Complete Question:
The complete question can be seen the in the attachment at the end of the solution of the question.
Answer:
Option B. -$182,057
Explanation:
The Cash flow from financing activities can be calculated by using the following formula:
Cash flow from financing activities = Changes in the equity finance
+ Changes in long term borrowings + Changes in short term borrowings
- Interest paid - Dividends paid
Here
Changes in the equity = $175,000 common stock in year 2008
- $125,000 common stock in year 2008 = $50,000
Changes in long term Borrowings = $61,290 - $78,445 = - $17,155
Changes in short term Borrowings = $16,753 - $12,004 = $4749
Interest paid is $0 because interest rate is not given hence we can't calculate it.
Dividends paid = $190,568 Opening Retained Earnings + $248,462 Net Profit for the year - $219,379 Closing Retained Earnings = $219,651
Now, by putting values in the above equations, we have:
Cash flow from financing activities = $50,000 - $17,155 + $4749 - 0 - $219,651 = -$182,057
Answer:
a. 4.89%
b. 5.23%
Explanation:
We use the rate formula which is shown in the attached spreadsheet
Given that,
Present value = $2,000 × 108.96% = $2,179.20
Future value or Face value = $2,000
PMT = $2,000 × 5.7% ÷ 2 = $57
NPER = 16 years × 2 = 32 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this,
a. The yield to maturity of the bond is 4.89%
b. The current yield would be
= 57 × 2 ÷ $2,179.20
= 5.23%
