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Cash

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

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?

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 ?

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

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

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

Cash flow

The Rogers Corporation has a gross profit of $880,000 and $360,000 in depreciation expense. The Evans Corporation also has $880,000 in gross profit, with $60,000 in depreciation expense. Selling and admin expense is $120,000 for both companies. Given the tax rate of 40%, compute the cash flow for both companies.

PDF Corp: Terminal Cash Flow

PDF Corp. needs to replace an old lathe with a new, more efficient model. The old lathe was purchased for $50,000 nine years ago and has a current book value of $5,000. (The old machine is being depreciated on a straight-line basis over a ten-year useful life.) The new lathe costs $100,000. It will cost the company $10,000 to ge

King Solomon Mining and Cash Tender Offer

The King Solomon Mining Company is contemplating a cash tender offer for the outstanding shares of Roanoke Coal Corporation. Roanoke Coal is expected to provide $162,500 in after-tax cash flow each year for the next 20 years. In addition, Roanoke has a $630,000 tax loss carryforward which King Solomon Mining can use in equal a

Two Definitions of Cash

What are the two definitions of cash, and why do corporate treasurers often use the second definition?

Alternatives increase a company's cash flow for the current year

Other things held constant, which of the following alternatives would increase a company's cash flow for the current year? a. Increase the number of years over which fixed assets are depreciated for tax purposes. b. Pay down the accounts payables. c. Reduce the days' sales outstanding (DSO) without affecting sales or op

Cash Position of Firm: Example Problem

A firm anticipates sales of $200K in January, growing by 15% per month throughout the year. It purchases 50% of its sales 60 days in advance of the actual sale, and pays for them 30 days in advance of the sale. Credit sales equate to 90% of all sales. Expenses for each month are 25% of total sales; taxes are paid at the rate

Importance of incremental cash flows in capital investment decisions

It is important to identify and use only incremental cash flows in capital investment decisions: a. Because ultimately it is the change in a firm's overall future cash flows that matter. b. Because they are the simplest to calculate. c. To accommodate unforeseen changes that might occur. d. Only when the stand-al

Midland Chemical Co: Compensating Balances, Cash Discount and Hedging

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, 9 3.4 percent with additional fees of $5,500 to cover services the bank is providing. In ei

Time zero

All of the following are common cash flow items to be considered at TIME ZERO, except a. initial purchase costs of assets b. net cashflow from sale of any old equipment being replaced c. installation costs d. working capital investment (such as inventory) e. depreciation tax shield from new assets being purchased

Timberline: How many times will cash need to be replenished in next 3 months?

The Timberline firm expects a total need of $12,500 over the next 3 months. They have a beginning cash balance of $1,500, and cash is replenished when it hits zero. The fixed cost of selling securities to replenish cash balances is $3.50. The interest rate on marketable securities is 8% per annum. There is a constant rate of cas

Cost of Giving Cash Discount

Tangston Mining was extended credit terms ov 3/15 net 30 EOM. The cost of giving up the cash discount, assuming payment would be made on the last day of the credit period is: a)75.26%, b) 16.56%, c)72.99%, d) 37.12%.

Cost of foregoing cash discount

Use the following information to answer the following question: Quick Corp. makes its purchases under terms of 2/10 net 30. If Quick Corp. foregoes the discount and pays for its purchases according to the terms of its trade credit, what is Quick's effective cost of using this source of credit? a.) 26.67% b.) 31.48% c.)

Effect of cash dividends on share price

Please help with the following problem. Provide step by step calculations in an Excel spreadsheet. The stock of Payout Corp. will go ex-dividend tomorrow. The dividend will be $0.50 per share, and there are 20,000 shares of stock outstanding. The market-value balance sheet for Payout is shown on the following table. a. What