Answer:
A)
Bank reconciliation:
Bank balance Augusts 31 $18,340
+ Deposits in transit $2,830
<u>- Outstanding checks $3,520</u>
Reconciled bank account $17,650
Cash balance reconciliation:
Cash balance August 31 $17,350
+ Error in recording check $360
<u>- Bank fees $60</u>
Reconciled cash account $17,650
B) Cash account balance $17,650
Answer:
$5,570
Explanation:
The purpose of a bank reconciliation statement is to reconcile the difference between Cash Book balance and Bank Statement balance. Also it is used to check accuracy of Cash Book and the accuracy of Bank Statement.
Graham, Inc.'s April bank reconciliation statement is prepared as :
Graham, Inc.
Bank reconciliation statement as at April 30
Balance as per Bank Statement $5,120
Add outstanding lodgments $800
Add back error at the bank $115
Less unpresented checks ($465)
Balance as per Cash Book $5,570
therefore,
The reconciled cash balance at April 30 on the bank reconciliation should be $5,570.
Answer:
Year Cash Flow (A) Cash Flow (B)
0 -37,500 -37,500
1 17,300 5,700
2 16,200 12,900
3 13,800 16,300
4 7,600 27,500
1) Using an excel spreadsheet and the IRR function:
IRR project A = 20%
IRR project B = 19%
2) Using the IRR decision rule, Bruin should choose project A.
3) In this case, since the length of the projects is only 4 years, then there should be no problem with the IRR decision rule, but for projects with longer time lengths, the discounts rates might vary and the best option is to use the modified internal rate of return (MIRR). But in this case the NPV of project B is higher, then Bruin should probably project B because it has a higher NPV. The NPV is always more important then the IRR.
4) Again using an excel spreadsheet and the NPV function:
NPV project A = $6,331
NPV project B = $8,139
5) first we must subtract cash flows from A by the cash flows from B:
1 $11,600
2 $3,300
3 -$2,500
4 -$19,900
then we calculate the IRR = 16%
Bruin should be indifferent between the two projects at a 16% discount rate. That means that at discount rates above 16%, you should choose project A, but at discount rates below 16%, you should choose project B
Answer:
$40 million
Explanation:
The computation of stock price is shown below:-
For computing the stock price first we need to compute the firm value which is below:-
Firm value = Free cash flow-1 ÷ (Weighted average cost of capital - Growth rate)
= $70.0 million ÷ (10% - 5%)
= $70.0 million ÷ 5%
= $1,400 million
Stock price = (Firm value - Debt) ÷ Number of shares
= ($1,400 million - $200 million) ÷ 30 million
= $1,200 million ÷ 30 million
= $40 million
