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# Find the present value

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I need to verify the following short financial problems. Please, see an attachment. Thank you.

Financial Planning & Controls Review Worksheet

1. Find the present value of the following:

A. \$1,200 in 5 years @ 5%
B. \$3,000 in 10 years @ 9%

2. Find the future value of the following:

A. \$1,500 in 6 years @ 6%
B. \$1,500 in 6 years @ 6% [compounded semi-annually]

3. Find the present value [current price] of a bond with the following:

\$1000 par value
7% coupon rate
10% current market yield
20 years till maturity

4. Wizard Company produces a game selling for \$32. Last year Wizard sold 50,000 games, each of which costs \$6 to produce. Wizard incurred selling and administrative expenses of \$80,000 and depreciation expense of \$10,000. In addition, Wizard has a \$100,000 loan outstanding at 12%. Their tax rate is 40%. There are 100,000 common shares outstanding.

Prepare an income statement for Wizard in good form [include EPS].

5. Calculate the after-tax cost of the interest. Assume the company has issued 10,000 bonds with a coupon rate of 8% and a face value of \$1,000 per bond. The company has a marginal tax rate of 35%.

#### Solution Preview

Financial Planning & Controls Review Worksheet

1. Find the present value of the following:

A. \$1,200 in 5 years @ 5%

PV = FV/(1 + i)n where PV is the present value
FV is the future value
i is the discount rate
n is the period

PV = 1,200 = 940.23
(1.05)5

B. \$3,000 in 10 years @ 9%

PV = 3,000 = 1,267.23
(1.09)10

2. Find the future value of the following:

A. \$1,500 in 6 years @ 6%

FV = PV(1 + i)n where PV is the present value
FV is the future value
i is the discount rate
n is the period

FV = 1,500(1.06)6 = 2,127.78

B. \$1,500 in 6 years @ 6% [compounded ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer the present value, future value, prepare an income statement for Wizard in good form [include EPS], and calculate the after-tax cost of the interest.

\$2.49