1. The 2013 balance sheet of Bear Inc., showed long-term debt of $1.45 million, and the 2014 balance sheet showed long-term debt of $1.52 million. The 2014 income statement showed an interest expense of $127,000. What was the firm’s cash flow to creditors during 2014?
2. The 2013 balance sheet of Bear Inc., showed $490,000 in the common stock account and $3.4 million in the capital surplus account. The 2014 balance sheet showed $525,000 and $3.7 million in the same two accounts, respectively. If the company paid out $275,000 in the cash dividends during 2014, what was the cash flow to stockholders for the year?
3. Given the information for Bear Inc. in the previous two questions, suppose you also know that the firm’s net capital spending for 2014 was $945,000 and that the firm reduced its net working capital by $87,000. What was the firm’s 2014 operating cash flow?
4. Brooks Corp. shows the following information on its 2014 income statement: sales=$185,000; costs=$98,000; other expense=$6,700; depreciation=$16,500; interest expense=$9,000; taxes=$19,180; dividends=$9,500. In addition, you are told that the firm issued $7,550 in new equity during 2014 and redeemed $7,100 in outstanding long-term debt. 1) What is the average tax rate? (Hint: Following the income statement in the notes to find the pretax income in order to calculate tax rate) 2) What is the 2014 operating cash flow? 3) What is the 2014 cash flow to creditors?
4) What is the 2014 cash flow to stockholders? 5) If net fixed assets increased by $26,100 during the year, what was the change to net working capital?
5. An investment offers $4,900 per year for 15 years, with the first payment occurring one year from now. If the required return is 8%, what is the present value of the investment? What would be the value if the payments occurred for 40 years? Forever?
6. Find the EAR in each of the following cases:
APR Compounding period EAR 7% Quarterly 16% Monthly 11% Daily (365 days in a year)
7. Joey Has just arranged to purchase a $550,000 home with a 20% down payment. The mortgage has a 6.1% stated annual interest rate, compounded monthly, and calls for equal monthly payments over the next 30 years. After the down payment, his first monthly payment will be due one month from now. However, the mortgage has an eight-year balloon payment, meaning that the balance of the loan must be paid off at the end of year 8. How much is the balloon payment in 8 years?
8. Given an interest rate of 6.1% per year, what is the value at Date t=7 of a perpetual stream of $2,500 annual payments that begins at Date t=15?
9. You want to buy a new car for $73,000. The contract is in the form of a 60month annuity due at a 6.45% APR. What is your monthly payment?