twenty years‚ rounded to the nearest dollar? (A) (B) $19‚292 (C) $144‚105 (D) 3. $14‚938 $40‚000 A firm’s profit before tax is $150 000 and depreciation expense is $30‚000. Assuming a company tax rate of 30%‚ the firm’s cash flow from operations is: (A) $840‚000 (B) $180‚000 (C) $135‚000 (D) $75‚000 4. Given an effective annual interest rate of 14 per cent‚ the present value of a perpetuity consisting of yearly payments of $25‚000 starting immediately
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Fin 5170 Fall 2009 The exam will consist on multiple choices‚ and problems and may be an essay question. I will ask a maximum of two questions taken from the following material covered in class Chapter 1 Describe the concept of agency problems and different ways to ameliorate agency problems in a corporation Chapter 3 Example 3.7 (pages 65-66) Use the concept of arbitrage to explain the price of Security A in table 3.8‚ and Security B in table 3.9). Compute the risk premium of both securities.
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C) What do you think is the real cause for the cash flow problem at cyclone? What actions can be taken to improve the situation? Comment on Rangi’s management of the factory. The real causes for the cash flow problem at cyclone are: • No perfect planning to distribute goods /provisions • Failure to establish human resource strategies. • Misusage of wealth during the cyclone • Negligence & irresponsibility of top level management. • Unsatisfactory workplace. Remedies to be done for improvement of
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Cash Flow Statements - Indirect method – Reconciliation for Cash from Operations –from Accrual profit to Cash generated. Accrual profit recorded items below that did not involve Cash Action to derive Cash Explanations and reasons for adjustments necessary to derive Cash from Operations [Profit making activities] 1 Depreciation buildings Add back Non cash expense that reduced profit 2 Proceeds from sale of Asset deduct Non cash gain or profit that increased profit 3 Carrying amount of Asset sold
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Discounted Cash Flow Homework Problems Please post the answers (and show your work) in the assignments section by midnight the last day of the week assigned. 1. Calculate the future value of 1‚535 invested today for 8 years at 6 percent. (5 points) $1535 * 1.5938 = $2‚446 2. What is the total present value of the following cash stream‚ discounted at 8 percent? (5 points) |Year |Amount |Rate |PV | |1 | $ 400
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comes to forecasting it is important for a company to look at all possible factors including fluctuation of prices and the market‚ possible declines in the economy‚ technological errors and so much more. In 2014 the well known pharmaceutical company Walgreens prepared to forecast the companies earning up to the year 2016. However‚ somewhere during their process an error occurred resulting in the company suffering from a billion dollar cut. “[A company must] evaluate data before plotting the projected
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Module 4 Analyzing and Interpreting Financial Statements DISCUSSION QUESTIONS Q4-1. Return on investment measures profitability in relation to the amount of investment that has been made in the business. A company can always increase dollar profit by increasing the amount of investment (assuming it is a profitable investment). So‚ dollar profits are not necessarily a meaningful way to look at financial performance. Using return on investment in our analysis‚ whether as investors or business
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I. Walgreens Corporation’s History and Mission Statement Established over a century ago‚ Walgreens has since grown into a national corporation with over 8‚489 stores (Walgreens Corporation‚ 2013). Today‚ they are the first largest drugstore chain in the nation before CVS‚ Rite Aid‚ and Wal-Mart. Walgreens serves more than 6.3 million customers daily and fills 784 million prescriptions every year (Walgreens Corporation‚ 2013). Priding itself on innovation and technology‚ Walgreens was the first drug
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Cash Budget Problem Answer the following questions using the information below: The following information pertains to Hepburn Company: Month Sales Purchases January $60‚000 $32‚000 February $80‚000 $40‚000 March $100‚000 $56‚000 ∙ Cash is collected from customers in the following manner: Month of sale 30% Month following the sale 70% ∙ 40% of purchases are paid for in cash in the month of purchase‚ and the balance is paid the following month. ∙ Labor costs are 20% of sales. Other
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CHAPTER 10 Cash Flows and Other Topics in Capital Budgeting ANSWERS TO END-OF-CHAPTER QUESTIONS 10-1. We focus on cash flows rather than accounting profits because these are the flows that the firm receives and can reinvest. Only by examining cash flows are we able to correctly analyze the timing of the benefit or cost. Also‚ we are only interested in these cash flows on an after tax basis as only those flows are available to the shareholder. In addition‚ it is only the incremental
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