5. Each of the following events affects one or more tables in Sections 29-2 to 29-3 ....

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5. Each of the following events affects one or more tables in Sections 29-2 to 29-3 . Show the effects of each event by adjusting the tables listed in parentheses:

a. Dynamic repays only $10 million of short-term debt in 2009. ( Tables 29.2 and 29.3 )

b. Dynamic issues an additional $40 million of long-term debt in 2009 and invests $25 million in a new warehouse. ( Tables 29.1 – 29.3 )

c. In 2009 Dynamic reduces the quantity of stuffing in each mattress. Customers don’t notice, but operating costs fall by 10%. ( Tables 29.1 – 29.3 )

d. Starting in the third quarter of 2010, Dynamic employs new staff members who prove very effective in persuading customers to pay more promptly. As a result, 90% of sales are paid for immediately and 10% are paid in the following quarter. ( Tables 29.4 and 29.5 )

e. Starting in the first quarter of 2010, Dynamic cuts wages by $20 million a quarter.

( Table 29.5 )

f. In the second quarter of 2010 a disused warehouse catches fire mysteriously. Dynamic receives a $50 million check from the insurance company. ( Table 29.5 )

g. Dynamic’s treasurer decides he can scrape by on a $10 million operating cash balance.

( Table 29.5 )

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Principles Of Corporate Finance

ISBN: 9780071314176

10th Global Edition

Authors: Richard Brealey

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