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Chapter 5, Problem 8Q
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To explain: The loan amortization schedule and the ways it is used.

Introduction:

Amortized loans: The amortized loans are the loans which are paid in equal installments and in fixed intervals. The installments which are paid contain both the amount of principal and the amount of interest. Some examples of amortized loans are- automobile loans, business loans, and home loans.

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General Finance Question
Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes): Income Statement Balance Sheet Sales Costs $ 40,000 Assets 34,160 $26,000 Debt Equity $ 7,000 19,000 Net income $ 5,840 Total $26,000 Total $26,000 The company has predicted a sales increase of 20 percent. Assume Yoo pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) Pro forma income statement Sales Costs $ 48000 40992 Assets $ 31200 Pro forma balance sheet Debt 7000 Equity 19000 Net income $ 7008 Total $ 31200 Total 30304 What is the external financing needed? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.) External financing needed $ 896

Chapter 5 Solutions

Bundle: Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition 6-Month Printed Access Card), 8th + Aplia Printed Access Card

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