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amid [387]
2 years ago
6

ash Flows from Investing Activities During the year, Murray Company sold equipment with a book value of $125,000 for $175,000 (o

riginal purchase cost of $225,000). New equipment was purchased. Murray provided the following comparative balance sheets: Murray Company Comparative Balance Sheets At December 31, 20X1 and 20X2 20X1 20X2 Long-Term Assets Plant and equipment $1,000,000 $1,025,000 Accumulated depreciation (500,000) (525,000) Land 500,000 725,750 Required: Calculate the investing cash flows for the current year. Use a minus sign to indicate a cash outflow.
Business
1 answer:
NeTakaya2 years ago
5 0

Answer:

Investing cash flow from current year = -$250,750. This means that the company invested $250,750 in purchasing new equipment and land during the year.

Explanation:

cash flow from investing activities = money received from the sale of assets - money spent purchasing new assets

  • money received from the sale of assets = $175,000
  • money spent purchasing new equipment = plant & equipment year 20x1 - plant & equipment year 20x2 + cost of old equipment = $1,000,000 - $1,025,000 + $225,000 = $200,000
  • money spent purchasing new land = land 20x2 - land 20x1 = $725,750 - $500,000 = $225,750  

Cash flow from investing activities = $175,000 - $200,000 - $225,750 = -$250,750

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5 0
3 years ago
Fama’s Llamas has a weighted average cost of capital of 10.9 percent. The company’s cost of equity is 12 percent, and its pretax
mojhsa [17]

Answer:

0.2

Explanation:

The weighted average cost of capital (WACC) is calculated as below:

WACC = (D/A) x r_D x (1-t) + (E/A) x r_E , where:

A: Market value of company asset;

D: Market value of company debt;

E: Market value of company equity;

r_D: pre-tax cost of debt;

r_E: cost of equity;

t: tax rate

Rearrange above formula a bit, we get:

WACC = (D/A) x r_D x (1-t) + (1 - D/A) x r_E

Putting all the numbers together, we have:

10.9% = (D/A) x 8.9% x (1 - 38%) + (1 - D/A) x 12%

Solve the equation, we get D/A = 17% or D/E = 0.2

So, target debt−equity ratio is 0.2

4 0
3 years ago
Adong's Fishing Products is analyzing the performance of its cash management. On average, the firm holds inventory for 65 days,
tatuchka [14]

Answer:

A. $45

B. $80

C. $8,167

Explanation:

(a) Calculation to determine the firm's cash conversion cycle

Cash conversion cycle=$65 +$15 – $35

Cash conversion cycle=$45

Therefore the firm's cash conversion cycle is $45

(b) Calculation to determine the firm's operating cycle

Operating cycle =$65 +$15

Operating cycle=$80

Therefore the firm's operating cycle is $80

(c) Calculation to determine the daily expenditure and the firm's annual savings if the operating cycle is reduced by 15 days

First step is to calculate the Daily expenditure

Daily expenditure =$1,960,000/360

Daily expenditure=$5,444.44

Now let determine the Annual savings

Annual savings =$5,444.44 *15*0.10

Annual savings=$8,167

Therefore the daily expenditure and the firm's annual savings if the operating cycle is reduced by 15 days will be $8,167

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2 years ago
The Rockies Division operates as a profit center. It reports the following for the year. Budgeted Actual Sales $1,969,700 $1,829
Eduardwww [97]

Answer:

IMPORTANT NOTE: The data of the calculation was obtained from an online research.

The answer and procedures of the exercise are attached in a microsoft excel document.  

Explanation  

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6 0
3 years ago
What is a minimum balance? A. The process of balancing your checkbook register against your bank statement B. The largest number
Leno4ka [110]

Answer:

What is a minimum balance?

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For bank accounts, the minimum balance is the minimum dollar amount that a customer must have in an account to receive some service benefit, such as keeping the account open or receiving interest

3 0
3 years ago
Read 2 more answers
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