How important and useful is the cash budget

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Reference no: EM132056421

1. How important and useful is the cash budget.

2. Company A wants to acquire Company B and estimates that Company B is worth $75 million. Company B has preferred stock of $5 million, debt of $10 million, and outstanding shares of 10 million. Based on this information, what is the maximum amount Company A should offer per common share?

3. Chronic Pain Clinic has estimated the following cash flows associated with a new project. The project cost of capital (discount rate) is 8 percent.

Year 0: ($700,000)

Year 1: $400,000

Year 2: $400,000

Year 3: $400,000

What is the project’s net present value?

A. $186,897

B. $197,619

C. $208,225

D. $324,538

E. $330,839

Reference no: EM132056421

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