True or false True or False:5. The two types of financial capital are equity and debt.6. A company that could not sell a washing machine for $800 started offering a "deluxe"model for $1,300, substantially increasing the sales of the $800 model. This is because ofanchoring.7. All natural capital can be renewed through sustainable management.8. The number of cars that pass an intersection each hour is an example of a flow.

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Answered: True or False: 5. The two types of…

Business

Accounting

True or False: 5. The two types of financial capital are equity and debt.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Ameer Ltd. is a manufacturing company that produces toys for kids. The company was able to sustain a reasonable amount of sales in the last two quarters despite the pandemic-crisis during the last year. However, the company has faced some serious liquidity problems due to delayed payments by the customers and lower sales in the first two quarters. Hence, the company is seriously thinking about revising its working capital standards by considering the changes in the market. The finance manager of the company is seeking your help in assessing the Average inventory processing period from the following financial data. en The company had an opening stock of OMR 10,000 during the last year and made a total purchase of 27,000 OMR. The company has returned OMR 2000 worth material due to quality issues. During the last year, the business has paid OMR 3000 as wages and OMR 6000 as salaries. The company sold goods for a total amount of OMR 50,000 of which OMR 20,000 sales was on cash basis.…
Ameer Ltd. is a manufacturing company that produces toys for kids. The company was able to sustain a reasonable amount of sales in the last two quarters despite the pandemic-crisis during the last year. However, the company has faced some serious liquidity problems due to delayed payments by the customers and lower sales in the first two quarters. Hence, the company is seriously thinking about revising its working capital standards by considering the changes in the market. The finance manager of the company is seeking your help in assessing the Average inventory processing period from the following financial data. The company had an opening stock of OMR 10,000 during the last year and made a total purchase of 27,000 OMR. The company has returned OMR 2000 worth material due to quality issues. During the last year, the business has paid OMR 3000 as wages and OMR 6000 as salaries. The company sold goods for a total amount of OMR 50,000 of which OMR 20,000 sales was on cash basis. Average…
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Joe’s Build Back Better (BBB) Ammo Corp has$15 million in cash, which it has accumulated from retained earnings. It was planning to use the money to build a new factory. Recently, the interest rate has increased. How does this influence the company's decision, assuming the alternative to investing in a factory is loaning the money out? (A)It doesn’t, since the company’s shareholders are expecting a new factory. (B)It is more likely to build the factory because a higher interest rate makes the factory more valuable. (C)It is less likely to build the factory, since the opportunity cost of using the funds to build a factory rises with a higher interest rate. (D)It doesn’t influence their decision, since the company does not need to borrow money to build the factory.
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In this scenario, Finance is facing a negative cash position. Currently the department is both issuing and retiring $6,000 of long-term debt. Use the sliders below to reassess the company's financing decisions and protect against an Emergency Loan. Task Question You have invested $6,000 in plant improvements and financed $6,000 Long-Term debt to pay for it. You have also elected to retire $6,000 of Long- Term Debt. Now, your closing cash position reads -$3,000. Retire Long Term Debt $0 Issue Long Term Debt $0 $3,600 $6,000 $10,000 $10,000 Closing Cash Position ($5,400) Hint Submit Total Raised Capital: $6,000 Spence 0 Starting Cash Position January 1, 2019 Cash Flow Cash from Operating Cash from Investing Cash from Financing . Dividends Paid • Issue Stock . Retire Stock .Net Change in Cument Debt • Issue Long-Term Debt . Retire Long-Term Debt Closing Cash Position December 31, 2019 Total Spent Capital: $6,000 $3,431 ($6,431) $0 SO $0 $0 $0 $0 $6,000 ($6,000) ($3,000) K Click to Expand✓…
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MINI CASE The Castillo Products Company was started in 2008. The company manufactures components for personal decision assistant (PDA) products and for other handheld electronic products. A difficult operating year, 2009, was followed by a profitable 2010. The founders (Cindy and Rob Castillo) are interested in estimating their cost of financial capital since they are expecting to secure additional external financing to support planned growth. Short-term bank loans are available at an 8 percent interest rate. Cindy and Rob believe that the cost of obtaining long-term debt and equity capital will be somewhat higher. The real interest rate is estimated to be 2 percent and a long-run inflation premium is estimated at 3 percent. The interest rate on long-term government bonds is 7 percent. A default-risk premium on long-term debt is estimated at 6 percent; plus Castillo Products is expecting to have to pay a liquidity premium of 3 percent due to the illiquidity associated with its…
12. Fill in the blank (or type your choice if you email your responses in the virtual world): A company is faced with a real problem. Because of bad decisions two years back, the company owes its banks a considerable amount of money. The firm has the opportunity to invest in a positive NPV project, but unfortunately, any value created will go straight to the banks. This type of influence of debt on the passing up actions of shareholders and the of good investments is called the
2. Suppose a business owner is trying to decide whether to invest in a new piece of machinery. The machine costs $160,000, and it is expected to generate revenue of $200,000. a. Solve for the expected rate of return on this machine. a. If the interest rate the business owner has to pay is 20%, will the business owner buy this machine? b. If the interest rate the business owner has to pay is 25%, will the business owner buy this machine? c. If the interest rate the business owner has to pay is 30%, will the business owner buy this machine?
H1. Account Rahul has an amount of N 300,000 which is invested in a business. He desires 15% return on his fund. It is known from the past cost data analysis that fixed costs are N 150,000 per annum and variable costs of operation are 60% of sales. Determine sales volume to get 15% return. Also tell shut down point of the business, if he would spend N 50,000 even if business must be closed.