Please see attachment.
1. Explain the difference between investing and saving.
2. List, and explain, three motivations for investing.
3. Using automobiles as an analogy, explain the difference between the primary market and secondary market.
4. Tom has come to you for some help in organizing his affairs. He has supplied you with the following information and asked you to prepare a net worth and annual income statement for him.
Tom is 35 years old, makes $36,000 (after payroll deductions) per year from his job, and receives interest of $390 per year from miscellaneous investments.
Tom has been tracking his expenses and has given you the following estimates:
? mortgage payments, including property taxes and interest, $5,886 ($3,094 is interest)
? groceries $4,800
? holidays $3,500
? car payments, including interest, $4,778 ($958 is interest)
? utilities $3,000
? house and car insurance $1,600
? gas and car maintenance $2,800
? life and disability insurance premiums $400
? house maintenance $1,500
? household expenses $600
? medical and dental expenses $400
? entertainment and lunches $5,500
? gifts $1,400
? clothing $3,400
? miscellaneous expenses $3,200.
Tom has the following debt:
? credit cards with balances owing $2,800
? line of credit $5,000
? mortgage $62,000
? car loan $18,500.
Tom also has estimated the following:
? value of house $100,000
? cash in bank $1,800
? CSBs $8,000
? furnishings and other personal assets $18,000
? car $20,000
? RRSP $28,500.
Tom would like to increase his contributions to his RRSP, but often finds cash is tight, last year he could only contribute $3,000.
Prepare a net worth and annual income statement for Tom.
5. How much income tax would Tom have to pay in 2000 if his taxable income was $52,000? Assume Tom is an Alberta resident, and ignore flat, surtaxes and personal exemptions. Deduct the RRSP contribution in computing taxable income.© BrainMass Inc. brainmass.com October 25, 2018, 1:28 am ad1c9bdddf
Intro to Financial Analysis
Compare the GAAP and economic balance sheets.
Dell, Inc. www.dell.com
Using the GAAP balance sheet, for each item, determine where it should be classified in the economic balance sheet (i.e., core operations, nonoperating net assets, debt claims, other capital claims, or equity claims). Create a two-column table in Word to show the corresponding accounts.
Determine whether any other items should appear on the economic balance sheet that is not on the GAAP balance sheet.
Determine if information exists in the annual report or elsewhere that can assist in valuing the non-operating net assets, debt, and other capital claims.
Estimate the cost of equity, WACC, and unlevered cost of equity.
Use the same company (Dell).
Find the beta for your company use: http://finance.yahoo.com/q/ks?s=AIG
Estimate your company's cost of equity.
Estimate your company's weighted-average cost of capital.
Estimate your company's unlevered cost of equity.
Show your calculations in an Excel document. Be sure to label each calculation clearly.
Combined income and cash flow statement
Download the company's annual report from its website, or the company's Form 10-K from the U.S. Securities and Exchange Commission (SEC) website [www.sec.gov].
Confirm that the firm's income, dividends, and other capital transactions explain the change in equity for the most recent year. (You may need to consult the statement of shareholders' equity.)
Confirm that the firm's cash flow statement begins with the same net income amounts found in the income statement.
Confirm that the firm's cash flow statement shows a change in cash that is equal to the difference between cash shown on the balance sheet at the beginning and end of the year. In Excel, construct a combined income statement and cash flow statement.
Write 1-2 paragraphs that answers the following: what would you do if you found there was a huge difference in the net income amounts and the reported cash flow amounts? How could technology limit the likelihood of this happening again?
Finally, prepare a trend analysis of operating ratios for at least three years' worth of financial data. Prepare the analysis in Excel. You may wish to create a common-sized income statement first, but it isn't required.
If you adjusted for any nonrecurring items in step (1), explain the adjustments in a separate Word document. Use any other information in your company's annual report to explain the change in revenues, gross margin percentage, and operating margin percentage. Add this information to a Word document.View Full Posting Details