You are examining the financial statements of the Geelong Football Club (GFC). According to the Income Statement
Question:
You are examining the financial statements of the Geelong Football Club (GFC). According to the Income Statement of GFC it made a loss while the Statement of Cash Flows of GFC shows a positive cash flow for the year. Explain how this could happen and support your discussion with suitable examples?
Provide an example of short-term finance, long-term finance and equity finance and briefly explain how GFC could use these to fund the organisations business operations?
The directors of Shenzhen Rail Ltd are considering the purchase of a new high-speed train. The details of the proposal are as follows:
Cost: $6,000,000.
Additional revenues generated per year: $1,500,000.
Additional operating and maintenance costs per year: $260,000
Required rate of return: 12 per cent.
(All cash flows occur at the end of each year)
The company has a policy of keeping its trains for only four years. Consistent with this policy, if the new train is purchased it will be traded-in on a new train after four years. At that time the train is expected to have a trade-in value of $1,500,000
Required
(a) Can you calculate the net present value for the proposed purchase of a new high-speed train and specify whether the project is acceptable. (show all workings)
(b) How money is said to have a 'time value'?