bjective is to Mmaximize cash ; calculate the ending balance of 2022 and 2023. interest rate.
bjective is to Mmaximize cash ; calculate the ending balance of 2022 and 2023. interest rate.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Question 2: The Al-Majid Construction Management Company constructs and operates different
communities in certain parts of UAE. The past few years have been difficult ones for Al-Majid facility
management company. The demand for Al-Majid Construction Management has been light and the
company has been unable to maintain full occupancy. However, Al-Majid Construction management has
recently broken ground for the construction of a new community and has more new construction
planned over the next 4 years (2022 through 2025). The chief financial officer (CFO) at Al-Majid
Construction Management Company, has projected Al-Majid's net cash flows over the next 4 years as
shown in the table below, Al-Majid will have negative cash flow for the next few years. With only $1
million in cash reserves, it appears that AL-Majid will need to take out some loans in order to meet its
financial obligations.
The main objective is to Mmaximize cash-balance position in 2025, considering the below Financial
Parameters: calculate the ending balance of 2022 and 2023.
.
.
.
Long Term 5-Year (LT) Loan: 5% interest rate.
Short Term 1-Year (ST) Loan: 7% interest rate.
2022 long term loan of 6m & short term loans of 2 m
2023 long term loan 5m
Year
2022
2023
2024
2025
Projected Net
Cash Flow
(Millions of
AED)
-8
-2
-4
3
Note: You need to present the how you calculate the ending balance for each Year using the below
formula:
Ending Balance Starting Balance + Cash Flow+Loans - Interest Payments - Loan Payments](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2ee27961-2d98-4069-bd8e-4c3d99346202%2F1db1483e-221d-4e16-b854-00e2cb71f3fb%2Fzhvqesd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 2: The Al-Majid Construction Management Company constructs and operates different
communities in certain parts of UAE. The past few years have been difficult ones for Al-Majid facility
management company. The demand for Al-Majid Construction Management has been light and the
company has been unable to maintain full occupancy. However, Al-Majid Construction management has
recently broken ground for the construction of a new community and has more new construction
planned over the next 4 years (2022 through 2025). The chief financial officer (CFO) at Al-Majid
Construction Management Company, has projected Al-Majid's net cash flows over the next 4 years as
shown in the table below, Al-Majid will have negative cash flow for the next few years. With only $1
million in cash reserves, it appears that AL-Majid will need to take out some loans in order to meet its
financial obligations.
The main objective is to Mmaximize cash-balance position in 2025, considering the below Financial
Parameters: calculate the ending balance of 2022 and 2023.
.
.
.
Long Term 5-Year (LT) Loan: 5% interest rate.
Short Term 1-Year (ST) Loan: 7% interest rate.
2022 long term loan of 6m & short term loans of 2 m
2023 long term loan 5m
Year
2022
2023
2024
2025
Projected Net
Cash Flow
(Millions of
AED)
-8
-2
-4
3
Note: You need to present the how you calculate the ending balance for each Year using the below
formula:
Ending Balance Starting Balance + Cash Flow+Loans - Interest Payments - Loan Payments
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