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Corporate Finance


The sales manager of ABC Inc. submitted the forecasted credit sales of products for the the last six months of 2014 for budgetary purposes. 1) Sales Forecast 2014 (Units) July $ 200,000 August $ 225,000 September $ 164,000 The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled: Collections on credit sales: 45% in month of Sales 35% in the first month following sales 20% in the second month following sales Given these data., the total cash collected during July, August and September would be: XYZ Inc. is working on its cash budget for June. The budgeted beginning cash balance is $14,000. Budgeted Cash Receipts total $183,000 and budgeted Cash Disbursements total $182,000. The desired ending Cash Balance is $33,000. The company has a line-of-credit agreement with its bank up to $80,000 to borrow in case the Cash Balance at the end of a month does not meet the aforementioned minimum balance. ) Kimmel Company. has provided the following data concerning a proposed investment project: Initial investment $250,000 Life of the project 10 years Annual net cash inflows $32,000 Salvage value $5,000 The company uses a discount rate of 15%. Required: Compute the net present value of the project. The management of Erion Corporation is considering the purchase of an automated molding machine that would cost $280,534, would have a useful life of 5 years, and would have no salvage value. The automated molding machine would result in cash savings of $74,000 per year due to lower labor and other costs. Required: Determine the internal rate of return on the investment in the new automated molding machine. Show your work!