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# Cash

### Regional Software has made a bundle selling spreadsheet software and has begun paying cash dividends. The firm's chief financial officer would like the firm to distribute 25% of its annual earnings (POR = 0.25) and adjust the dividend rate to changes in earnings per share at the rate ADJ = 0.75. Regional paid \$1.00 per share in dividends last year. It will earn at least \$8.00 per share this year and each year in the foreseeable future. Use the dividend adjustment model, Equation (18.1), to calculate projected dividends per share for this year and the next four.

A10. (Dividend adjustment model) Regional Software has made a bundle selling spreadsheet software and has begun paying cash dividends. The firm's chief financial officer would like the firm to distribute 25% of its annual earnings (POR = 0.25) and adjust the dividend rate to changes in earnings per share at the rate ADJ = 0.75.

### c7 p9

Elmdale Enterprises is deciding whether to expand its production facilities. Although long term cash flows are difficult to estimate, management has projected the following cash flows for the first two year ( in millions of dollars):

### Free Cash Flow and Intrinsic Value of Stock

Based on the information provided, calculate the intrinsic value in 2004 of a share of INV Corp. using the FCFF (free cash flow to the firm ) model. For 2004 the FCFF was \$30,000, total debt was \$20,000, and there were 12000 shares outstanding. The required rate of return is 9% and the estimated growth rate in FCFF is 6.5%.

### Cash-to-cash cycle for McGhee Corporation

Use the information below to answer the following questions. 1. Convert the asset portion of the firms balance sheet into its daily equivalent. How many days does the firm have in its asset "cash -to-cash" cycle? How can the firm make the number of days less? 2. Convert the short tem liabilities on the balance sheet int

### Determining Relevant Cash Flows Time Line

For each of the following projects, determine the relevant cash flows, classify the cash flow pattern, and depict the cash flows on a time line. a. A project that requires an initial investment of \$120,000 and will generate annual operating cash inflows of \$25,000 for the next 18 years. In each of the 18 years, maintenance of

### Calculate free cash flow for three years (2010,2009,2008).

Please calculate free cash flow for three years (2010,2009,2008). 2010 2009 2008 2007 Net Fixed Asset 13929 13161 12498 11779 Total current asset 7450 7252 7114 6755 Total current Liab 7714 7646 8689 7581 NOPAT 559 1735 1698

### Cash flows, present value, cash flow streams, investments

1) Seaborn Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value 18 percent? At 24 percent? Year Cash Flow 1 \$950 2 \$1040 3

### Stock Price, Cash Flow, Opportunity Cost of Capital

1. An analyst knows with certainty that Skipper Inc. will exist for two years and have the following cash flows per share: Year 1 Year 2 Revenue \$100 \$100 Costs \$ 80 \$80 Net cash flow \$ 20 \$ 20 What is the stock price of Skipper Inc. if the opportunity cost of capital is 8 percent?

### Cash analysis

Your firm sells \$2,000 worth of goods in December, \$1,700 worth in January, \$1,500 in February and \$1,600 in March. Your cost is 60% of the retail price. You have a receivables period of 30 days and a payables period of 45 days. You buy your products one month prior to selling them. Which one of the following statements is corre

### Calculating Net Credit Position

Sampson Orange Juice Company normally takes 20 days to pay for its average daily credit purchases of \$6,000. Its average daily sales are \$7,000, and it collects accounts in 28 days. a. What is the net credit position? That is, compute its accounts receivable and accounts payable and subtract the latter from the former. Acco

### Present value of cash returns

The Swell Computer Company has developed a new line of desktop computers. It is estimated that the cash returns generated by the new product line will be \$500,000 per year for the next five years and then \$300,000 per year for 3 years after that (the chase returns occur at the end of each year). At 9% interest rate, what is

### Expected value of company in one year, with and without expansion 2. expected value of debt in one year, with and without expansion 3. in one year how much value creation from expansion? how much for stockholder? Bondholder? 4. if company does not expand, what happens to price of bonds? what happens to price if they do expand? 5. if no expansion, what are implications for future borrowing needs? what are implications if it does expand? 6. How would answer be affected if expansion were financed with cash on hand instead of new equity?

From Corporate Finance 9/e (Ross, Westerfield, Jaffe) pg 552 Company plans to expand in one year. Has outstanding bond with face value of \$34 million due in one year. Bond covenants prohibit issuance of additional debt. Expansion will be equity financed at cost of \$8.4 million. State of comapny in three states if econ

### Lessee Analysis

From the lessee viewpoint, the riskiness of the cash flows, with the possible exception of the residual value, is about the same as the riskiness of the lessee's Answer a. equity cash flows b. capital budgeting project cash flows c. debt cash flows d. pension fund cash flows e. sales

### Golden Basket Lottery choice of prize: house or cash. Draw a time line

You have just won the Golden Basket lottery which gives you the choice of your prize being either a house and land package with a current market value of \$500,000 or receiving cash totalling \$600,000 paid in three instalments of \$200,000, \$150,000, \$250,000 respectively. If you choose the cash alternative the first of amount wil

### Cash Flows Differences in accepting projects is referred to as what?

The difference between a firm's future cash flows if it accepts a project and the firm's future cash flows if it does not accept the project is referred to as the project's_________? incremental cash flow internal cash flows external cash flows erosion effects financing cash flows

### What is the change in net cash provided by operations?

A firm purchases goods on credit worth \$150. The same firm pays off \$100 in old credit purchases. An investment is made via the purchase of a new facility and equity is issued in the amount of \$300 to pay for the purchase. What is the change in net cash provided by operations?

### Two reasons for holding cash; estimate target cash balance

What are the two principal reasons for holding cash? Can a firm estimate its target cash balance held to satisify each of the two reasons?

### Cash Rebates

Among the cash management techniques used by most businesses are those that slow down their bill payments. A good example for this is Cash Rebates offered on household items like computers and other electronics. 1. Are these practices sound business decisions? Are they ethical? Explain. 2. What percentage of the rebates o

### Kohlberg - Catering Company Cash Flow Problems

Lawrence Kohlberg theorized that there are 6 stages of moral development through which a person may pass as he or she develops from infancy to adulthood. Kohlberg was interested in the way that people arrived at their moral judgment when faced with social dilemmas. In this question, you will assume that a small catering comp

### Certainty Equivalent Cash Flow

Certainty Equivalent Cash Flow Question A project has an expected risky cash flow of \$250.00 in year one. The risk free rate is 7%, the market rate of return is 15%, and the project's beta is 1.6. Calculate the certainty equivalent cash flow for year one. Please show step-by-step computations.

### Cash Cycles for Amazon

Please see the attached PDF diagram for these questions: 1.) Contrast Amazon's cash cycle to that of its competitor Barnes & Noble. Why does Amazon have such an advantage over Barnes & Noble ? What does this suggest as a sales model to other retailers ? 2a.) How can Boeing have such a long payables period of 208 days ?

### Effective Yield: Should Fort Collins invest its cash in the United States or in Mexico?

I am having a tough time getting this set up correctly. Please help... Fort Collins, Inc., has \$1 million in cash available for 30 days. It can earn 1 percent on a 30-day investment in the United States. Alternatively, if it converts the dollars to Mexican pesos, it can earn 1.5 percent on a Mexican deposit. The spot rate

### Midland Chemical: Compensating balances, cash discount, hedging, effective rates

Midland Chemical Co. is negotiating a loan from Manhattan Bank and Trust. The small chemical company needs to borrow \$500,000. The bank offers a rate of 8¼ percent with a 20 percent compensating balance requirement, or as an alternative, 9¾ percent with additional fees of \$5,500 to cover services the bank is providing. I

### Short-Term Investment

Which security would you choose for a short-term investment? How does that security assist a company in meeting its cash management goals?

### Calculate cash from investments

"Use the following information to determine cash from investing activities." Accounts Receivable (\$5,000) Cash \$357,000 Inventory \$213,000 Prepaid Expenses \$25,000 Fixed Assets \$463,000 Accumulated Depreciation (\$213,000) Accounts Payable \$112,000

### Calculate overall change in cash

Calculate overall change in cash Please review the steps I used in preparing the attached problem. "Use the following information to determine your client's overal change in cash." Accounts Receivable (\$5,000) Supplies \$1,000 Inventory \$3,000 Prepaid Rent (\$2,000) Fixed Assets \$18,000

### Cash inflows and risk: Pueblo Enterprises is considering investing in either of two mutually exclusive projects

Pueblo Enterprises is considering investing in either of two mutually exclusive projects, X and Y. Project X requires an initial investment of \$30,000; project Y requires \$40,000. Each project's cash inflows are 5-year annuities: Project X's inflows are \$10,000 per year; project Y's are \$15,000. The firm has unlimited funds and,

### Wal-Mart: Cash Flow Estimate

Every company has capital projects. The company you have selected must need something! Be it a new wing to the building, a new product line to be funded, a new piece of equipment, find one new acquisition your company needs. Once you have identified the new possible investment item, what problems are you going to have in es

### Cats and Dogs Company: Cash Transactions Scenario

The following cash transactions took place during March, the first month of business for Cats and Dogs Company. D.C. Dawg started a business, Cats and Dogs Company, by contributing \$6,000. The Cats and Dogs Company borrowed \$2,000 from the bank on March 1. The note is a 1-year, 12% note, with both principal and interest to b

### Debt vs. Cash Financing

After you finish your discussion with the managers and finance personnel, the head of strategic planning stops by your office to discuss the IPO. He says that recently the investment bankers started to encourage the firm to begin to use more financial leverage as a sign to Wall Street that the company would be more aggressive wh