Chapter 12 Problems 1. Cash flow (LO2) Assume a corporation has earnings before depreciation and taxes of $100‚000‚ depreciation of $50‚000‚ and that it has a 30 percent tax bracket. Compute its cash flow using the format below. Earnings before depreciation and taxes _____ Depreciation _____ Earnings before taxes _____ Taxes @ 30% _____ Earnings after taxes _____ Depreciation _____
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yield is 12%. Interest is paid semiannually on June 30 and December 31. Required: • 1. Determine the price of the bonds at January 1‚ 2013. • 2. Prepare the journal entry to record their issuance by The Bradford Company on January 1‚ 2013 • 3. Prepare the journal entry to record interest on June 30‚ 2013 (at the effective rate). • 4. Prepare the journal entry to record interest on December 31‚ 2013 (at the effective rate). 1. Interest for 4M @ 11‚46992 is $45‚879‚680 Principle 80M @
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27. Prepare a statement of cash flows for the Crosby Corporation. Follow the general procedures indicated in Table 2–10 on page 38. Crosby Corporation Statement of cash flows For the year ending December 31‚ 2008. Cash flows from operating activities Net income (earnings after taxes) = $160‚000 Adjustments to determine cash flow from operating activities: Add back depreciation = $150‚000 Increase in accounts receivable = ($50‚000) Increase in inventory = ($20‚000) Decrease in prepaid
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ENC 1101 2:00-3:15pm 9 September 2011 River Flows In You: Yiruma “River Flows In You” by the South Korean composer Yiruma is a calming and beautiful contemporary classical melody. The song is presented very simply‚ a single artist with a piano‚ but this simplicity effectively reaches the audience and creates for them a mood and background to the song. In essence‚ this work is a love story that is translated into a romantic refrain that combines the use of the senses and dynamics to convey the feeling
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CHAPTER 4 DISCOUNTED CASH FLOW VALUATION Solutions to Questions and Problems 10. To find the future value with continuous compounding‚ we use the equation: FV = PVeRt a. b. c. d. FV = $1‚000e.12(5) FV = $1‚000e.10(3) FV = $1‚000e.05(10) FV = $1‚000e.07(8) = $1‚822.12 = $1‚349.86 = $1‚648.72 = $1‚750.67 23. We need to find the annuity payment in retirement. Our retirement savings ends at the same time the retirement withdrawals begin‚ so the PV of the retirement withdrawals will be the FV of
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What is a Negative Cash Flow? When a company spends more than it receives during a set period of time‚ typically a quarter‚ the company is said to have a negative cash flow. This is often viewed as an indicator of financial ill health by people who are assessing companies to determine whether or not to invest in the company. Many things can influence cash flow‚ however‚ and one that’s negative should not necessarily be seen as a black mark. Publicly traded companies send out documentation
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period between buying materials and collecting cash. And the third period is the period between selling the product and collecting cash. Cash flow management should be done carefully. The mistakes which are made during calculation of NPV and IRR can be compensated‚ but cash flow must be designed well. While the company makes cash flow endeavoring‚ the collection time and collection amount are assumed pessimistic in order to be well-prepared towards collecting problems. The payment should
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Ishikawa diagram From Wikipedia‚ the free encyclopedia Ishikawa diagram Cause and effect diagram for defect XXX.svg One of the Seven Basic Tools of Quality First described by Kaoru Ishikawa Purpose To break down (in successive layers of detail) root causes that potentially contribute to a particular effect Ishikawa diagrams (also called fishbone diagrams‚ or herringbone diagrams ‚ cause-and-effect diagrams‚ or Fishikawa) are causal diagrams that show the causes of a certain event -- created
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a) ASC 830-230-55-1: This reference shows how to format and account for cash flows when a company has subsidiaries operating in foreign countries. It gives an example of a consolidated cash flow statement from a US based company and its two subsidiary companies. The reference explains how excess cash should be disclosed. A majority of the reference deals with the local currency and how it should be shown with the parent company‚ in this case a US company based on the dollar. So for both foreign companies
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of equipment‚ a truck and an overhead pulley system‚ in this year’s capital budget. The projects are 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
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