Page 2 of 5 Please answer the following questions either by typing or copying the scan/image of your handwritten answers underneath each question. Please use the following table for questions 1 and 2. 2019 2020 Sales 9,350 Depreciation 1,661 Cost of goods sold 4,707 Other expenses 824 Interest 776 Cash 6,466 Account receivable 9,427 Short-term notes payable 2,147 Long-term debt 24,696 Net fixed assets 54,273 Accounts payable 4,644 Inventory 14,283 Dividends 1,411 Tax rate is 34% Q1) How much is the cash flow from assets for 2020? (10 Points) Q2) Using the information from Question 1, show that the cash flow from assets is equal to the sum of the cash flows to bondholders and shareholders? (10 Points) 12,500 1,661 2,979 946 776 6,067 8,034 1,171 20,320 50,888 4,384 14,283 1,411 Page 3 of 5 Q3) Sam's Inc. has sales of $2,576 total assets of $1,576 and a debt-equity ratio of 1.25. If its return on equity is 15%, what is its net income? (10 Points) I Q4) The most recent financial statement for your company is as follows. Sales for 2021 are projected to grow by 25%. Interest expense will remain constant. The tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. If the firm is operating at only 70% capacity, and no new debt or equity is issued, what is the external financing needed to support the growth rate in sales? (10 Points) Income Statement 2021 Sales $800,000 Costs 700,000 Other expenses 20,000 Ebit 80,000 Interest paid. 10,000 Taxable income 70,000 Taxes (35%) 24,500 Net income 45,500 Balance Sheet 2021 Liabilities and Equity 25,000 40,000 85,000 150,000 422,026 572,026 Dividend Add to RE Current assets Cash Acc. Receivables Inventory Total Fixed assets Net plant & equip. Total assets Assets 33,735 11,765 Current liabilities Acc payable Notes payable Total Longterm debt Owners' Equity Comm. Stock RE Total Total liability and equity 68,000 17,000 85,000 158,000 140,000 182,900 322,900 565,900 Page 5 of 5 Q5) You expect to receive $8,949 at graduation in four years. You plan on investing it at 11% until you have $65,000. How long will you wait from now? (10 Points) Q6) You need a 30-year, fixed-rate mortgage to buy a new home for $289,705. Your mortgage bank will lend you the money at a 5% APR (quarterly compounding) for this 360-month loan. However, you can afford monthly payments of only $1,2500, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. How large will this balloon payment have to be for you to keep your monthly payments at $1,250? (10 Points)
