Your company's goal is to have an ending cash balance each month of $100,000. For the current month you have the following: net cash flow = −$76,000 and beginning cash balance of $100,000. What should be your monthly borrowing given your company's goal?
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. 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
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
What are the two definitions of cash, and why do corporate treasurers often use the second definition?
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
What amount would a person with actual cash value (ACV)coverage receive for 2-year-old furniture destroyed by a fire? The furniture would cost $1,000 to replace today and had an estimated life of 5 years.
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
Primrose Corp has $15 million of sales, $2 million of inventories, $3 million of receivables, and $1 million of payables. Its cost of goods sold is 80 percent of sales, and it finances working capital with bank loans at an 8 percent rate. If Primrose lowered inventories and receivables by 10% each and increased payables by
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
The management of Table Rock Memorial Hospital needs to prepare a cash budget for July 2009. The following information is available: a. The cash balance on July 1, 2009, is $245,000. b. Actual services performed during May and June and projected services for July are: May June July Cash serv
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
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
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
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%.
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.)
A company generated free cash flow of $51 million last year and expects it to grow at a constant rate of 4 percent indefinitely. The company's weighted average cost of capital is 12 percent. The company has 25 million shares of outstanding stock, and the current price per share is $28.50. a. Calculate the company's free cash
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
4. A company's weekly cash position is as follows: · Week 1 $24,000 · Week 2 $34,000 · Week 3 $10,000 · Week 4 $15,000 The annual interest rate for investments is 12% what dollar return can the company earn on these weekly investments.
Your eccentric Aunt Claudia has left you $50,000 in Alcan shares plus $50,000 cash. Unfortunately her will requires that the Alcan stock not be sold for one year and the $50,000 cash must be entirely invested in one of the stocks shown in Table 7.8. What is the safest attainable portfolio under these restrictions?
Explain whether you would recommend that the automobile businesses use cash rebates. In this discussion, please provide references that are used and use a consistent citing format.
As a part of the Final project Assignment, on Saturday, October 25, 2008, of this week you will do the Valuation using Free Cash Flows (FCF). The following free cash flows (in $ Million) are projected for the next five years. The free cash flows are expected to grow at a stable rate of 7% for every year after year 5. The opportu
Mater Pasta, Inc., has projected sales volume of $1,432 for the second year of a proposed expansion project. Costs normally run 70% of sales or about $1,002 in this case. The depreciation expense will be $80, and the tax rate is 34%. a) What is the net cash flow (operating cash flow)?
The Wet corp. has an investment project that will reduce expenses by $15,000 per year for 3 years. The projects cost is $20,000. If the asset is part of the 3-year MACRS category (33% first year depreciation) and the company's tax rate is 34%, What is the cash flow in year 1?
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,
Victoria's Apparel has forecast credit sales for the 4th Quarter as: September (actual) $50,000 4th Quarter October (forecast) 40,000 November (forecast) 35,000 December (forecast) 60,000 Experience has shown that 20% of credit sales are collected in the month of the sale, 70%
Calculate the effective annual percentage cost of foregoing the cash discount under each of the following credit terms: a- 2/10, net 60 b- 2/10, net 30
At the end of 2006, you forecast that a firm's free cash flow for 2007 will be $430 million. The firm has 5,000 million shares outstanding, trading at $4.30 each and no net debt. What is the forecast of the growth rate in free cash flows after 2007 that is implicit in the market price? Use a required return of 10%.
14.) Mr. Monty Terry, a real estate investor, is trying to decide between two potential small shopping center purchases. His choices are the Wrigley Village and Crosley Square. The anticipated annual cash inflows from each are as follows: Wrigley Village Crosley Square Yearly Aftertax Cash
You are analyzing a project and have developed the following estimates. The depreciation is $72,000 a year and the tax rate is 35 percent. What is the best case operating cash flow? Base Case Lower Bound Upper Bound Unit Sales 2700 2400 2900 Price Per Unit $210 $19