EP FUNDAMENTALS OF FIN.MGMT.-MINDTAP
14th Edition
ISBN: 9781305672086
Author: Brigham
Publisher: CENGAGE L
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Chapter 17, Problem 2P
AFN EQUATION Refer to problem 17-1. What additional funds would be needed if the company’s year-end 2015 assets had been $4 million? Assume that all other numbers are the same. Why is this AFN different from the one you found in problem 17-1? Is the company’s “capital intensity” the same or different? Explain.
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Question 3: Study the following financial statements.
What was NOWC for 2017 and 2018? Show the calculation and circle your answer. Assume that all
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Calculate the Free Cash Flow in 2018. Show the calculation and circle your answer.
What was 2018 EVA? Show the calculation and circle your answer. Assume that its after-tax cost of
capital is 10%.
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Chapter 17 Solutions
EP FUNDAMENTALS OF FIN.MGMT.-MINDTAP
Ch. 17 - Prob. 1QCh. 17 - Assume that an average firm in the office supply...Ch. 17 - Would you agree that computerized corporate...Ch. 17 - Certain liability and net worth items generally...Ch. 17 - Suppose a firm makes the following policy changes....Ch. 17 - AFN EQUATION Carter Corporations sales are...Ch. 17 - AFN EQUATION Refer to problem 17-1. What...Ch. 17 - AFN EQUATION Refer to problem 17-1 and assume that...Ch. 17 - PRO FORMA INCOME STATEMENT Austin Grocers recently...Ch. 17 - EXCESS CAPACITY Walter Industries has 5 billion in...
Ch. 17 - REGRESSION AND INVENTORIES Jasper Furnishings has...Ch. 17 - PRO FORMA INCOME STATEMENT At the end of last...Ch. 17 - LONG-TERM FINANCING NEEDED At year-end 2015, total...Ch. 17 - SALES INCREASE Pierce Furnishings generated 2...Ch. 17 - REGRESSION AND RECEIVABLES Edwards Industries has...Ch. 17 - REGRESSION AND INVENTORIES Charlie's Cycles Inc....Ch. 17 - EXCESS CAPACITY Edney Manufacturing Company has 2...Ch. 17 - Prob. 13P
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- AFN EQUATION Refer to Problem 16-1. What additional funds would be needed if the companys year-end 2019 assets had been 4 million? Assume that all other numbers are the same. Why is this AFN different from the one you found in Problem 16-1? Is the companys capital intensity the same or different? Explain.arrow_forwardAFN Equation Refer to Problem 9-1. What would be the additional funds needed if the companys year-end 2018 assets had been 7 million? Assume that all other numbers, including sales, are the same as in Problem 9-1 and that the company is operating at full capacity. Why is this AFN different from the one you found in Problem 9-1? Is the companys capital intensity ratio the same or different?arrow_forwardAFN EQUATION Refer to problem 16-1. What additional funds would be needed if the companys year-end 2016 assets had been 4 million? Assume that all other numbers are the same. Why is this AFN different from the one you found in problem 16-1? Is the companys capital intensity the same or different? Explain.arrow_forward
- AFN Equation Refer to Problem 9-1. Return to the assumption that the company had 5 million in assets at the end of 2018, but now assume that the company pays no dividends. Under these assumptions, what would be the additional funds needed for the coming year? Why is this AFN different from the one you found in Problem 9-1?arrow_forwardAFN EQUATION Refer to problem 17-1. What additional funds would be needed if the company's year-end 2018 assets had been 4 million? Assume that all other numbers are the same. Why is this AFN different from the one you found in problem 17-1? Is the company's "capital intensity" the same or different? Explain.arrow_forward1. Using PROBLEM 1, how much is the projected net income for 2022? 2. Using PROBLEM 1, how much is the projected net cash flows from operating activities for 2026 must be? 3. Using PROBLEM 1, how much is the INTRINSIC Value of ABC Corporation? 4. Using PROBLEM 1, how much is the total present value of Free Cash Flows to ordinary shareholders of ABC Corporation? 5. Using PROBLEM 1, If your required return on investment is 12%, would you purchase the shares of ABC Corporation? Substantiate your answer. YES NOarrow_forward
- Q) For a given company studies indicate that due to the nature of contract business, any excess funds generated are expected to earn at a rate of 11% per year. Use the ROIC method to determine the rate of return on invested capital value for the given cash flow series.(X0=$2,000, X1=$-900, X2=$-7,000, X3=$6,900) Explain it early but not in excel works. Typed or handwriting onlysarrow_forwardWhich of the following statements is most correct? (Hint: Work Problem 4-16 before answering 4-17, and consider the solution setup for 4-16, as you think about 4-17.) a. If a firm's expected basic earning power (BEP) is constant for all of its assets and exceeds the interest rate on its debt, then adding assets and financing them with debt will raise the firm' expected return on common equity (ROE). b. The higher its tax rate, the lower a firm's BEP ratio will be, other things held constant. c. The higher the interest rate on its debt, the lower a firm's BEP ratio will be, other things held constant. d. The higher its debt ratio, the lower a firm's BEP ratio will be, other things held constant. e. If a firm's expected basic earning power (BEP) is constant for all of its assets and exceeds the interest rate on its debt, then adding assets and financing them with debt will decrease the firm's expected return on common equity (ROE).arrow_forwardThe term "additional funds needed (AFN)" is generally defined as follows: a A forecasting approach in which the forecasted percentage of sales for each balance sheet account is held constant. b. The amount of assets required per dollar of sales. c. The amount of internally generated cash in a given year minus the amount of cash needed to acquire the new assets needed to support growth. d. Funds that a firm must raise externally from non-spontaneous sources, ie., by borrowing or by selling new stock to support operations. e. Funds that are obtained automatically from routine business transactions.arrow_forward
- N1 what are the risks and benefits a business investing in capital equipment. include necessary, ethical factors and examples to support your analysis. The NPV is $2,243,458 ^ explain based on this number. thank you i upvotearrow_forward5.1 Calculate the Payback Period (expressed in years, months and days). 5.2 Calculate the Accounting Rate of Return on average investment (expressed to two decimal places). 5.3 Identify TWO (2) reasons why the company should not use the accounting rate of return to evaluate capital investments. 5.4 Calculate the Net Present Value. 5.5 Calculate the Internal Rate of Return (expressed to two decimal places) if the net cash flows are R320 000 per year for five years. Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. INFORMATION Purchase price R1 000 000 Expected useful life 5 years Scrap value 0 Minimum required rate of return 15% Expected net cash inflows: Year 1 R250 000 Year 2 R260 000 Year 3 R300 000 Year 4 R400 000 Year 5 R380 000 Expected net profit: Year 1 R50 000 Year 2 R60 000 Year 3 R100 000 Year 4 R200 000 Year 5 R180 000arrow_forwardAn advantage of this method is that it highlights how a capital investment can affect a company’s liquidity. Select one: a. Payback Method b. Accounting Rate of Return Method c. Time Value of Money d. Discounted Cash Flow Techniques. Need typed answer only.Please give answer within 45 minutesarrow_forward
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