a. If you put $1200 in the bank now, how much will you have after six years? What if you earn 12% compounded interest per year? b. If you buy a painting for $300 and are able to sell it after 4 years for $500, what was your effective annual interest rate on your investment? c. What is the effective interest rate of an adve
1. Discuss the time value of money and its importance. Explain the relationship of discounting and compounding. Suppose you were considering depositing your savings in one of three banks, all of which pay 5 percent interest; bank A compounds annually, bank B compounds semiannually, and bank C compounds daily. Which bank would y
A stock is expected to pay a dividend of $2 per share in one month and in four months. The stock price is $40 and the risk-free rate of interest is 6% per annum with continuous compounding for all maturities. An investor has just taken a short position in a five-month forward contract on the stock. What are the forward price an
Documents uncovered after the Exxon Valdez oil spill in Alaska revealed that Exxon could have used double-hulled oil tankers that would have prevented the spill, but the cost of refitting their fleet of single-hulled tankers was considered too high. Exxon determined that the cost of cleaning up an oil spill would be less than th
1. Use the appropriate form of the percentage formula. Find P if R=6623% and B=150. 2. The formula Total cost=Cost+Shipping cost+Installation is used to find the total cost of a business asset. The formula can be written in symbols as T=C+S+I. Solve the formula for I, the installation cost of the asset. 3. Complete the inc
1. One manufacturer needs to calculate the net price of an order with a list price of $900 and a trade discount series of 10/8/5. Use the net decimal equivalent to find the net price. 2. Find the acid-test ratio for a business if the balance sheet shows the following amounts: cash, $32,776; receivables, $13,039; marketable
9-11 Cost of reinvested profits and new common shares - CAPM Using the data for each firm shown in the following table, calculate the cost of reinvested profits and new common shares using the CAPM. P0 Rf Market Total of Firm
18. Find the amount that should be set aside today to yield the desired future amount. Future amount needed $9000 Interest rate 48% Compounding period Quarterly Investment time 4 years 19. Rosa Burnett needs $6,000 in three years to make the down payment on a new car. How much must she invest today if she receives 2.5
15. Compute the compound amount and the interest on a loan of $10,800 compounded annually for five years at 8%. Use the $1.00 future value table or the future value and compound interest formula. 16. John Smith has $9,000 that he plans to invest in a compound-interest-bearing instrument. His investment agent advises him th
Here are two questions regarding the interest and investments. Margaret Hillman invested $8,000 at 1.8% compounded quarterly for one year. Find the future value and the interest earned for the year. How much should Linda Bryan set aside now to buy equipment that costs $6,200 in one year? The current interest rate is 0.95
8. A loan for $3,500 with a simple annual interest rate of 11% was made on September 5 and was due on November 21. Find the ordinary interest. 9. Find the discount and proceeds on a $3,220 face-value note for three months if the discount rate is 9.5%. (Use the banker's rule.) 11.Shanquayle Jenkins needs to calculate the
Your salary for the coming year is $100,000 (payable one year from now) and you expect to work for another 30 years. You expect your annual base salary to grow at a 4% annual rate during the remainder of your career. Your company's pension plan calls for you to receive a yearly pension payment after you retire equal to 25% of yo
Find the amount that should be set aside today to yield the desired future amount. Future amount needed, $7000, interest rate, 12%, compounding., Semiannually, investment time, two years. (see attached chart) Dewey Sykes plans to open a business and four years when he retires. How much must he invest today to have $10000 whe
11. A man makes a simple discount note with a face value of $2300, a term of 160 days, and a 18% discount rate. Find the discount. (Use the banker's rule) 12. A man has a simple discount note for $6600, at an ordinary bank discount rate of 8.72%, for 40 days. What is the effective interest rate? Round to the nearest 10th of a
Q4 The company is in the 40 percent tax bracket. Its cost of goods sold always represents 60 percent of its sales. That is, if the company's sales were to increase to RM1.5 million, its cost of goods sold would increase to RM900,000. Q5 The company's CEO is unhappy with the forecast and wants the firm to achieve a net incom
Q1 You have just borrowed RM20,000 to buy a new car. The loan agreement requires for 60 monthly payments of RM444.89 each to begin one month from today. If the interest is compounded monthly, what is the effective annual rate on this loan? Q2 Era Baru Bhd. recently reported net income of RM385,000. The tax rate is 40 percen
Larry is 40 year old and has never married. He wants to retire at age 62 with an 80% wage replacement ratio. Larry currently earns $100,000 as an employee and has managed to save $100,000 towards his retirement goal (including investment assets and cash equivalents). He is currently saving $5,000 per year in his 401(k) plan.
1. Why is it necessary to know about time value of money concepts? Why can't you just make judgments about future cash flows based purely on the size of the cash flows? 2. Define Future Value. 3. Define Present Value. 4. What are annuities? 5. (calculating future value) You buy an 8 year, 7% CD for $1,000. In
One year ago, the Beauty Skins Bhd deposited $3,600 in an investment account for the purpose of buying new equipment four years from today. Today, it is adding another $5,000 to this account. It plans to make a final deposit of $7,500 to the account next year. How much will be available when it is ready to buy the equipment, ass
Part 1: (a) The LUFTUS corp offers a 6% bond with a current market price of $875.05 . The yield to maturity is 7.34% . The face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures? (b) A corporate bond with a face value of $1,000 matures
Q7. The zero coupon bonds of Markus Inc. have a market price of RM394.47, a face value of RM1,000, and a yield to maturity of 6.87%. When will this bond mature? (Answer in number of years.) Q8. Windmill Corp has a 15-year bond issue outstanding that pays a 9% coupon. The bond is currently priced at RM894.60 and has a par value
Q1 Camel Industries is expected to pay an annual dividend of RM1.30 a share next month. The market price of the stock is RM24.80 and the growth rate is 3 percent. What is the firm's cost of equity? Q2 An investment promises the following cash flow stream: RM1,000 at Time 0; RM2,000 at the end of Year 1 (or at T=1); RM3,000
Discuss how you can use: - organization, time - management, and communication - towards your career or how you can use these to be a successful - online learner
Using a 3.8% discount rate, calculate the Net Present Value, Payback, Profitability Index, and IRR for each of the investment projects below (note, the inflows are for each year). Based on your calculations rank the projects and support you answer. Project 1 Initial Invest= $520,000, Cash inflows of $100,000 for years 1-5 a
1- Give ONE (1) example to describe how corporate social responsibility can be consistent with effort of the management to maximize the firm's value. 2- Doing business in the era of globalization exposes a company to more challenges. Provide ONE (1) example of these challenges and explain the action that a financial manage
1. How much will my annual payments be on a $15,000 loan at 12% interest, to be paid off in 4 years? 2. How much will my monthly payments be on a $15,000 loan at 12% interest, to be paid off in 4 years? 3. How long will it take me to save $13,816.45 if I make annual payments of $1,000 at 7%? 4. Which of the following
1. How much would you accept in lump sum today, in place of a lottery payment of $50,000 at the end of each of 20 years. ($1.000,000 in total), assuming you could invest it at an 8% rate? 2. What will be the value in 20 years of $5,000 contributed at the end of each year into an IRA (individual retirement account) which pay
I am having problems understanding the concepts and mathematical formulas of time value of money especially future value, present value and etc... 1. Provide a definition of time value of money. 2. To what extent is it important for financial managers to understand the concept of time value of money? Why? Please explain your
Advance Auto Parts AAP Search Advance Auto Parts website and find the section called "Investor Relations" to obtain the financial information of the company over the past several years. Answer the following questions: 1. Provide a brief description of the Advance Auto Parts Inc, its main business and operational activitie
a. If the goal of a firm is to maximize the shareholders' wealth, does it mean profit is not important at all? Explain your answer. b. What are the advantages and disadvantages of the three principal forms of business organization? c. Briefly explain the term "agency costs" as related to a corporation. How can agency problem