Business College

Blair Madison Co. issues $2.4 million of new stock and pays $331,000 in cash dividends during the year. In addition, the company took advantage of falling interest rates to borrow $1.64 million in a new bond issue and paid off existing bonds with a face value of $2.70 million. The company bought 514 of another company's $1,140 bonds at a $114,000 premium. The net cash flow provided by financing activities is:

Answers

Answer 1

Answer: $1,009,000

Explanation:

Based on the information given, the net cash flow provided by financing activities will be:

New stock issued = $2,400,000

Add: New bond issued = $1,640,000

Less: Cash dividend = $331,000

Less: Existing bonds paid = $2,700,000

Net cash flow = $1,009,000

Related Questions

A firm will maximize the present value of future profits by maximizing current profits when: the growth rate in profits is constant. the growth rate in profits is larger than the interest rate. Correct! the interest rate is larger than the growth rate in profits and both are constant. the growth rate and interest rate are constant and equal.

Answers

Answer:

the interest rate is larger than the growth rate in profits and both are constant.

Explanation:

In the case when the firm wants to maximize the present value of the profits that arise in near future so here the current profits would be maximize at the time when the rate of interest would be more than the growth rate and both would remain constant

Hence, the option c is correct

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