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Helga
1 month ago
12

Exercise 11-13A Calculate financing cash flows (LO11-5) Dristell Inc. had the following activities during the year (all transact

ions are for cash unless stated otherwise): A building with a book value of $400,000 was sold for $500,000. Additional common stock was issued for $160,000. Dristell purchased its own common stock as treasury stock at a cost of $75,000. Land was acquired by issuing a 6%, 10-year, $750,000 note payable to the seller. A dividend of $40,000 was paid to shareholders. An investment in Fleet Corp.’s common stock was made for $120,000. New equipment was purchased for $65,000. A $90,000 note payable issued three years ago was paid in full. A loan for $100,000 was made to one of Dristell’s suppliers. The supplier plans to repay Dristell this amount plus 10% interest within 18 months. Required: Calculate net cash flows from financing activities. (Cash outflows should be indicated with a minus sign.)
Business
1 answer:
soldi70 [3.1K]1 month ago
3 0

Answer:

The total cash flow from financing activities amounts to -$45,000.

Explanation:

The calculation for financing activities' net cash flow is outlined below:

= Additional common stock issued - treasury stock purchase - dividends paid - long-term note payable issued

= $160,000 - $75,000 - $40,000 - $90,000

= -$45,000

All other transactions referenced in the question fall under investment activities.

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Answer:

6.43%

Explanation:

The insurance company will calculate the internal rate of return utilizing the method detailed below:

Cash flows      Year involved      Present [email protected]%  Present [email protected]%          

($100)                 1-20                      ($851)                            ($1,487.75)                      

$3,310                 20                        $492                             $1,832.67

                                                        ($359)                           $344.92

IRR=A%+ (a/a-b)*(B%-A%)

A%=10%  a= ($359) B%=3%  b=$344.92  

IRR=10%+(-$359/-$359-$344.92)*(3%-10%)

     =6.43%

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