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 your final year’s base salary. The first payment will be made one year after your retirement, and you expect to live for twenty years after your retirement. The interest rate is 8% per year.
a) What is the amount of the yearly pension payment that you can expect to receive under this plan (assume that you will receive your $100,000 base salary payment one year from now)?
b) Now suppose you are contemplating a switch to a new employer. The new employer will match your annual base salary, and you can expect this to grow at a 4% annual rate until your retirement. However, the new employer offers no pension plan. The new employer offers to pay you a flat annual bonus, on top of your base salary, to compensate you for the loss of the pension plan. How much of an annual bonus would you require before you were just willing to make the switch?
Day: April 26, 2018
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 and the initial value of the forward contract?
Three months later, the price of the stock is $48 and the risk-free rate of interest is still 6% per annum. What are the forward price and the value of the short position in the forward contract?
Make sure that you show or explain all calculations. Make sure you answer all questions above.
Suppose the current spot price for gold is $800 per ounce. The risk-free interest rate available to all investors for borrowing or lending is 0.50% per month (monthly compounding). Forward contracts are available to buy or sell gold for delivery in 1 year; the forward price for gold is $890 per ounce. You have a large inventory of gold.
Assume that storage costs for gold are zero. Is there an arbitrage opportunity? If you answer “YES,” then show step by step how you would make a profit and calculate the profit per ounce of gold. If you answer “NO,” then show why there is no arbitrage opportunity.
Now assume that the present value of the storage cost for gold is $100 per ounce for one year of storage. Is there an arbitrage opportunity? If you answer “YES,” then show step by step how you would make a profit and calculate the profit per ounce of gold. If you answer “NO,” then show why there is no arbitrage opportunity.
Make sure that you show or explain all calculations. Make sure you answer all questions above.
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 your final year’s base salary. The first payment will be made one year after your retirement, and you expect to live for twenty years after your retirement. The interest rate is 8% per year.
a) What is the amount of the yearly pension payment that you can expect to receive under this plan (assume that you will receive your $100,000 base salary payment one year from now)?
b) Now suppose you are contemplating a switch to a new employer. The new employer will match your annual base salary, and you can expect this to grow at a 4% annual rate until your retirement. However, the new employer offers no pension plan. The new employer offers to pay you a flat annual bonus, on top of your base salary, to compensate you for the loss of the pension plan. How much of an annual bonus would you require before you were just willing to make the switch?
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.
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.
“This is illogical,” said Mike Rafferty, president of XYZ Company. “Unit sales this year were the same as last year, but our bottom line profits have more than doubled. Who made the accounting mistake�”the people or the computer?”
The income statements to which Mr. Rafferty was referring are shown below (based on the absorption costing method):
XYZ Company Income Statement – Absorption Method
Year 1 Year 2
Sales (40,000 units each year) $1,253,000 $1,253,000
Cost of goods sold 840,000 720,000
Gross margin 413,000 533,000
Selling and administrative expense 335,000 335,000
Net operating income $78,000 $198,000
XYZ Production Data
Year 1 Year 2
Production in units 40,000 50,000
Sales in units 40,000 40,000
Variable manufacturing cost per unit produced $6 $6
Variable selling and administrative expense per unit sold $1 $1
Fixed manufacturing overhead costs (total) $600,000 $600,000
The income statements above report net operating income for the first two years of operation. During the first year, the company produced and sold 40,000 units. During the second year, the company also sold 40,000 units, but it increased production as shown below:
XYZ Company applies fixed manufacturing overhead costs to its product on the basis of each year’s production and so a new fixed manufacturing overhead rate is computed each year.
Explain how activity-based costing may or may not be useful for XYZ in preparing variable and absorption-based income statements.
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.
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.
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.
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.
