Answer:
Cash balance is $85,000
Explanation:
In determining the cash balance of the period, we must know how much is the inflow and outflow of the cash for the period and add it or deduct to the beginning balance. It is simply, beginning balance plus inflows less outflows. February is the first month of the operation of Schwenn Enterprises, that only means the possible beginning balance of the cash is the cash investment. So to further discuss it clearly, let’s do the computation.
Beginning balance on February $100,000
Add: inflow
Cash sales $20,000
Less: outflow
payment on expenses $35,000
CASH BALANCE AT FEBRUARY 28 $85,000
A. The size of the factory is fixed.
We know there will always be costs of rent and etc when running a business so even in the short run there is fixed costs. The output is always variable depending on the number of workers. The number of workers is also not fixed, but the size of the factory is because you cant just get up and move your business over night, it costs money and is a lot of work.
Answer:
16.27%
Explanation:
Given that,
Equity multiplier = 1.27
Total asset turnover = 2.10
Profit margin = 6.1 percent
Here, the return on equity is calculated by multiplying profit margin, asset turnover and equity multiplier.
Return On Equity:
= (Profit margin) × (Asset turnover) × (Equity multiplier)
= (0.061) × (2.10) × (1.27)
= 0.1627
= 16.27%
Answer:
Lets see what are the double entries of borrowings and purchase of new manufacturing equipment and their implications:
Double Entry for borrowings:
Dr Bank $500,000
Cr Notes Payable $500,000
The above double entry shows that the total assets and Notes Payable are increased due to this transaction. Furthermore, in the Statement of Cash flow we see an increase in Cash from Financing activities and decrease in the Cash from investing activities.
The second transaction is purchase of new manufacturing equipment. It must be accounted for as under:
Dr Manufacturing Equipment $500,000
Cr Bank $500,000
This transaction shows that net impact on the total assets is same as one asset has been increased by spending the other asset. This transaction also has no impact on Cash for financing, inventories and notes payable balances. However, their is increased negative balance in cash from investing activities.
Answer:
MIRR -16.50%
They should reject the project is it destroys capital it do not meet to pay up the cost of the investment.
A typical firm’s IRR will be greater than its MIR
If the project yields higher than the cost of capital the IRR will be higher than the MIRR as reinvest the cashflow at the project yield rather than copany's cost of capital, thus it overstate the return.
Explanation:
WACC (cost of capital, reinvestment and financiation rate) = 7%
<em>Cash inflow:</em>
Year 1 275000 336,886.825
Year 3 450000 481500
Year 4 450000 450000
Total 1,268,386.825
<em>Cash outflow:</em>
F= -2,500,000
Year 2 -125000 - 109, 179.841
Total 2,609,179.841
Now we can solve for MIRR:
![MIRR = \sqrt[n]{\frac{FV \: inflow}{PV \: outflow}} -1](https://tex.z-dn.net/?f=MIRR%20%3D%20%5Csqrt%5Bn%5D%7B%5Cfrac%7BFV%20%5C%3A%20inflow%7D%7BPV%20%5C%3A%20outflow%7D%7D%20-1)
![MIRR = \sqrt[4]{\frac{1,268,386.82}{2,609,179.84}} -1](https://tex.z-dn.net/?f=MIRR%20%3D%20%5Csqrt%5B4%5D%7B%5Cfrac%7B1%2C268%2C386.82%7D%7B2%2C609%2C179.84%7D%7D%20-1)
MIRR - 16.49991% = -16.50%
