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Assign1 - ACTSC 371 Corporate Finance 1 Assignment 1 Due...

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ACTSC 371 - Corporate Finance 1 Assignment 1 – Due May 25th 4:30 pm Question 1: The following are the 2006 Income Statement and 2005 and 2006 Balance Sheets for ABC Inc. Income Statement 2006 Revenues 1000 Operating Expenses 650 Interest Expense 100 Depreciation 100 Net Income 150 Dividends 140 Balance Sheets 2005 2006 Cash 50 10 Other Current Assets 20 20 Patents 100 100 Other Fixed Assets 900 1000 Total Assets 1070 1130 Current Liabilities 50 20 Long Term Debt 820 710 Shareholder’s Equity 200 400 Total Liabilities and Equity 1070 1130 (a) Find the operating cash flow for 2005 (b) Calculate the cash flow of the firm. 1
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Question 2: In this question, please refer to the 2006 Income statement and 2006 Balance Sheet for ABC from Question 1. Assume ABC wishes sales to grow by 25% in 2007. Assume the following: Sales, operating expenses and depreciation are all expected to grow at the same rate. Interest costs and dividends are expected to remain constant. All assets (except patents) are expected to grow at the same rate as sales.
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