Question 3 :

A- The 2011 balance sheet of Anna's Tennis Shop, Inc., showed $450,000 in the common stock account and $2.1 million in the additional paid-in surplus account. The 2012 balance sheet showed $490,000 and $2.4 million in the same two accounts, respectively.

If the company paid out $400,000 in cash dividends during 2012, what was the cash flow to stockholders for the year?(Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)

Cash flow to stockholders

$

The Stancil Corporation provided the following current information:

Proceeds from long-term borrowing

$

18,900

Proceeds from the sale of common stock

5,900

Purchases of fixed assets

22,900

Purchases of inventories

3,800

Payment of dividends

16,400

Determine the cash flows from the firm and the cash flows to investors of the firm.(Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)

Cash flows from the firm

$

Cash flows to investors of the firm

$

The 2011 balance sheet of Anna's Tennis Shop, Inc., showed long-term debt of $5.4 million, and the 2012 balance sheet showed long-term debt of $5.8 million. The 2012 income statement showed an interest expense of $130,000.

What was the firm's cash flow to creditors during 2012?(Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)

Cash flow to creditors

$

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B - Southern California Publishing Company is trying to decide whether to revise its popular textbook,Financial PsychoanalysisMade Simple. The company has estimated that the revision will cost $70,000. Cash flows from increased sales will be $21,500 the first year. These cash flows will increase by 3 percent per year. The book will go out of print four years from now. Assume that the initial cost is paid now and revenues are received at the end of each year.

If the company requires a return of 8 percent for such an investment, calculate the present value of the project.(Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present value

$

Should it undertake the revision?

• No
• Yes

Find the APR, or stated rate, in each of the following cases(Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)):

Stated Rate (APR)

Number of Times Compounded

Effective Rate (EAR)

%

Semiannually

11.2

%

Monthly

12.1

Weekly

9.8

Infinite

13.5

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C- Conoly Co. has identified an investment project with the following cash flows.

Year

Cash Flow

1

$

800

2

1,090

3

1,350

4

1,475

If the discount rate is 7 percent, what is the present value of these cash flows?(Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present value

$

If the discount rate is 17 percent, what is the present value of these cash flows?(Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present value

$

If the discount rate is 25 percent, what is the present value of these cash flows?(Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present value

$