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Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.
Equity investments: The financial instruments which claim ownership in the issuing company and pay a dividend revenue to the investor company, are referred to as equity securities. The investments in equity securities are referred to as equity investments.
To Determine: The pretax amount related to lease reported by Company B in the statement of cash flow for the year ended December 31, 2018.
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Chapter 21 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
- 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.arrow_forward1. How much is the net share in the profit or loss of the associate (investment income) in 2021? P480,000 P825,000 P420,000 P135,000 2. How much is the carrying amount of the investment as of December 31, 2021? P7,815,000 P8,025,000 P7,680,000 P7,125,000arrow_forwardProblem 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.arrow_forward
- W eBook Assume that today is December 31, 2021, and that the following information applies to Abner Airlines: After-tax operating income (EBIT(1-T)] for 2022 is expected to be $400 million. The depreciation expense for 2022 is expected to be $180 million. The capital expenditures for 2022 are expected to be $200 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 3% per year. The required return on equity is 13%. The WACC is 10%. The firm has $190 million of nonoperating assets. The market value of the company's debt is $4.541 billion. 70 million shares of stock are outstanding. Using the corporate valuation model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent.arrow_forwardMultiple choice: Assuming that SN North Company has the following net cash inflow: P55,000, P55,000, P55,000, and P55,000 for years 1, 2, 3, and 4, respectively. Assuming further that the company’s cost of capital is 25% for a net cost of investment of P120,000, the net present value (rounded off) is equivalent to: • P15,000• P20,000• P 5,000• P10,000arrow_forward$1897 mibns 000,0062 sw I Y al coles a bl 6) The Kaufmann Group is considering a $364,000 investment with the following net cash flows. Kauffman requires a 12% return on its investments. Annual Net Cash Flows Present Value of $1 at 12% Initial investment 1.0000 Year 1 $ 124,000 0.8929 Year 2 84,000 0.7972 Year 3 144,000 0.7118 Year 4 s istos bas 000,00 254,000 svenistot 008,20 0.6355 by Year 5 74,000 0.5674 The present value of this investment is: A) B) C) D) E) $483,588. $161,576. $119,588. $230,308. $281,005.arrow_forward
- LO 3 E3.14 Identification of Variable Interest Entity and Primary Beneficiary Softek Corporation forms a separate legal entity, Startek, to develop new technology. The entity is funded by $4,000,000 in outside equity and $26,000,000 in debt. Softek guarantees Startek's debt. The entity is expected to generate the following cash flows at the end of one year: Cash Flow $11,000,000 33,000,000 55,000,000 A discount rate of 10 percent is appropriate. Required b. Probability 0.40 0.20 0.40 a. Assume qualitative analysis of Startek's VIE status is inconclusive. Quantitatively analyze whether Startek is a variable interest entity. Assume Startek is a variable interest entity. Identify the factors that determine whether Softek is the primary beneficiary that must consolidate Startek.arrow_forwardAssignment 3 Ch.5 Name / ID/ Section / Q1/ Ipswich Corporation is investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. considering an Present value of an ordinary annuity of $1: 12% 13% 14% 15% 0.893 0.885 0.877 0.87 1.69 1.668 1.647 1.626 2.402 2.361 .322 2.283 3.037 2.974 2.914 2.855 Present value of $1: 12% 13% 14% 15% 0.893 0.885 0.877 0.87 Q2/ A company is evaluating an investment. The company uses the straight-line method of depreciation. Use the following information to compute the accounting rate of return. Show your calculations and round to one decimal place. Project SR875,000 Investment Residual value Operating income Year I 120,000 Year 2 120,000 Year 3 120,000 Year 4 120,000 Year S Q3/ Your grandfather would like to share some of his fortune…arrow_forwardA firm has the following investing alternative: Cash Inflows Year A B C 1 $1,100 $3,600 -- 2 1,100 -- -- 3 1,100 -- $4,562 Each investment costs $3,000; investments B and C are mutually exclu- sive, and the firm’s cost of capital is 8 percent. a. What is the net present value of each investment? b. According to the net present values, which investment(s) should the firm make? Why? c. What is the internal rate of return on each investment? d. According to the internal rates of return, which investment(s) should the firm make? Why? e. According to both the net present values and internal rates of return, which…arrow_forward
- Question 8: Assume the following free cash flows for Elle Inc. for Year 6 and forecasted FCFF for Year 7 onward (in millions): Current Forecast Horizon Terminal Year ($millions) Year 7 Year 8 Year 9 Year 10 Year 11 Free cash flows to the firm (FCFF) $4,973 $5,222 $5,482 $5,757 $6,045 $6,166 The DCF value of the firm using the FCFF information above, a discount rate of 6%, and an expected terminal growth rate of 2%, is:arrow_forwardA firm has $1,120 in inventory, $2,780 in fixed assets, $1,470 in accounts receivable, $930 in accounts payable, and $540 in cash. What is the amount of the net working capital? Question 9 options: $4980 $3130 $4060 $2200arrow_forwardFree cash flow FCF Year (t) 2020 2021 2022 2023 $710,000 $850,000 $950,000 $1,090,000 Other data Growth rate of FCF, beyond 2023 to infinity = 6% Weighted average cost of capital = 9% Market value of all debt = $6,030,000 Market value of preferred stock = $2,410,000 Number of shares of common stock to be issued = 1,100,000arrow_forward
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
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