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The 2011 balance sheet of Annas Tennis Shop Inc showed long term debt of $145 million and the 2012 balance sheet showed longterm debt of $152 million The 2012 income statement showed an

1. The 2011 balance sheet of Anna’s Tennis Shop, Inc,. showed long-term debt of $1.45 million, and the 2012 balance sheet showed long-term debt of $1.52 million. The 2012 income statement showed an interest expense of $127,000. What was the firm’s cash flow to creditors during 2012?

2. The 2011 balance sheet of Anna’s Tennis Shop, Inc., showed $490,000 in the common stock account and $3.4 million in the additional paid-in surplus account. The 2012 balance sheet showed $525,000 and $3.7 million in the same two accounts, respectively. If the company paid out $275,000 in cash dividends during 2012, what was the cash flow to stockholders for the year?

3. Given the information for Anna’s Tennis Shop, Inc., in the previous two problems, suppose you also know that the firm’s net capital spending for 2012 was $945,000 and that the firm reduced its net working capital investment by $87,000. What was the firm’s 2012 operating cash flow, or OCF?

4. During the year, the Senbet Discount Tire Company had gross sales of $1.06 million. The firm’s cost of goods sold and selling expenses were $525,000 and $215,000, respectively. Senbet also had notes payable of $800,000. These notes carried an interest rate of 7 percent. Depreciation was $130,000. Senbet’s tax rate was 35 percent.

a. What was Senbet’s net income?
b. What was Senbet’s operating cash flow?

5. Schwert Corp. shows the following information on its 2012 income statement: sales = $185,000; costs = $98,000; other expenses = $6,700; depreciation expense = $16,500; interest expense = $9,000; taxes = $19,180; dividends = $9,500. In addition, you’re told that the firm issued $7,550 in new equity during 2012 and redeemed $7,100 in outstanding long-term debt.

a. What is the 2012 operating cash flow?
b. What is the 2012 cash flow to creditors?
c. What is the 2012 cash flow to stockholders?
d. If net fixed assets increased by $26,100 during the year, what was the addition to networking capital (NWC)?

Chap 4:

1. An investment offers $4,900 per year for 15 years, with the first payment occurring one year from now. If the required return is 8 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever?

2. Find the APR, or stated rate, in each of the following cases:

stated rate apr number of times compounded effective rate ear
  semiannually 9.8%
  monthly 19.6
  weekly 8.3
  infinite 14.2

3. One of your customers is delinquent on his accounts payable balance. You’ve mutually agreed to a repayment schedule of $700 per month. You will charge 1.3 percent per month interest on the overdue balance. If the current balance is $21,500, how long will it take for the account to be paid off?

4. Audrey Sanborn has just arranged to purchase a $550,000 vacation home in the Bahamas with a 20 percent down payment. The mortgage has a 6.1 percent stated annual interest rate, compounded monthly, and calls for equal monthly payments over the next 30 years. Her first payment will be due one month from now. However, the mortgage has an eight-year balloon payment, meaning that the balance of the loan must be paid off at the end of Year 8. There were no other transaction costs or finance charges. How much will Audrey’s balloon payment be in eight years?

5. Given an interest rate of 6.1 percent per year, what is the value at Date t = 7 of a perpetual stream of $2,500 annual payments that begins at Date t = 15?

6. You want to buy a new sports car from Muscle Motors for $73,000. The contract is in the form of a 60-month annuity due at a 6.45 percent APR. What will your monthly payment be?


Apr 09 2020 View more View Less

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