5. Your company just bought a commercial freezer to chill executive martinis. The freezer cost $23,000. You expect the freezer to last to last 9 years and be worth $1200 at the end of that period. Calculate the depreciation schedule for the asset, using the straight line depreciation model. How did the purchase of the freezer affect your balance sheet if you paid cash for the asset?

6. Apple Inc had a closing share price of $186 per share at the end of 2023. It had earnings per share of $2.18 at the end of 2023.Calculate Apple's PE ratio. Other companies in the same industry have average PE ratios of less than 60. What does this suggest about Apple Inc?

7. FINA Inc produces a line of commercial freezers that it sells to bar and restaurant companies. They produce 500 of these freezers each month, at a cost of $900 per freezer. At the beginning of March 2024, they had 42 freezers unsold, in the warehouse. In March 24 they produced the usual 500 freezers and sold 400 of them.What was the ending inventory in April 24 and what was the cost to finance this inventory, assuming an annual percentage rate of 5% on short term debt for FINA Inc?

8. If FINA Inc extends 30 day open book credit to all customers, what was the additional financing cost for that credit on the freezers sold in April 24 but not paid for until May 24?

9. FINA Inc has a policy of maintaining at least $100,000 in cash in their checking account, to reduce risk and maintain a favorable Current Ratio, as that is considered important to their investors. They earn 1% annual interest on the funds in their checking account. This year, they financed $22 million in working capital at a short term cost of debt of 6%. What is the cost to finance the cash in their checking account?

Answer rating: 100% (QA)

5 Depreciation Schedule using Straight Line Depreciation Model Cost of the freezer 23000 Residual va... View the full answer