Day: April 26, 2018

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 percent. (Use banker’s rule)

13. A man holds a note of $5000 that has an interest rate of 13% annually. The note was made on March 16 and is due November 14. He sells the note to a bank on June 12 at a discount rate of 12% annually. Find the proceeds on the third-party discount note. (Use the bankers rule)

16. Tom Bond borrowed $6200 at 5 ½% for three years compounded annually. What is the compound amount of the loan and how much interest will he pay on the loan?

22. Compute the amount of money to be set aside today to ensure a future value of $4300 in one year if the interest rate is 8.5% annually, compounded annually.

23. Ronnie Cox has just inherited $27,000. How much of this money should be set aside today to have $17,000 to pay cash for a Ventura Van, which he plans to purchase in one year? He can invest at 1.7% annually, compounded annually.

The Used Books Company is a small online retailer operating out of a garage apartment. The owner buys books at garage sales, thrift shops, library sales, and whenever an opportunity arises. The company classified all books into five categories based on cost of acquisition and estimated sales price. See below for details about books purchased and sold during the last year (20XX).

Price Categories

A B C D E
Units Sold 2,000 1,000 500 400 400
Units Purchased 3,000 1,200 1,000 1,000 1,000

Resale Price $4.00 $15.00 $25.00 $45.00 $40.00
Cost $0.50 $5.00 $10.00 $20.00 $20.00

In addition to purchasing inventory (used books), The Used Book Store incurs some operating expenses.

Variable operating expenses
Shipping per book $ 1.50

Fixed expenses
Internet-related costs $5,000
Travel, etc. 2,000
Advertising 1,000
Other overhead 3,000

Required:
– Prepare a variable costing (behavioral) income statement for the company in good format.
– Prepare a second variable costing statement assuming 90% of all the books in each category purchased were actually sold.
– Prepare a third variable costing statement assuming that the price is increased by 50% for all five categories (use original sales information).
– What type of information do you derive from the income statements you prepared above? The owner enjoys the used-book business. Any suggestions as how to turn this into a full-time business venture so the owner can quit his other job?

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. His employer’s plan calls for a 50% match for contributions up to an employee elective deferral of 6%.

Financial Goal: Larry’s primary goal, for this example, is to retire at 62 with an 80% wage replacement, including Social Security, projected to be $30,000 in today’s dollars at normal retirement age of 67. He wants to plan for a life expectancy to age 95.

Economic and Investment Information:
General inflation is expected to average 3.0% annually for the foreseeable future.
Larry’s expected investment portfolio rate of return is 8.5%
Larry’s marginal income tax rate is 25%.

Problems:
Calculate how much Larry will need on the day he retires to meet his retirement goal.
Calculate how much he needs to save regularly to meet his retirement goal. (Discuss if he can meet his current retirement goal with his current savings pattern.)
Provide 3 alternatives for Larry to consider and explain why each alternative might work. (Explain why each alternative might or might not work and explain why.)

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 income equal to RM240,000. Assume that Hebat’s interest expense remains constant. At what level of sales the company has to achieve it wants to obtain this net income.

Q6
Nilai Services Bhd. reported RM2.3 million of retained earnings on its balance sheet last year. This year, the company has incurred a loss of RM500,000 (negative RM500,000). Despite the loss, the company still paid RM1.00 dividend per share this year. The company’s earnings per share for this year were -RM2.50 (negative RM2.50). What was the level of retained earnings on the company’s balance sheet this year?

Question 1:
On 1 January 2012, Rose Tremayne opens a bank account in the name of her new trading business, Rose Tremayne Trading (RTT). She puts £112,000 of her own money into the business bank account. The following is a summary of transactions during 2012:
(1) RTT takes out a short-term bank loan of £45,000 cash.
(2) RTT buys non-current assets at the start of January at a cost of £72,000 paying cash.
(3) Buys inventory of £60,000, paying cash.
(4) Inventory costing £48,000 is sold on credit for £72,000.
(5) Purchases inventory on credit for £84,000.
(6) Inventory costing £6,000 is sold for £9,000 cash.
(7) RTT purchases a 12 month insurance policy on April 1 for £4,000 providing cover until March 31 2013.
(8) RTT purchases two lots of land for £60,000 (ie £30,000 per lot). The purchase price of £60,000 is paid after RTT takes out a ten year loan of £34,000.
(9) Sells one of the lots of land for £33,000 cash.
(10) RTT pays rent of £15,000 for the first nine months of 2012 but owes rent of £5,000 on 31 December 2012.
(11) Inventory costing £69 000 is sold for £103,000 cash.
(12) Wages for the period amounting to £30,000 are paid in full.
(13) RTT pays off £15,000 of its short term bank loan.
(14) RTT pays total interest of £4,000 for the long-term bank loan for 2012.
(15) Customers pay £30,000 of cash owing.
(16) RTT pays its trade creditors £48,000.
(17) The equipment purchased for £72,000 at the start of January has an expected useful life of four years and an expected scrap value of zero. Assume straight-line depreciation is to be charged on these assets.

Instructions:
(a) Prepare a balance sheet for RTT as at 31st December 2012.

(b) Prepare an income statement for RTT for 2012 and briefly comment on RTT’s performance during 2012.

(c) Prepare a cash flow statement for RTT for 2012.

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. Interest is compounded annually. How much is it worth at maturity?

6. (calculating present value) What’s the present value of $10,000 to be received in 6 years? (Your required rate of return is 10% a year.)

7. (calculating the rate of return) A friend promises to pay you $500 three years from now if you loan him $400 today. What interest rate is your friend offering you?

8. (calculating the future value of an annuity) If you invest $100 a year for 20 years at 6% annual interest, how much will you have at the end of the 20th year?

9. (calculating the present value of an annuity) How much would you be willing to pay today for an investment that pays $700 a year at the end of the next 5 years? (Your required rate of return is 6% a year.)

10. (Rate of return of an annuity) You would like to have $1,000,000 40 years from now, but the most you can afford to invest each year is $1,000. What annual rate of return will you have to earn to reach your goal?

11. (Monthly compounding) If you bought a $1,000 face value CD that matured in six months, and which was advertised as paying 6% annual interest, compounded monthly, how much would you receive when you cashed in your CD at maturity?

12. (Annualizing a monthly rate) Your credit card statement says that you will be charged 1.03% interest a month on unpaid balances. What is the Effective Annual Rate (EAR) being charged?
13. (Monthly loan payment) Best Buy has a flat-screen HDTV on sale for $1,799. If you could borrow that amount from Carl’s Credit Union at 6% for 1 year, what would be your monthly loan payments?

14. (PV of a perpetuity) If your required rate of return was 6% a year, how much would you pay today for $100 a month forever? (that is, the stream of $100 monthly payments goes on forever, continuing to be paid to your heirs after your death)

15. (PV of an uneven cash flow stream) what is the PV of the following project?
(Assume r = 7%)
Year Cash Flow
1 $1,000
2 $2,000
3 $3,000
4 $4,000

16. (FV of an uneven cash flow stream) what is the FV at the end of year 4 of the following project?
(Assume r = 7%)
Year Cash Flow
1 $1,000
2 $2,000
3 $3,000
4 $4,000

17. Define the Capital Asset Pricing Model (CAPM).

18. Define “beta” as it applies to common stocks.

19. You have two stocks in your portfolio. $20,000 is invested in a stock with a beta of 0.6 and $40,000 is invested in a stock with a beta of 1.4. What is the beta of your portfolio?

20. If the risk-free rate is 2% and the expected rate of return on the stock market is 7%, what is the required rate of return on a stock with a beta of 1.4 according to the CAPM?

Hello,

I’m looking to flesh out some more inputs regarding the project I’m writing on (Impact of Uninsured and Unisured Population). I have Sharp Healthcare System in San Diego California as my case study. Im on Part 3 of my project. Can someone help me with the following criterias?

1.) Evaluate the overall risk to the organization if the rates of uninsured and underinsured continue to rise at 2-3% over the next five years. How is the risks being measured? (I guess, any not for profit hospital may be used as guideline).

2.) Give at least five key initiatives for building the organizational strength to meet these risks. The initiatives should detail the issue, the degree of risk, the internal and external environmental strengths and weaknesses, and your assessment of the ability of the organization to effectively respond to these risks. Factors that should be considered include the capacity of the organization to respond to change, the willingness of the leadership/ management to commit to organizational enhancement, and the barriers to organizational effectiveness.

Description: Now it is time to bring everything together based upon the feedback that you have received. This is also another opportunity to review your plan and make revisions that you feel are pertinent. The business plan should include the concepts and ideas that were covered throughout this course. The following points need to be addressed in your business plan for the establishment of an e commerce site: The e commerce infrastructure Marketing concepts for the e commerce environment Communicating effectively in the e commerce environment Privacy and security issues in conducting business online The issues and challenges of ethics in conducting business online Utilizing social media outlets to enhance e commerce sites The implications of business to business e commerce for your business Anything else that you deem important to support your business plan for expansion to the Internet The deliverable length is 1,250 1,500 words. Ensure that the assignment adheres to APA formatting. Do not forget to include a cover page and reference page with all of your resources.

I’m having a hard time setting up an Excel solver model for the problem below:
Owens-Wheat uses two production lines to produce three types of fiberglass mats. The demand requirements for each type of mat (in tons) for the next four months are as follows:

Month Mat Type
1 2 3
1 200 300 400
2 300 100 300
3 200 400 200
4 300 200 100

If it were dedicated to simply producing a mat of a single type, a single line 1 machine could produce either 20 tons of a type 1 mat or 30 tons of a type 2 mat. Similarly, a single line 2 machine could produce either 25 tons of type 2 mat or 28 tons of type 3 mat. Note that mat type 1 cannot be produced on line2, while mat type 3 cannot be produced on line 1. If costs $ 5,000 per month to operate a single machine on line 1, and $ 5,500 to operate a single machine on line 2. A cost of $ 2,000 is incurred each time a new machine is purchased for either line, while a cost of $ 1,000 is incurred when a machine is retired from service. At the end of each month, Owens would like a minimum inventory of 50 tons of each mat type and the cost of holding one ton on inventory for a month of any mat type is $ 5. At the beginning of month 1, the company has 5 line 1 machines, and 8 line 2 machines. Determine a minimum cost production schedule for each mat type of each production line.

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 at the end of Year 2; and RM5,000 at the end of Year 3.
At a discount rate of 5%, what is the present value of the cash flow stream?
Q3
Recently you invested in a 20-year asset that pays you RM100 at t = 1, RM500 at t = 2,
RM750 at t = 3, and some fixed cash flow, X, at the end of each of the remaining 17
years. You purchased the asset for RM5,544.87. Alternative investments of equal risk
have a required return of 9%. What is the annual cash flow received at the end of each
of the final 17 years, that is, what is X?
Q4
You deposit RM1,000 in a bank account that pays 6% nominal annual interest, compounded
monthly. How much will you have in your account after 3 years?