encouraged to use spreadsheets. Refer to Note on Sample Cash Flow Template. Question 1 (5 points) The project with the highest IRR is always the project with the highest NPV. Your Answer | | Score | Explanation | True | | | | False | ✔ | 5.00 | Correct. Try now to sort this out in different contexts‚ | Total | | 5.00 / 5.00 | | Question Explanation This is all about the fundamental difference between IRR and NPV. Question 2 (10 points) Ann Arbor is considering offering public
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Exam 2 Part 2 Answer any EIGHT of the ten questions. Each question is worth 5 points. Return your answers to me by 11:59 PM Sunday 11 November 2012 1. A number of publicly traded firms pay no dividends yet investors are willing to buy shares in these firms. How is this possible? Does this violate our basic principle of stock valuation? Explain. Our basic principle of stock valuation is that the value of a share of stock is simply equal to the present value of all of the expected dividends
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Writing Assignment Week 1 Question 2.2 – Accounting and Cash Flows: Why is it that the revenue and cost figures shown on a standard income statement may not be representative of the actual cash inflows and outflows that occurred during a period? Financial Statements are prepared according to accrual rule of ‚ according to which cost and revenue are recorded as they occur and not when they are actually received or paid. This is why cash flows during the year may be different from revenue and costs
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José A Valdés 3 de octubre de 2013 Sem. De Contabilidad Prof. Alejandro Méndez Case 11-1 Polluter Corp Facts of Case: Polluter Corp is an SEC registrant and manufacturer household cleaning products. In the course of operations‚ Polluter Corp emits emission pollutants; The Company receives emissions allowances‚ (EAs‚) from the government for 2010 to 2030. Polluter Corp will upgrade their production facilities in 2014 in order to reduce their pollutants. Emissions Allowance
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and Indirect Cash Flows Marlene A Broaddus-Waddell XACC-291 June 27‚ 2013 The difference between direct and indirect method of cash flows are the operating activities‚ which is the first section of the statement of cash flows. The investing and financing activities sections has no reported differences in the presentation of the cash flows. The direct presentation of cash flows displays cash receipts and payments from operations‚ more or less like the actual statement of cash flow. On the other
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Direct and Indirect Cash Flows Christine Grae XACC/291 Principles of Accounting II March 29‚ 2015 Susan Schulz When companies utilize the accrual method of accounting‚ they will prepare a cash flow statement in order to understand the flow of cash. We call this method the cash flow statement and it can be prepared in two different methods which would be indirect and direct. The methods are different but they both will be conducted with the same results for the accounting period. The direct
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present value of the asset’s expected future cash flows. SECURITY VALUATION In general‚ the intrinsic value of an asset = the present value of the stream of expected cash flows discounted at an appropriate required rate of return. Can the intrinsic value of an asset differ from its market value? Ct = cash flow to be received at time t. k = the investor’s required rate of return. V = the intrinsic value of the asset. BOND VALUATION Discount the bond’s cash flows at the investor’s required rate of return
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preparing a statement of cash flows‚ the term cash is broadly defined to include both cash and cash equivalents. Cash comprises cash on hand and demand deposit with banks. Cash equivalents consist of short term‚ highly liquid investments such as treasury bills‚ commercial paper‚ and money market funds. Such investments are made solely for the purpose of generating a return on funds that are temporary idle. Instead of simply holding cash‚ most companies invest their excess cash reserves in these types
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independent. The cash outlay for the truck is $17‚100 and that for the pulley system is $22‚430. The firm’s cost of capital is 14%. After-tax cash flows‚ including depreciation‚ are as follows: Year Truck Pulley 1 $5‚100 $7‚500 2 $5‚100 $7‚500 3 $5‚100 $7‚500 4 $5‚100 $7‚500 5 $5‚100 $7‚500 Calculate the IRR‚ the NPV‚ and the MIRR for each project‚ and indicate the correct accept-reject decision for each. Year Truck Pulley 0 -$17‚200 -$22‚430 1 $5‚100 $7‚500 2 $5‚100 $7‚500
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year ended December 31‚ 2010. Cash received from lenders $20‚000 Cash received from customers 60‚000 Cash paid for new equipment 35‚000 Cash dividends paid 8‚000 Cash paid to suppliers 18‚000 Cash balance 1/1/10 12‚000 Hint: Prepare a statement of cash flows. (SO 5) Instructions • Prepare the 2010 statement of cash flows for Damon Corporation. • Suppose you are one of Damon’s creditors. Referring to the statement of cash flows‚ evaluate Damon’s ability to repay
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