Sheridan Company has recorded the following items in its financial records.Cash in bankCash in plant expansion fundCash on handHighly liquid investmentsPetty cashReceivables from customersStock investments$55,800102,00014,80038,20061090,20067,600The highly liquid investments had maturities of 3 months or less when they were purchased. The stockinvestments will be sold in the next 6 to 12 months. The plant expansion project will begin in 3 years.(a)What amount should Sheridan report as "Cash and cash equivalents" on its balance sheet?Cash and cash equivalents

Cash and cash equivalents refers to the line item on the balance sheet that reports the value of a…

Answered: Sheridan Company has recorded the…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 2P

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From Part A above, assume that the bank decided to give a loan of $ 59 million to Zenith Corporation (recorded for initial year). Zenith-Corporation invested the amount in a project and generated the following sequence of cash flows over six years: Year Cash Flow ($ million) 0 -59 1 4 2 5 3 6 4 7.33 5 8 6 8.25 Calculate the Net Present Value (NPV) and the Profitability Index (PI) over the six years. Assume discount rate 13% This project does not end after the sixth year but instead will generate cash flows far into the future. Estimate the project’s terminal value, assuming that cash flows after year 6 continue at $8.25 per year perpetuity and then recalculate the investment’s NPV. Calculate the terminal value assuming that cash flows after the sixth year grow at 2% annually in perpetuity, and then recalculate the NPV.
From Part A above, assume that the bank decided to give a loan of $ 59 million to Nivea Corporation (recorded for the initial year). Nivea-Corporation invested the amount in a project and generated the following sequence of cash flows over six years: Year Cash Flow ($ million) 0 -59 1 4 2 5 3 6 4 7.33 5 8 6 8.25 Calculate the Net Present Value (NPV) and the Profitability Index (PI) over the six years. Assume discount rate 17% This project does not end after the sixth year but instead will generate cash flows far into the future. Estimate the project’s terminal value, assuming that cash flows after year 6 continue at $8.25 per year perpetuity and then recalculate the investment’s NPV. Calculate the terminal value assuming that cash flows after the sixth year grow at 2% annually in perpetuity, and then recalculate the NPV.
Using the information given below calculate the cash flow from financing for Year 2. Year 1 Year 2 Cash 10.0 20.0 Receivables 30.0 35.0 Net property plant and equipment 50.0 60.0 Total assets 90.0 115.0 Payables 10.0 20.0 Debt 30.0 10.0 Common stock 5.0 15.0 Retained earnings 45.0 70.0 Total liabilities and equity 90.0 115.0 Net income 32.0 48.0 Select one: (53.0) (33.0) 13.0 (13.0)
Calculate the amount of liquidity a bank can generate from selling its AFS portfolio using the following information:USTs held in AFS = $92,053,000Securities held in HTM = $13,500,000Loans = $69,680,000Settlement occurs on T+2Maturing on T+1 = $16,000,000Haircut = 5%USTs in AFS used as collateral for RP liabilities (i.e./ "encumbered") = $19,740,000 $56,313,000 $53,497,350 $52,697,350 $51,710,350
For each of the investments below, calculate the rate of return earned over the period. Cash Flow During Period - $900 14,000 5,000 70 1,500 (Click on the icon here in order to copy the contents of the data table above into a spreadsheet.) Investment A B C D E Beginning-of-Period End-of-Period Value Value $1,400 140,000 55,000 500 14,000 $400 115,000 49,000 200 12,600
Tom Alexander has an opportunity to purchase any of the investments shown in the following table, price single yr cash flow yr of receipt a$7,500 $14,615 6b$225 $1,514 21c$1,425 $4,472 11d$375 $16,972 41 . The purchase price, the amount of the single cash inflow, and its year of receipt are given for each investment. Which purchase recommendations would you make, assuming that Tom can earn 10% on his investments? The present value of Investment A is $ (Round to the nearest cent.) The present value of Investment B is $ (Round to the nearest cent.) The present value of Investment C is $ (Round to the nearest cent.) The present value of Investment D is $ (Round to the nearest cent.) Which…
A man with $30,000 to invest decides to diversify his investments by placing $15,000 in an account that earns 6.2% compounded continuously and $15,000 in an account that earns 7.4% compounded annually. Use graphical methods to determine how long it will take for his total investment in the two accounts to grow to $45,000
. A bank has the following: high-quality liquid assets (HQLA) worth $62 million . Non liquid assets of $15 mln . • • • Stable deposits of $20 min Wholesale Short term deposits of $10 mln $ 50 mln in anticipated net cash flows over a 60 day stress period $39 million in anticipated net cash flows, over a 30-day stress period: Calculate the Liquidity Coverage Ratio O 210% O 124% O 164% O 159%
Kabab Co. is considering a $240,000 investment, which will provide net returns of $110,000, $160,000, and $220,000 in the second, third, and fourth years, respectively. What is the payback period? Round up to the next month Use the following table: Cumulative Cash Cash Outflow Çash Inflow Net Cash Year Flow Flow 2 years and 10 months Ob. 2 years and 9 months 2 years and 11 months Od. 2 years and 8 months
XYZ Co. had the following activities in 2020: Issue of Bonds OMR 15000 Increase in receivables OMR 16000 Decrease in Land OMR 35000 Payment of Bank Loan OMR 8000 Sale of Building OMR 13000 Payment of Dividend OMR 4000 Purchase of equipment OMR 10000 Purchase of Treasury shares OMR 6000 Issue of Common stock OMR 22000 What is the cash flows from financing activities? Select one: O a. OMR 20000 b. OMR 15000 c. OMR 19000 d. NONE OF THE OPTIONS
an a&e firm planning for a future expansion deposited $36000 each year for 5 years into a sinking (investment) fund that was to pay an unknown rate of return. if the account had a total of $454000 immediately after the fifth deposit, what rate of return did the company make on these deposits?
Tommy Textiles Limited estimates that it takes the company 27 days on average to pay off its suppliers. It also knows that it has days sales in inventory of 64 days and days sales outstanding of 32 days. Which of the following is Tommy's cash conversion cycle? O a. 79 days O b. 49 days O c. 59 days O d. 69 days A Financial Analyst has recommended a $100 000 portfolio containing assets X, Y and Z. $20 000 will be invested in asset X, with a beta of 1.5; $50 000 will be invested in asset Y, with a beta of 2.0; and $30 000 will be invested in asset Z, with a beta of 0.5. The beta of the portfolio is: O a. 1.25 O b. 1.45 O c. 1.55 O d. 1.15

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