Foundations Of Financial Management
Foundations Of Financial Management
17th Edition
ISBN: 9781260013917
Author: BLOCK, Stanley B., HIRT, Geoffrey A., Danielsen, Bartley R.
Publisher: Mcgraw-hill Education,
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Chapter 9, Problem 32P
Summary Introduction

To calculate: The rate of return required to get $71,231 on investing $9,260 in 18 years.

Introduction:

Rate of return:

A rate that shows the net profit or loss of an investor on their investment over a particular time period is termed as the rate of return.

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Assume that the following statements of financial position are stated and a book value.  Alpha Corporation  Current Assets  $15,000  Current Liabilities  $5,400  Net Fixed Assets  39,000  Long-Term Debt  10,100     Equity  38,500        $54,000     $54,000    Beta Corporation  Current Assets  $3,600  Current Liabilities  $1,400  Net Fixed Assets  6,700  Long-Term Debt  2,100        Equity  6,800     $10,300     $10,300  Suppose the fair market value of Beta’s fixed assets is $9,500 rather than the $6,700 book value shown. Alpha pays $17,300 for Beta and raises the needed funds through an issue of long-term debt. Construct the post-merger statement of financial position now, assuming that the purchase method of accounting is used.

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Foundations Of Financial Management

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