1. Zhang Company has a loan agreement that provides it with cash today, and the company must...
Question:
1. Zhang Company has a loan agreement that provides it with cash today, and the company must pay $25,000 4 years from today. Zhang agrees to a 6% interest rate. The present value of 1 (single sum) for 4 periods at 6% is 0.7921. What is the amount of cash that Zhang Company receives today?
2.
The current year-end balance sheet data for a company are shown below.
Assets:
Cash $ 38,000
Marketable securities 45,000
Accounts receivable (net) 127,500
Merchandise inventory 149,500
Long-term investments 135,000
Plant assets (net) 517,500
Total assets $ 1,012,500
Liabilities and equity:
Accounts payable $ 148,700
Accrued liabilities 90,000
Notes payable (secured by plant assets) 254,800
Common stock ($12 par) 180,000
Contributed capital in excess of par 135,000
Retained earnings 204,000
Total liabilities and equity $1,012,500
Calculate the following ratios. Be sure to show your work.
Required:
(a) working capital
(b) current ratio
(c) acid-test ratio.
Expert Answer:
1 Present Value of Loan Agreement The present value PV formula is PV Future Value 1 Interest RateNum... View the full answer
