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Skandia Mining Company Financial Statements Income Statement Balance Sheet Assets Liabilities and Owner'S Equity

The weekly assignment asks students to answer 8 questions related to business finance concepts like determinants of sustainable growth, time value of money calculations, and compound interest. Students are asked to define key terms, calculate sustainable growth rates from financial statements, and determine future and present values of cash flows at given interest rates over different time periods.

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112 views2 pages

Skandia Mining Company Financial Statements Income Statement Balance Sheet Assets Liabilities and Owner'S Equity

The weekly assignment asks students to answer 8 questions related to business finance concepts like determinants of sustainable growth, time value of money calculations, and compound interest. Students are asked to define key terms, calculate sustainable growth rates from financial statements, and determine future and present values of cash flows at given interest rates over different time periods.

Uploaded by

IzzahIkramIllahi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Business Finance-1 (FIN506)

Weekly Assignment # 3

Instructor: Sana Tauseef


Semester: Fall 2019
Due Date: September 15, 11 p.m.

1. Based on the PRAT model, what are the various determinants of a company’s sustainable
growth? Discuss how each of these components impacts the company’s growth rate?
(8-10 lines)

2. Define (in your own words):


a. Compounding
b. Amortized Loan
c. Present Value
d. Perpetuity
(9-10 lines)

3. What three variables are integral in the calculation of Present Value and Future Value of
a cash flow? Briefly explain all three.
(6-7 lines)

4. The concept of Time Value of Money states that a dollar received today has a higher
value than a dollar received tomorrow. Using the concept of Ordinary Annuity and
Annuity Due, which one would you prefer as a lender and why?
(3-4 lines)

5. The table below shows the financial information for the Skandia Mining Company:

SKANDIA MINING COMPANY


FINANCIAL STATEMENTS
INCOME STATEMENT BALANCE SHEET
    ASSETS LIABILITIES AND OWNER'S EQUITY
$4,250.
SALES 0 CURRENT ASSETS $900.0 CURRENT LIABILITIES $500.0
$3,875. NET FIXED $2,200.
COSTS 0 ASSETS 0 LONG-TERM DEBT $1,800.0
TAXABLE INCOME $375.0     OWNER'S EQUITY $800.0
$3,100. TOTAL LIABILITIES AND OWNER'S
TAXES (34%) $127.5 TOTAL ASSSETS 0 EQUITY $3,100.0
NET INCOME $247.5        
DIVIDENDS $82.6        
ADDITION TO RETAINED
EARNINGS $164.9        

Using the table above calculate the sustainable growth rate for the company.
6. A machine is to be replaced after 5 years, when it is expected to cost Rs. 10,00,000. How
much equal sum should be set aside and invested, at the end of each year at 12% p.a. to
accumulate the desired sum?

7. If you invest Rs. 10,000 today for a period of 5 years, what will be its maturity value if
the interest rate per year is 15%?

8. How many years will it take for Rs. 5000 invested today at 12% p.a. rate of interest to
grow to Rs. 160,000?

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