The Wonderful Widget Company Future. Extending the budget summary of the Widget Company (Table 4.10), assume that, for 2014, total receipts are $975,000, operating expenses are $850,000, employee benefits are $290,000, and security costs are $210,000.
a. Based on the accumulated debt at the end of 2013, calculate the 2014 interest payment. Assume an interest rate of 8.2%.
b. Calculate the total outlays for 2014, the year-end surplus or deficit, and the year-end accumulated debt.
c. Based on the accumulated debt at the end of 2014, calculate the 2015 interest payment, again assuming an 8.2% interest rate.
d. Assume that in 2015 the Widget Company has receipts of $1,050,000, holds operating costs and employee benefits to their 2014 levels, and spends no money on security. Calculate the total outlays for 2015, the year-end surplus or deficit, and the year-end accumulated debt.
e. Imagine that you are the CFO (chief financial officer) of the Wonderful Widget Company at the end of 2015. Write a three-paragraph statement to shareholders about the company’s future prospects.
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