Advanced technology for use in the green fuel production
1. Shawn Paschal has been working on an advanced technology for use in the green fuel production at King Fisher Aviation. He is almost finished with the technology and anticipates the first cash flow from the technology to be $200,000 received 2 years from today. Subsequent annual cash flows will grow at 4.5 percent in perpetuity.
What is the present value of the technology if the discount rate is 12 percent?
Fill in the value in the spreadsheet.
2. The previous financial manager had been evaluating the cash flows of a proposed project. The present value of the following cash stream is $9,300 when discounted at 10%.
Year 1 - Cash Flow $1,800
Year 2 - Cash Flow _______?
Year 3 - Cash Flow 2,900
Year 4 - Cash Flow 3,100
Fill in the values in the spreadsheet.
3. King Fisher Aviation has projected the following quarterly sales amounts for the coming year:
Quarter 1 $750
Quarter 2 $820
Quarter 3 $790
Quarter 4 $950
Accounts Receivable at the beginning of the year are $350. King Fisher has a 30 day collection period. Calculate the cash collections in each of the four quarters by completing the following for each quarter.
Beginning receivables
Sales
Cash Collections
Ending Receivables
Rework the Ending Receivables calculation using 45 and 60 days.
Fill in the values in the spreadsheet.
4. King Fisher Aviation purchases from suppliers in a quarter are equal to 65% of the next quarter's forecast sales. The payables period is 30 days. Wages, taxes, and other expenses are 25% of sales, and interest and dividends are $68 per quarter.
Projected quarterly sales are as follows.
Quarter 1 $1,300
Quarter 2 $1,400
Quarter 3 $1,400
Quarter 4 $1,200
Sales for the first quarter of the next year are projected to be $1,500. Calculate the company's cash outlays, by completing the following for each of the four quarters.
Payment of accounts
Wages, taxes, and other expenses
Long-term financing expenses (interest and dividends)
Total
Fill in the values in the spreadsheet.
5. Following are the most recent balance sheets for King Fisher Aviation.
Excluding accumulated depreciation, determine whether each item is a use of cash, and the amount:
Assets 2015
2016
Cash 49,280 44,816
Accounts Receivable 98,155 101,412
Inventories 82,400 87,715
Property, Plant, and Equipment 223,994 242,085
Less: Accumulated depreciation 76,174 85,688
Total Assets 377,655 390,340
Liabilities and Equity 2015 2016
Accounts Payable 74,511 49,496
Accrued Expenses 10,790 7,740
Long-term debt 48,000 44,000
Common stock 25,000 30,000
Accumulated Retained Earnings 219,354 259,104
Total Liabilities and Equity. 377,655 390,340
Fill in the values in the spreadsheet.