Exercise 5-9During the next fiscal year ending June 30.2020, Texas Company will makesubstantial investments in new product lines and in a modernization program.Significant changes to be made during the year are listed below:1. Equipment with a net book value of P86,000 will be sold during the year.2. All of the capital stock of Ohio Company will be exchanged with 5,000shares of Texas Company at a time when the market value is P40 per share.P250,000 cash will also be given as part payment.3. Bonds having a face value of P1,000,000 will be issued on June 30, 2020 at98%.4. Trading securities carried at market value of P200,000 will be sold forP215,000.5. New equipment will be purchased during the year.6. A new building will be purchased at a cost of P1,000,000, although there areno building retirements.7. Cash dividends will be paid to stockholders.The financial statements forccast for the year ended June 30, 2020 are givennext page: 186Income SiatementFor the Year Ended June 30, 2020Net salesCost of guods sold (including depreciationP2.430,500Operating expenses (including depreciationP1,073,000of P100,000)500,0007,500Interest expenseGain on sale of equipmentGain on sale of trading securitiesUnrealized holding gain on trading securitiesIncome tax(26,000)(15,000)(44,000)356,000P1,851.500P 579,000TotalNet incomeTexas CompanyBalance SheetsJune 30Assets20202019CashP532,000275,000141,500168,500450,00043,000P442,000Trading Securities(market)325.00080,500Accounts receivableInventories86,000Investrient in Associates (cost)Land43.0001,095,000321,500Buildings (net)Equipment (net)Total assets352,000P3,057,000242,500P1,540,500Liabilitjes & EquityP 93,500P107,50050,00041,500156,500Accounts payableShort-term bank loans payableAccrued operating expense:Income tax payableBonds payable (net)('ommon stock, l'10 par valueAdditional paid in capitalRetained earningsTotal liabilities & equity50,00020,500143,00980,000550,000500,000400,000250,000820,000P3,057,000435,000P1,540,500SE' =REQUIRED:1. Prepare a forecast cash flow statement for the year ended June 30 20202. Show supnorting schedules or 1-accoounts foi many missing anuounts

Given: The table is given as below,

During the next fiscal year ending June 30. 2020, Texas Company will abstantial investments in new product lines and in a modernization pro- ignificant changes to be made during the year are listed below: Equipment with a net book value of P86,000 will be sold during the year All of the capital stock of Ohio Company will be exchanged with shares of Texas Comnany time whe the arket valu is P40 n

During the next fiscal year ending June 30. 2020, Texas Company will abstantial investments in new product lines and in a modernization pro- ignificant changes to be made during the year are listed below: Equipment with a net book value of P86,000 will be sold during the year All of the capital stock of Ohio Company will be exchanged with shares of Texas Comnany time whe the arket valu is P40 n

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 11P

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Exercise 5-9 During the next fiscal year ending June 30. 2020, Texas Company will make substantial investments in new product lines and in a modernization program. Significant changes to be made during the year are listed below: 6. 1. Equipment with a net book value of P86,000 will be sold during the year. 2. All of the capital stock of Ohio Company will be exchanged with 5,000 shares of Texas Company at a time when the market value is P40 per share. P250,000 cash will also be given as part payment. 3. Bonds having a face value of P1,000,000 will be issued on June 30, 2020 at 98%. 4. Trading securities carried at market value of P200,000 will be sold for P215,000. 5. New equipment will be purchased during the year. 6. A new building will be purchased at a cost of P1,000,000, although there are no building retirements. 7. Cash dividends will! be paid to stockholders. The financial statements forecast for the year ended June 30, 2020 are given next page:
Exercise 5-9 During the next fiscal year ending June 30.2020, Texas Company will mmake substantial investments in new product lines and in a modernization program. Significant changes to be made during the year are listed below: 1. Equipment with a net book value of P86,000 will be sold during the year. 2. All of the capital stock of Ohio Company will be exchanged with 5,000 shares of Texas Company at a time when the market value is P40 per share. P250,000 cash will also be given as part payment. 3. Bonds having a face value of P1,000,000 will be issued on June 30, 2020 at 98%. 4. Trading securities carried at market value of P200,000 will be sold for P215,000. 5. New equipment will be purchased during the year. 6. A new building will be purchased at a cost of P1,000,000, although there are no building retirements. 7. Cash dividends will! be paid to stockholders. The financial statements forccast for the year ended June 30, 2020 are given next page:
Exercise 5-9 During the next fiscal year ending June 30.2020, Texas Company will make substantial investments in new product lines and in a modernization program. Significant changes to be made during the year are listed below: 1. Equipment with a net book value of P86,000 will be sold during the year. 2. All of the capital stock of Ohio Company will be exchanged with 5,000 shares of Texas Company at a time when the market value is P40 per share. P250,000 cash will also be given as part payment. 3. Bonds having a face value of P1,000,000 will be issued on June 30, 2020 at 98%. 4. Trading securities carried at market value of P200,000 will be sold for P215,000. 5. New equipment will be purchased during the year. 6. A new building will be purchased at a cost of P1,000,000, although there are no building retirements. 7. Cash dividends will be paid to stockholders. The financial statements forccast for the year ended June 30, 2020 are given next page:
101 2018 CURRENT ASSETS INVESTMENT POLICY Rentz Corporation is investigating the optimal level of current assets for the coming year Management expects sales to increase to approximately $2 million as a result of an asset expansion presently being undertaken. Fixed assets total $1 million, and the firm plans to maintain a 60% debt-to- assets ratio. Rentz's interest rate is currently 8% on both short and long-term debt (which the firm uses in its permanent structure). Three alternatives regarding the projected current assets level are under consideration: (1) a restricted policy where current assets would be only 45% of projected sales, (2) a moderate policy where current assets would be 50% of sales, and (3) a relaxed policy where current assets would be 60% of sales. Earnings before interest and taxes should be 12% of total sales, and the federal-plus-state tax rate is 40%. a. What is the expected return on equity under each current assets level? b. In this problem, we assume that…
Problem 9-11 he following is a four-year forecast for Torino Marine. Year Free cash flow ($ millions) 2022 -59 a. Fair market value b. Fair market value per share 2023 80 2024 97 . Estimate the fair market value of Torino Marine at the end of 2021. Assume that after 2025, earnings before interest and tax will remain constant at $200 million, depreciation will equal capital expenditures in each year, and working capital will not change. Torino Marine's weighted-average cost of capital is 12 percent and its tax rate is 40 percent. Note: Do not round Intermediate calculations. Enter your answer in millions rounded to 1 decimal place. million 2025 119 . Estimate the fair market value per share of Torino Marine's equity at the end of 2021 if the company has 44 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $340 million. Note: Do not round Intermediate calculations. Round your answer to 2 decimal places.
Exercise 5-9 During the next fiscal year ending June 30. 2020, Texas Company will make substantial investments in new product lines and in a modernization program. Significant changes to be made during the year are listed below: 1. Equipment with a net b0ok value of P86,000 will be sold during the year. 2. All of the capital stock of Ohio Company will be exchanged with 5,000 shares of Texas Company at a time when the market value is P40 per share. P250,000 cash will also be given as part payment. 3. Bonds having a face value of P1,000,000 will be issued on June 30, 2020 at 98%. 4. Trading securities carried at market value of P200,000 will be sold for P215,000. 5. New equipment will be purchased during the year. 6. A new building will be purchased at a cost of P1,000,000, although there are no building retirements. 7. Cash dividends wil! be paid to stockholders. The financial statements forccast for the year ended June 30, 2020 are given next page:
Future Values and Long-Term Investments Portman Corporation engaged in the following transactions during 2020: a. On January 1, 2020, Portman deposited $12,000 in a certificate of deposit paying 6% interest compounded semiannually (3% per 6-month period). The certificate will mature on December 31, 2023 b. On January 1, 2020, Portman established an account with Lee County Bank. Portman will make quarterly payments of $2,500 to Lee beginning on March 31, 2020, and ending on December 31, 2021. Lee guarantees an interest rate of 8% compounded quarterly (2% per 3-month period). Required: 1. Prepare the cash flow diagram for each of these two investments. 2. Calculate the amount to which each of these investments will accumulate at maturity. (Note: Round answers to two decimal places.)
Problem 2 ABM Enterprise would like to evaluate/analyze an investment proposal.Given the following:Investment amount - 450,000 (2022)Dividends / Revenue stream - 100,000 for the first year and an interval of 5,000 for thesucceeding yearsDiscount rate - 14% a. NPV for the perio 2023 through 2029;b. Total NPV using manual computation;c. Total NPV using the Excel function; andd. IRR rate.
QUESTION 40 On January 1, 2020, Smith Company signed a six-year Note for the acquisition of equipment. Annual interest and principal payments of $21,980, based on an interest rate of 9% are to be made every December 31, beginning with December 2020. Compute the value of the Note at 1/1/20. Following are appropriate factors from tables: Table % / n Present Value of annuity due $1 Present Value of ordinary annuity of $1 Present value of $1 Future Value of ordinary annuity of $1 9%/6 4.88965 4.48592 .59627 7.52333 $101,975.34 $98,600.52 $107,474.51 $131,880
View Policies Current Attempt in Progress Swifty Corporation borrowed $660000 from Liber Bank on January 1, 2019 in order to expand its mining capabilities. The five-year note required annual payments of $178200 and carried an annual interest rate of 8.50%. What is the amount of expense Swifty must recognize on its 2020 income statement? O $35580 $45722 O $40969 O $56100
Problem 9-11 The following is a four-year forecast for Torino Marine. Year Free cash flow ($ millions) 2022 -49 2023 70 2024 2025 87 109 a. Estimate the fair market value of Torino Marine at the end of 2021. Assume that after 2025, earnings before interest and tax will remain constant at $200 million, depreciation will equal capital expenditures in each year, and working capital will not change. Torino Marine's weighted-average cost of capital is 15 percent and its tax rate is 30 percent. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place. b. Estimate the fair market value per share of Torino Marine's equity at the end of 2021 if the company has 34 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $240 million. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Fair market value b. Fair market value per share million
Problem 2 ABM Enterprise would like to evaluate/analyze an investment proposal. Given the following: Investment amount 450,000 (2022) Dividends / Revenue stream - 100,000 for the first year and an interval of 5,000 for the succeeding years Discount rate - 14% a. NPV for the perio 2023 through 2029; b. Total NPV using manual computation; c. Total NPV using the Excel function; and d. IRR rate.