Question 1 (a)Let's say you made a mistake andoverestimated the value of breeding livestockby $15,000. How would this affect liquidity?Solvency?Question 1 (b) (Why do we use depreciation instead ofprincipal payments as an expense againstincome?

Lets understand the basics. Liquidity ratio calculates company's ability to pay its short term…

Answered: Let's say you made a mistake and…

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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Hello about the calculation, shouldn't be surplus because the BOP result is positive? and negative when the BOP is negative? Explain why 20,000 is deficit
Use the following information for the Quick Study below. (Algo) [The following information applies to the questions displayed below.] Following is information on an investment in a manufacturing machine. The machine has zero salvage value. The company requires a 6% return from its investments. Initial investment Net cash flows: Year 1 Year 2 Year 3 Year 1 Year 2 Year 3 QS 24-19 (Algo) Net present value with unequal cash flows LO P3 Compute this machine's net present value. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round all present value factors to 4 decimal places. Round present value amounts to the nearest dollar.) Totals Initial investment Net present value Net Cash Flow $ $ $ (240,000) 195,000 90,000 103,000 388,000 195,000 90,000 103,000 Present Value Factor Present Value of Net Cash Flows $ $ 0 0
Is after-tax cashflow still the cash inflow even if it is the sum of NOPAT and depreciation in the project?
The excel calculations are incorrect in places like the rounding and the other values need explanation as to their calculation. Every cell should contain a formula except the given values for the captured NWC. I don't understand the B6 calculation. B3 reflects the investment not the depreciation. Isn't year 0 deprc $0
As a company, to minimize the present worth of taxes paid to the federal government, use longest MACRS recovery period. true or false?
A potential new project involves an up-front (year 0) increase in inventories of $760. In your cash flow table, the cash flow impact of that change in year 0 only should be $__________. Do not round any intermediate work, but round your final answer to 2 decimal places (ex: 12.34567 should be entered as 12.35). Do not enter the $ sign. Include a negative sign if your answer is negative.
Hi, number 3 still appears to be unanswered for this problem. How do you determine relevant cash flow (after-tax) at project disposal (termination)?
15. Since a financial manager prefers to receive cash flows as fast as possible,____.A. a longer depreciable life is preferred to a shorter oneB. a shorter depreciable life is preferred to a longer oneC. the manager is not concerned with depreciable life, because depreciation is a noncash expenseD. the manager is not concerned with depreciable life, because once depreciation is a sunk cost.
None
Sd
A business executive once stated, “Depreciation is one of our biggest operating cash inflows.” Do you agree? Explain.
The TRUTH about Free Cash Flow (FCF): FCF decreases when additional investments in working capital are needed Terminal value is deducted from the PV of FCF to arrive at valuation Accelerated depreciation methods reduces FCF O FCF is estimated on a before tax basis

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Let's say you made a mistake and overestimated the value of breeding livestock by $15,000. How would this affect liquidity? Solvency? Question 1 (b) Why do we use depreciation instead of principal payments as an expense against income?