Assignment: Finance, Cash Flow, and Financial Statement Analysis
1 - What is the primary disadvantage of the corporate form of the organization? Name at least two advantages of the corporate organization?
2- Evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to an overemphasis on the short-term profits at the expense of the long-term profits
3- The 2014 balance sheet of Steelo, Inc., showed current assets of $4,630 and current liabilities of $2,190. The 2015 balance sheet showed current assets of $5,180 and current liabilities of $2,830. What was the company's 2015 change in net working capital, or NWC?
4- An investment project has annual cash inflows of $2,800, $3,700, $5,100, and $4,300, for the next four years, respectively. The discount rate is 14 percent. What is the discounted payback period for these cash flows if the initial cost is $5,200? What if the initial cost is $5,400? What if it is $10,400?
5- A firm evaluates all of its projects by applying the IRR rule. If the required return is 14 percent, should the firm accept the following project?
|
Year
|
Cash Flow
|
|
0
|
-$26,000
|
|
1
|
11,000
|
|
2
|
14,000
|
|
3
|
10,000
|
6- Simple Interest versus Compound Interest [LO1] First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City Bank pays 8 percent interest compounded annually. If you made a deposit of $9,000 in each bank, how much more money would you earn from your Second City Bank account at the end of seven years?