the compensation of salespersons from fixed annual salaries totaling $201,600 to total salaries of $44,300 plus a 5% commission on net sales. | |||
| 3. |
Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. (a) Compute the break-even point in dollars for 2014. break even point: (a) Compute the break-even point in dollars for 2014.
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In: Accounting
1) A. Assume you are staring a new job tomorrow and will be paid $100,000/year with 2 paydays/month. If you invest 5% (of each paycheck) in your 401k a mutual fund that returns 9.5%/year, how much will this retirement account be worth after 50 years of work (at retirement)? Check your MAGNATUDES __________________________________
B. Use your answer above as the balance in your retirement account at retirement. How much could you withdraw each and every year from this account assuming that you can invest (the above money) at 5%/year and have zero in the account after 30 years?. _________________________________
2) Assume a stock has $5 dividend that you believe will grow at 6% for the next three years then at 4% forever. If you have a 7% Discount rate, what is the far value of the stock today???__________________________ Show the 5 step process.
In: Finance