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Cash flow to stockholders, Revenue, EBIT, YTM

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4 questions

1) Thompson jet skis has operating cash flow of $218. Depreciation is $45 and interest paid is $35. A net total of $69 was paid on long-term debt. The firm spent $180 on fixed assests and increased net working capital by $38. What is the amount of the cash flow to stockholders?

2) The Adept Co. is analyzing a proposed project. The company expects to sell 2,500 units, give or take 10%. The expected variable cost per unit is $8 and the expected fixed costs are $12,500. Cost estimates are considered accurate within a plus or minus 5% range. The depreciation expense is $4,000. The sale price is estimated at $16 a unit, give or take 2%.

What is the sales revenue?

3) The Can-Do Co. is analyzing a proposed project. The company expects to sell 12,000 units, give or take 4%. The expected variable cost per unit is $7 and the expected fixed cost is $36,000. The fixed and variable cost estimates are considered accurate within a plus or minus 6% range. The depreciation expense is $30,000. The tax rate is 34%. The sale price is estimated at $14 a unit, give or take 5%.

What is the earnings before interest and taxes?

4) Winston Enterprises has a 15-year bond issue outstanding that pays a 9% coupon. The bond is currently priced at $894.60 and has a par value of $1,000. Interest is paid semiannually. What is the yield to maturity?

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Solution Summary

Answers 4 questions on Cash flow to stockholders, Sales Revenue, Earning before interest and taxes (EBIT) , Yield to maturity of a bond.

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1) Thompson jet skis has operating cash flow of $218. Depreciation is $45 and interest paid is $35. A net total of $69 was paid on long-term debt. The firm spent $180 on fixed assests and increased net working capital by $38.  What is the amount of the cash flow to stockholders?

Cash flow from assets= Operating cash flow -Net capital spending - change in net working capital
or Cash flow from assets= $218 -$180 -$ 38= $0

Cash flow from assets = Cash flow to creditors + Cash flow to stock holders
Cash flow to creditors = Interest paid+ payment on debt = $35+ 69= $104
Cash flow to stock holders= Cash flow from assets - Cash flow to creditors -$104

Answer:         -$104

2) The Adept Co. is analyzing a proposed project. The company expects to sell 2,500 units, give or take 10%. The expected variable cost per unit is $8 and the expected fixed costs are $12,500. Cost estimates are considered accurate within a plus or minus 5% range. The depreciation expense is $4,000. The sale price is estimated at $16 a ...

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