Essay on Cash Flow

Words: 910
Pages: 4

Application of Cash flow formulae [problems 1-5], Depreciation [problems 6-8] and Break-even Analysis [problems 9-10]

Total Marks: 100

Problem #1 [5] What amount would you need to pay each January 1 into a savings account if at the end of 15 years (15 payments) you desire RM 30,000? Annual interest is 7%. (Note: The last payment will coincide with the time of RM RM 30,000 balance.)

Problem #2 [5] A future amount, F, is equivalent to $1,500 now when six years separate the amounts and the annual interest rate is 12%. What is the value of F?

Problem #3 [5] A present obligation of $20,000 is to be repaid in equal uniform annual amounts, each of which includes repayment of the debt (principal) and interest on the
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Should the company buy the new equipment?

What are the break-even points ($ and units) for the two processes?

Problem # 10 [5+6+7=18]

The J & J Company has three product lines of belts – A, B, and C – having contribution margins of $3, $2, and $1, respectively. The president foresees sales up to 200,000 units in the coming period, consisting of 20,000 units of A, 100,000 units of B, and 80,000 units of C. The company’s fixed costs for the period are $250,000.

a) What is the company’s break-even point in units, assuming that the given sales mix is maintained?

b) If the mix is maintained, what is the total contribution margin when 200,000 units are sold? What is the operating income?

c) What would be the operating income become if 20,000 units of A, 80,000 units of B, and 100,000 units of C were sold? What is the new break-even point in units if these relationships persist in the next period?

Tips for submission:

13 Use a cover page,

14 Write down your matric number, name, course title, assignment number etc.

15 Put the ‘Due date for Submission’ and the ‘Date of Submission’

16 Try to solve the problems yourself for deeper understanding. (In case of dire need, u can seek help from your friends, but don’t do it at the first