finance_assignment2-1

Finance_assignment2- - Finance Assignment 2-1 Flow of Funds Exercise Carson Company is a large manufacturing firm in California that was created 20

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Finance Assignment 2-1 Flow of Funds Exercise “Carson Company is a large manufacturing firm in California that was created 20 years ago by the Carson family. It was initially financed with an equity investment by the Carson family and 10 other individuals. Over time, Carson Company has obtained substantial loans from finance companies and commercial banks. The interest rate on the loans is tied to market interest rates and is adjusted every six months. Thus, Carson’s cost of obtaining funds is sensitive to interest rate movements. It has a credit line with a bank in case it suddenly needs to obtain funds for a temporary period. It has purchased Treasury securities that it could sell if it experiences any liquidity problems”, according to Jeff Mandura, author of Financial Markets and Institutions. Carson has a surplus unit because its assets value at about $50 million and generates sales of about $100 million each year. When the sales exceed the value of the assets that means that
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/28/2010 for the course MBA 737 taught by Professor Wright during the Spring '10 term at Heidelberg.

Page1 / 3

Finance_assignment2- - Finance Assignment 2-1 Flow of Funds Exercise Carson Company is a large manufacturing firm in California that was created 20

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online