Purchase Solution

Various Financial Management Problems

Not what you're looking for?

Ask Custom Question

1. An investor expects the value of a 1,000 dollar investment to double within 8 years. What is the expected annual rate of growth in the investment

2. A firm has a total sebt of 600,000 and equity of 400,000. What is the debt/net worth ratio and the debt to total assets ratio for the firm? please show the calculations

3. in brief, what happens to the value of money if prices in general fall?

4. What is the future value of a 10,000 investment after 18 years if the anual rate of interest is 8%? show calculations

5. A bond has a prinicipal amount of 1,000 an annual interest payment of 100 dollars and a maturity of 10 years. Whats the bondsvalue of price if comparable debt yields 12 percent

6. a firm has preffered stock outstanding that has 40 dollars of an annual dividend, a 1000 par value and no ,maturity. if comparable yields are 9 percent, what should be the price of the prefered stock.

7. your broker recomends that you purchase good mills stock at 30 dollars. the stock pays a 2.20 annual dividend that is expected to grow annually at 8 percent. (the same rate of growth is expected for its per share earnings) if you want to earn 15 percent on your funds, should you purchase this stock. show calculations

8. indentify three advantages of establishing a corporation rather than a sole proprietorship

9. what are the main functions of break even analysis

10. jeniffer wants to buy a new car four years from now that will cost 15,000. in order to meet this goal, how much money must she save annually, the funds earn an intrest of 6 %

Purchase this Solution
Solution Summary

The solution has various problems relating to annual rate of return, debt ratio, breakeven analysis

Solution Preview

1 An investor expects the value of a 1,000 dollar investment to double within 8 years. What is the expected annual rate of growth in the investment

You can use the rule of 72 which says that the period for doubling an amount is 72/r where r is the interest rate. If we know the period, then r is 72/period. Here period is 8 years, so the interest rate is 72/8=9%.
If you wish to do exact calculation, then 1,000 grows to 2,000 in 8 years. Use the compound interest formula 2,000=1,000*(1+r/100)^8. Solving this for r will give 9.05%.

2. A firm has a total sebt of 600,000 and equity of 400,000. What is the debt/net worth ratio and the debt to total assets ratio for the firm? please show the calculations

Networth is the total equity in a firm. Debt/Networth ratio is total debt divided by total equity of the firm.
Debt/Networth = 600,000/400,000 = 1.5
The fundamental accounting equation is
Assets = Liabilities + Owners Equity.
We are given that Liabilities ( these are nothing but the total debt - what the firm owes to others) are 600,000 and equity is 400,000. The total assets are 600,000+400,000=1,000,000
Debt/Total Assets = 600,000/10,000,000 = 0.6

3. in brief, what happens to the value of money if prices in general fall?

If the prices fall, the value of money rises. This is because we can buy more quantity for the same amount or buy the same quantity at a lower amount. A fall in prices, increases the value of money.

4. What is the future value of a 10,000 investment after 18 years if the anual rate of interest is 8%? show calculations

The future value can be found using the compound interest formula. The formula is
Future Value=Present Value * (1+r/100)^n
where r is the rate of interest and n ...

Purchase this Solution
Free BrainMass Quizzes
Motivation

This tests some key elements of major motivation theories.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

View More Free Quizzes
Related BrainMass Solutions

  • Multinational Finance

    175521 What new problems and factors are encountered in international as opposed to domestic financial management? 1.What new problems and factors are encountered in international as opposed to domestic financial management?

  • Annual report to assess the risk management strategy

    Financial Management: Text and Problems, 3rd edition, Tata McGraw-Hill Publishing Company Limited, New Delhi. 2. Charturvedi, A. (2002). Analysis of financial Management: 8th edition, Shree Mahavir Book Depot, New Delhi. 3.

  • Financial Statements, Financial Analyses, and Management of an Organization

    In most companies, planning is done by a team whose members represent the various units in the organization. e) It helps managers identify problems and deal with them before they aggravate.

  • Evaluating financial health

    Similarly, companies facing problems with cash management and working capital will attach more importance to liquidity ratios such as quick ratio and current ratio.

  • Homeland Security Strategies

    This department also helps the state or federal government in the process of regain from the various critical problems.

  • What are some ethical challenges which can occur when measur

    When we weigh the financial and productivity measures against the organization, management wants to present the organization in the best way possible, which is where ethical problems arise.

  • Corporate Finance Relevance

    Problems in financial management are exhibited in poor corporate governance whereby financial statements do not give an accurate position of a business.

  • Issues in International Financial Management

    182245 Issues in International Financial Management Identify and evaluate contemporary issues in international financial management description. // There are many contemporary issues that affect the international financial management description.

  • Consulting Practice

    Management consulting follows the same concept as that of the banking institutions, for example, banks provide financial capital and management consultants provide intellectual capital to clients (Thorp, 2011).

  • Domestic Financial Management, Arbitrage, Risk, and Contracts

    250395 Domestic Financial Management, Arbitrage, Risk, and Contracts 1. What new problems and factors are encountered in international as opposed to domestic financial management? 2. What does the term arbitrage profits mean? 3.

View More Related Solutions