Corporate Financial Management

Questions & Answers

Prepare the beginning balance sheet as of December 31, 2020 as well as the three financial Question 1 (35 points): see sheet 01 statements for the fiscal year ending December 31, 2021. 11 2020:

Question 4 (8 points): see sheet 04 Find the most recent fiscal year's financial statements for Apple Inc. Find the depreciation and utization amount and the capex amount for the most recent fiscal year.

2. The KK Business' second capital asset investment project will require an initial investment of $624,000 and is expected to generate the following cash flows: Year 1 $175,000 Year 2 $155,000 Year 3 $165,000 Year 4 $145,000 Year 5 $345,000 A. What is the project's payback period? B. If the required rate of return is 14%, what is the project's net present value? The present value of $1 at compound interest of 14% for 1, 2, 3, 4 and 5 years is .877, .769, 675, .592 and 519, respectively. Note, the second capital asset will be sold at the end of year 5, cash proceeds of $240,000 are included in the year 5 cash flow. C. Which Project would you accept and why?

1. The KK Business is considering two capital asset investment projects. Project 1 is requires a capital expenditure of $1,125,000. The project has an estimated useful life of five years and no salvage value. The estimated net cash flows and net Income from the first project are as follows: The company's minimum desired rate of return is 14%. The present value of $1 at compound interest of 14% for 1, 2, 3, 4 and 5 years is .877, 769, 675, 592 and 519, respectively. Determine: (a) the average rate of return on investment, including the effect of depreciation on the investment, and (b) the net present value.

Q3: Why do firms prefer to invest their internally generated surplus funds in Marketable Securities instead of increasing dividends? [1.5 Mark]

Q1: Firms prefer internal Finance. Why? [1 Mark]

Q4: Why do firms use "issuing the equities" as the last resort, after debt and hybrid securities,to get the external funding? [1.5 Mark]

Q2: Why do firms avoid sudden changes in dividends? [1 Mark]

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