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Read MoreThe following data relate to Austin Corporation for last year:
Net income
$237
Net increase in all current assets except cash
$47
Net decrease in current liabilities
$27
Cash dividends paid on common stock
$36
Gain on sale of investments
$11
Depreciation expense
$13
What is the net cash provided by operating activities for last year on the
statement of cash flows for Austin Corporation?
Enter your answer as either a positive or negative number, do not include a dollar sign.
\text{Net Income} = 237Net Income=237Depreciation is a non-cash item, so we add it back to net income.237 + 13 = 250237+13=250A gain on the sale of investments is subtracted since it increases net income but doesn't generate operating cash flow.250−11=239239−47=192Net decrease in current liabil...
Read MoreAllen Company's income statement reported total revenues, $850 and total expenses (including $40 depreciation) of $720. The balance sheet reported the following: Accounts Receivable-beginning balance, $50 and ending balance, $60; Accounts Payable-beginning balance, $22 and ending balance, $28.
Based only on this information, what are the net cash inflows from operating activities? Enter your answer as either a positive or negative number, do not include a dollar sign.
Step 1: Calculate Net IncomeNet income is the difference between total revenues and total expenses.\text{Net Income} = 850 - 720 = 130Net Income=850−720=130Step 2: Add Back Depreciation (a non-cash expense)Depreciation is a non-cash expense, so we add it back to net income.\text{Adjusted Net In...
Read MoreA growth company would likely report which of the following on the Statement of Cash Flows?
A. Negative Cash Flows from Operations; Negative Cash Flows from Investing; and Positive Cash Flows from Financing
B. Positive Cash Flows from Operations; Negative Cash Flows from Investing; and Negative Cash Flows from Financing
C. Negative Cash Flows from Operations; Positive Cash Flows from Investing; and Positive Cash Flows from Financing
D. Positive Cash Flows from Operations; Positive Cash Flows from Investing; and Positive Cash Flows from Financing
A. Negative Cash Flows from Operations; Negative Cash Flows from Investing; and Positive Cash Flows from Financing...
Read MoreDuring the previous year, Company X's cash balance increased by $440 million. Investing and financing activities created positive cash flow totaling $730 million.
What were net cash flows from operating activities in the statement of cash flows?
A. Outflow of $290 million.
B. Outflow of $440 million.
C. Inflow of $880 million.
D. Inflow of $440 million.
Let "Operating activities" be xx.440=x+730Solving for xx:x=440−730=−290So, net cash flows from operating activities are an outflow of $290 million.The correct answer is A. Outflow of $290 million....
Read MoreGammaro Games is considering an equipment investment that will cost $970,000. Projected net cash inflows over the equipment's three-year life are as follows: Year 1: $484,000; Year 2: $384,000; and Year 3: $296,000. Gammaro Games wants to know the equipment's IRR.
View the present value of $1 table.
View the future value of $1 table.
Requirement
View the present value of annuity of $1 table.
View the future value of annuity of $1 table.
Use trial and error to find the IRR within a 2% range. (Hint: Use Gammaro Games' hurdle rate of 8% to begin the trial-and-error process.) Use a business calculator or spreadsheet to compute the exact IRR.
Begin by calculating the NPV at three rates: 8%, 10%, and 12%. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.)
The NPV at 8% is
Begin by calculating the NPV at three rates: 88%, 1010%, and 1212%. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.)The NPV at 8% is$42,296Part 2The NPV at 10% is$9,436Part 3The NPV at 12% is$(20,998)Part 4The IRR is s...
Read MoreBramley Manufacturing is considering three capital investment proposals. At this time, the company has funds available to pursue only one of the three investments.
View the capital investment proposals.
Requirement
Which investment should Bramley Manufacturing pursue at this time? Why?
Since each investment presents a positive NPV, Bramley Manufacturing should use the compare the profitability of each investment.
ince each investment presents a positive NPV, BramleyBramley Manufacturing should use the profitability index to compare the profitability of each investment.Part 2Use the method selected above to compare the profitability of each investment beginning with Equipment A. (Enter all amounts as p...
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Berkner Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six-year life and will cost $950,000. Projected net cash inflows are as follows:
View the projected net cash inflows. View the present value of $1 table.
View the future value of $1 table. Read the requirements.
View the present value of annuity of $1 table.
View the future value of annuity of $1 table.
Requirement 1. Compute this project's NPV using Berkner Industries' 14% hurdle rate. Should Berkner Industries invest in the equipment? Why or why not?
Begin by computing the project's NPV (net present value). (Round your answer to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.)
Net present value
Requirement 1. Compute this project's NPV using BerknerBerkner Industries' 1414% hurdle rate. Should BerknerBerkner Industries invest in the equipment? Why or why not?Begin by computing the project's NPV (net present value). (Round your answer to the nearest wh...
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Industries is evaluating whether to invest in solar panels to provide some of the electrical needs of its main office building in
The solar panel project would cost
and would provide cost savings in its utility bills of
per year. It is anticipated that the solar panels would have a life of
years and would have no residual value.
Requirements
1. Calculate the payback period in years of the solar panel project
2. | If the company uses a discount rate of %, what is the net present value of this project? |
3. | If the company has a rule that no projects will be undertaken that have a payback period of more than five years, would this investment be accepted? If not, what arguments could the energy manager make to try to obtain approval for the solar panel project? |
4. | What would you do if you were in charge of approving capital investment proposals? |
Requirement 1. Calculate the payback period in years of the solar panel project. Determine the formula, then calculate the payback period. (Round your answer to two decimal places.)Part 2 Initial investment÷Expected annual net cash inflow=Payback period$500,000÷$65,000=7.69yearsPar...
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Managers estimate that this investment will have a 10-year life and generate net cash inflows of
the first year,
the second year, and
each year thereafter for eight years. The investment has no residual value. Compute the payback period.
First enter the formula, then calculate the payback period. (Round your answer to two decimal places.)Part 2Full years+ (Amount to complete recovery in next year÷Projected cash inflow in next year) =Payback6+ ($15,000÷$225,000) =6.07yea...
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