Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
1) At the start of the most recent financial year a company had assets of $156 million and liabilities of $60 million
1) At the start of the most recent financial year a company had assets of $156 million and liabilities of $60 million. At the end of the financial year the company had assets of $231 million and liabilities of $137 million. During the year, shareholders contributed additional capital of $46 million and the company paid a dividend of $17 million. What was the company’s profit for the year.
2.At the end of the financial year a company had a share price of $31 and 90 million shares outstanding. In addition, the company had $153 million in short-term debt, $687 in long-term debt, cash of $112 million and reported $263 million in net income for the year. What is the company's enterprise value
3.
A capital budgeting project that calls for a replacement decision: Select one: a. results in total cash flows that are equal to incremental cash flows. b. has no initial period cash flows. O C. normally does not increase the volume of a firm's operations. d. None of the above
Expert Solution
1.
Equity at the beginning of year = Asset - liabilities
= 156 - 60 = 96 Million
Equity at end of year = 231 - 137 = 94 Million
Ending equity = Beginning equity + Net Income + Owner contribution - Dividend paid
94 = 96 + Net Income + 46 - 17
Net Income = 94 - 96 -46 +17
= -31 Million
2.
Enterprise value is calculated using the below formula:
Enterprise value= Market capitalization + Total debt – Cash and cash equivalents
Market capitalization= Stock price * Total shares outstanding
= $31*90 million
= $2,790 million
Enterprise value= $2,790 million + 153 million + 687 million - 112 million
= $3,518 million.
3.
Answer : Correct Option is (a.) Results in total cashflows that are equal to incremental cashflows.
Reason :
While taking Capital Budgeting decision that calls for replacement decisions ,the relevant total Cash flows are incremental cash flows resulting from replacing the existing system by new system.
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
