Desiree Smith

ASSIGNMENT 2
1. Complete 2 on page 137 (Direct Method)

Midland Manufacturing Corporation

Statement of Cash Flow
For the Year Ended December 31, 2016

Cash Flow from Operating Activities:

Net Income 10,000
Depreciation Expense 5,000
Accounts Receivable (1500)
Inventory (1500)
Accounts Payable 1000
Accruals 1000
Deferred Federal Income Tax 2000
Net Cash Flows from Operating Activities 16,000

Cash Flows from Investing Activities:

Fixed Assets- Purchase of equipment (12,000)
Fixed Assets- Retired equipment 2000
Net Cash Flows from Investing Activities (10,000)

Cash Flows from Financing Activities:

Long Term Debt (4,000)
Dividends (5,000)
Proceeds from sale of new stock 2000
Net Cash Flows from Financing Activities (7000)

Net Decrease in Cash- Ending Cash Balance -1000

Desiree Smith

2. Complete ST1 on page 179

a. 1,000 (1+0.08/1^5)
1,000 (1.08^5)
= $1,469.33

b. 1,000(1+0.08/4^4x5)
1,000(1.02^20)
=$1,485.95

Complete 1,3,4, 7 on page 180

1. 3 years = $1191.02
5 years= $1338.23
10 years= $1790.85

3. FVAN=PMT(FVIFA)(1.09)
= $20000(11.028) (1.09)
= $240,410.40

4. a. PVAND = PMT(PVIFA )(1.08)

= 1200(7.536)(1.08)
=$ 9,766.66

b. Seeing that its $10,000 at present value, I prefer condition

1 (solution to 4-a) @ $9,766.66 which is less.

7. 4% (annually)= 800(1.04^8)= $584.53

8%(annually)= 800/(1.08^8)= $432.22
20% (quarterly)= 20/4=5% = 800/(1.05^8x4)= $167.89
0% ((annually)= 800/(1.0^8)= $800

Complete 11, on page 181

Desiree Smith

5%= (Present value annuity factor of 5% for 25years x$70)+

(1000/1.05^25)
= (70x14.0939) + (1000/3.386)
= 986.57+295.30
= $1,281.87

7%= (Present value annuity factor of 7% for 25years x$70)+

(1000/1.07^25)
= (70x11.6536) + (1000/5.4274)
= 815.75+184.23
= $1,000.00

12%= (Present value annuity factor of 12% for 25years x$70)+

(1000/1.12^25)
= (70x7.8431) + (1000/17.0001)
= 549.02+58.82
= $607.84