Words QUESTION 5 Given an inlerest rate of 5.85 percent per year, what is the va

Question

Words QUESTION 5 Given an inlerest rate of 5.85 percent per year, what is the value at year t-8 of a perpetual steam of $2,500 payments that begin at year t 25 O $16,412 02 O $17 208.00 O $34,335.96 O $36,235.06 o s3671 1.41 QUESTION Home Supply, Inc. has compiled the following information 2013 2014 Sales Interest paid Long-term debt Common stock 427 ,400 19,800 260,000 $511,500 21,600 295,000 160,000 159.000 160.00 Cliek Save and Submit to save and submit, Chiek Save All Answers to save all answers. Save All An ??@ w?

Explanation / Answer

Ans 5) Perpetuatity value at year 25 = $2500/.0585

= $42735

Value at year 8 = $42735/(1.0585)^16 = $17208

Question 6 is related to accounting.

Cash flow from asset = Net change in fixed asset - Change in Net working capital

= (392200 - 336900) - (41500 - 36700 + 58800 - 56800 + 38200 - 34900 + 32900 - 36800)

= $49100

Cash flow to share holders = Dividend paid - change in common stock - change in retained earning

= (511500-21600- 23500-61100-289300 - 39400)-(160000 - 1500000)-( 32700 - 28600)

= $62500

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