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Dr. Vinny Bumbattez (PhD in Accounting) is the CFO of Rowecheatem Inc. and has asked you his Senior Finance manager (a recent graduate of the GBM program at Humber College) to prepare the Cash Budget for next year 2021. The Vice President of sales Henry Scully (also a graduate of Humber College) has provided you with the following quarterly sales estimates in millions of Canadian Dollars. (Mr. Scully has used an exchange rate of $1.48 for any USD sales in his conversion to Cdn dollars) Q1 - $160; Q2 - $ 175; Q3 - $190; Q4 - $215. Sales for Q1 of 2022 are projected to be $170. At the beginning of the year Accounts Receivable are going to be $68 million. The company has a 45 day collection period. The company's purchases from suppliers in a quarter are equal to 45% of next quarter's forecasted sales, and suppliers are normally paid in 36 days. Wages, rent and other expenses are estimated to be 25% of sales. Interest expense and dividends are $12 million per quarter. The company plans a capital project which will cost $75 million in the second quarter. The company will start the year with a $49 million cash balance and is required to maintain a $30 million minimum bank balance due to existing borrowing covenants. The CFO would like to reduce this requirement by 50% in 4 years' time when current commitments come due.
problem 1: Prepare a detailed schedule that shows the cash inflows and disbursements by quarter. Once the detailed schedule is done use those figures to complete the cash budget schedule. In order to be awarded any marks, students must show all their work.
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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