PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
7th Edition
ISBN: 9780357033647
Author: Billingsley
Publisher: CENGAGE L
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Chapter 10, Problem 3FPE
Summary Introduction
To identify: A plan for Mr.M in deciding how much insurance to buy and help them find a policy
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Where discount factors are required, use only the four decimals present value tables (Appendix 1 and 2) that appear after the formula sheet.
REQUIREDUse the information provided below to answer the following questions. Ignore taxes.5.1 Calculate the Payback Period of both projects (expressed in years, months and days.) 5.2 Calculate the Net Present Value of both projects. (Your answers must include thecalculations of the present values and NPVs.) 5.3 Calculate the Internal Rate of Return (IRR) of Project B (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive cost ofcapital rates) and interpolation. 5.4 On the basis of the IRR, should Project B be considered favourably for investment? Why? 5.5 Calculate the Accounting Rate of Return on average investment of Project A (expressedto two decimal places).
INFORMATION
The following information relates to two capital expenditure…
Use the information provided below to prepare the following for May and June 2025:
Debtors Collection Schedule
Cash Budget.
The following information was provided by Lewis Traders:1. An unfavourable bank balance of R40 000 is expected on 30 April 2025. 2. Budgeted credit sales for April to June 2025 are as follows:
April
R420 000
May
R372 000
June
R432 000
3. Credit sales are estimated to be 60% of the total sales. The balance of the sales is for cash. Customers who purchase for cash are entitled to a discount of 10%.4. Collections from credit sales are expected to be as follows:• 30% during the month of sale (These debtors receive a 5% discount.)• 70% in the following month.5. Budgeted purchases of inventories from April to June 2025 are as follows:
April
R360 000
May
R320 000
June
R400 000
Prepare the Pro Forma Statement of Financial Position as at 31 December 2025 from the information provided below.
Info:
The budgeted Statement of Financial Position of Candyland Ltd as at 31 December 2024 is as follows:
Candyland Ltd
Statement of Financial Position as at 31 December 2024
R
ASSETS
Non-current assets
2 500 000
Fixed/Tangible assets
2 500 000
Current assets
2 250 000
Inventory
1 500 000
Accounts receivable
625 000
Cash
125 000
Total assets
4 750 000
EQUITY AND LIABILITIES
Equity
3 500 000
Ordinary share capital (150 000 shares)
3 000 000
Retained earnings
500 000
Non-current liabilities
750 000
Long-term loan: Barbie Bank
750 000
Current liabilities
500 000
Accounts payable
500 000
Total equity and liabilities
4 750 000
Candyland Ltd provided the following additional financial data to assist in the preparation of the Pro Forma…
Chapter 10 Solutions
PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
Ch. 10 - Prob. 1LOCh. 10 - Identify the types of coverage provided by...Ch. 10 - Prob. 3LOCh. 10 - Prob. 4LOCh. 10 - Prob. 5LOCh. 10 - Choose a property and liability insurance agent...Ch. 10 - Prob. 1FPECh. 10 - Last year, Thea and Rory Brown bought a home with...Ch. 10 - Prob. 3FPECh. 10 - Prob. 4FPE
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