notes carried an interest rate of 9 percent. Depreciation was $110‚000. Senbet’s tax rate was 35 percent. a. What was Senbet’s net income? The interest expense for the company is the amount of debt (notes payable in this case) times the interest rate on the debt. Thus the amount of interest expense is $900‚000(0.09 = $81‚000. So‚ the income statement for the company is: Income Statement Sales $1‚200‚000
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by the fund The acquisition refers to the finance decision Efficient use of funds refers to the investment decision A major aspect of corporate finance is the creation and determination of value Objective of Financial Management- Maximize shareholder wealth is the main goal—to maximize the market value of the firm 3 Main Decision Areas of Financial Manager to Achieve Maximization: 1. Investment Decision- What long-term investments should the firm take? 2. Financing Decision- How can the
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effect on the company’s total fixed manufacturing overhead costs. The customer would like some modifications made to product R34 that would increase the variable costs by $6.00 per unit and that would require a one-time investment of $37‚000 in special molds that would have no salvage value. This special order would have no effect on the company’s other sales. The company has ample spare capacity for producing the special order. | Required: | Determine the effect on the company’s total net operating
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Financial Management Assignment - A Question 1a: Should the titles of controller and treasurer be adopted under Indian context? Would you like to modify their functions in view of the company practice in India? Justify your opinion? Answer to 1a: Controller & Treasurer are independent & they have their own Perspectives & Drivers as detailed below: Controller Responsibilities include‚ Double entry accounting‚ financial reporting‚ Fraud measure‚ detective controls‚ Financial restatement‚ Compliance
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CPT EFF3. QKL Co. plans a new project that will generate $ 265‚000 of cash flow at the end of each year for 7 years and additionally $167‚000 at the end of the project. If the continuously compounded rate of interest is 8%‚ estimate the present value of the cash flows. a. 1‚097‚567.12 b. 1‚271‚062.87 c. 1‚515‚761.89 d. 1‚459‚704.54 e. None of the above Solution: The answer is D. !"#‚!!! !!! !!∗!.!" ! !.!"!! +167‚000 ∗ � !!∗!.!" = 1‚459‚704.54 4. Sandra decides to set up a retirement
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CHAPTER 5 The Time Value of Money CHAPTER ORIENTATION In this chapter the concept of a time value of money is introduced‚ that is‚ a dollar today is worth more than a dollar received a year from now. Thus if we are to logically compare projects and financial strategies‚ we must either move all dollar flows back to the present or out to some common future date. CHAPTER OUTLINE I. Compound interest results when the interest paid on the investment during the first period
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Annuities Practice Problems Prepared by Pamela Peterson Drake 0. 0. Congrats! You just won the $64 million Florida lottery. Now the Surely Company is offering you $30 million in exchange for the 20 installments on your winnings. If your opportunity cost of funds is 8%‚ should you agree to this deal? 0. Given: CF = $64‚000‚000 / 20 = $3‚200‚000 N = 20 i = 8% Annuity due PV = $33‚931‚517.44 No: the annuity is worth almost $34 million to you‚ but Surely is offering only $30.
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b. people make decisions regarding resource allocation over time and how to handle risk c. people decide whether or not to become risk averse. d. society can reduce aggregate risk. ANSWER: b. how people make decisions regarding resource allocation over time and how to handle risk TYPE: M DIFFICULTY: 1 SECTION: 14.0 2. If you put $300 in an account paying 2 percent interest‚ what is the future value of this account in two years? a. $310 b. $312
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However‚ it is flawed to treat the value of a pound that is received in the future to be equal to the value of a pound received today. One reason is that due to rising inflation‚ the true value of the currency will depreciate over time‚ and this results in a fall in the purchasing power of a pound. Rational economic agents also tend to value near term benefits more than the long term benefits because of the future uncertainties and risks. This phenomenon is described as time preference. Hence‚ the concept
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DIVERSIFICATION AND FIRM PERFORMANCE: AN EMPIRICAL EVALUATION Anil M. Pandya and Narendar V. Rao Abstract Diversification is a strategic option that many managers use to improve their firms’ performance. This interdisciplinary research attempts to verify whether firm level diversification has any impact on performance. The study finds that on average‚ diversified firms show better performance compared to undiversified firms on both risk and return dimensions. It also tests the robustness of these
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