Chapter 2, Problem 4RQ

Pat and Chris have identical interest-bearing bank accounts that pay them $15 interest per year. Pat leaves the $15 in the account each year, while Chris takes the $15 home to a jar and never spends any of it. After five years, who has more money? Pat. Chris. They both have the same amount. Don’t know

Assume a firm has earnings before depreciation and taxes of $200,000 and no depreciation. It is in a 25 percent tax bracket. a. Compute its cash flow using the following format: Earnings before depreciation and taxes _____Depreciation _____Earnings before taxes _____Taxes @ 25% _____Earnings after taxes _____Depreciation _____Cash Flow _____ b. Compute the cash flow for the company if depreciation is $200,000. Earnings before depreciation and taxes _____Depreciation _____Earnings before taxes _____Taxes @ 25% _____Earnings after taxes _____Depreciation _____Cash Flow _____ c. How large a cash flow benefit did the depreciation provide?

Assume a $40,000 investment and the following cash flows for two alternatives. Year                       Investment X                      Investment Y  1                               $6,000                               $15,000  2                                 8,000                                 20,000  3                                 9,000                                 10,000  4                               17,000                                     —  5                               20,000                                     — Which of the alternatives would you select under the payback method?

The Short-Line Railroad is considering a $140,000 investment in either of two companies. The cashflows are as follows:Year                   Electric Co.                   Water Works1..................         $85,000                         $30,0002..................           25,000                           25,0003..................           30,000                           85,0004–10............           10,000                           10,000a. Using the payback method, what will the decision be?b. Using the Net Present Value method, which is the better project? The discount rate is 10%.

What is corporate finance explain its important?

What is corporate finance? can you explain more?

General accounting problem.

What do you know about corporate finance? tell me about this

Which of the following is the primary function of insurance? Making risk disappear. Pooling and sharing risk among the insured. Making someone else pay for an accident or loss. Don’t know.