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Finance Assignment

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Subject
Accounting
Type
Homework
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Surname 1
Student’s Name
Professor’s Name
Course
Date
Question 1
Answer: payment = $1000 x 2 = $2000, after 25 years, FV= PMT x [(1+r)^n-1/r]
FV=2000 x [(1+0.06)^25-1]/0.06 = $109729.024
The actual annual return is $109729.024/25 = $4389.16
Question 2
Answer: $10000=PMT x [(1+0.04)^3-1]/0.04 x [(1+0.04)^2]/0.04
Payment=$3203.49
If the r is 10%, n=3, I/Y=10%, FV=10000, Payment=3201.15
Question 3
Answer: $80000-$20000=$60000, so FV=PV x (1+r) ^n = 60000 x (1+5%) ^36 =
$347508.97
Question 4
Answer: a) if Emily and Paul do not take money from wedding, then the future value will be
higher.
b) If Emily takes her grandfather’s $80000 invest to 401(k) retirement, then the
interesting rate will be 6% instead of 5%, the return will be higher.
Question 5
Answer: PVA=$200000-$40000=$160000, interest rate=0.03, term is= 15 x 12 = 180

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Surname 2
PVA= PMT x [1-(1+I) N/I] = PMT x [1-(1+ (0.03/12) x 180]/ (0.03/12) = $160000
So PMT =$1104.93 If the term is 30 years, the monthly payment will be $674.57
Question 6
Answer: The longer the number of period, the less amount of monthly mortgage has to be
paid.
ABC, Inc. Income Statement (in thousands)
Question 1
Current ratio=current assets/current liabilities=$28500/$31350=0.9
Acid test ratio=current assets-inventories/current liabilities=$28500-$8700/$31350 = 0.63
Question 2
DSO=Accounts receivable/(Sales/365)=$17800/($200000/365)=32.5 days
Fixed assets turnover= Net Sales/Assets = $200000/$43500=4.6
Total Asset turnover= Sales/Total Assets = $200000/$72000 = 2.78
Question 3
Liabilities-to-assets ratio=Total liabilities/Total Assets=$39600/$72000=55%
Time-interest-warned ratio=EBIT/Interest Charge= $4000/$1000=4
Question 4
Net profit margin=Net Income/Sales=$1950/$200000=0.98%
Return on equity=Net Income/common equity=$1950/$32400=6.05%
Question 5 
Liquidity management:

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Surname 1 Student’s Name Professor’s Name Course Date Question 1 Answer: payment = $1000 x 2 = $2000, after 25 years, FV= PMT x [(1+r)^n-1/r] FV=2000 x [(1+0.06)^25-1]/0.06 = $109729.024 The actual annual return is $109729.024/25 = $4389.16 Question 2 Answer: $10000=PMT x [(1+0.04)^3-1]/0.04 x [(1+0.04)^2]/0.04 Payment=$3203.49 If the r is 10%, n=3, I/Y=10%, FV=10000, Payment=3201.15 Question 3 Answer: $80000-$20000=$60000, so FV=PV x (1+r) ^n = 60000 x (1+5%) ^36 = $347508.97 Question 4 Answer: a) if Emily and Paul do not take money from wedding, then the future value will be higher. b) If Emily takes her grandfather’s $80000 invest to 401(k) retirement, then the interesting rate will be 6% instead of 5%, the return will be higher. Question 5 Answer: PVA=$200000-$40000=$160000, interest rate=0.03, term is= 15 x 12 = 180 Surname 2 PVA= PMT x [1-(1+I) N/I] = PMT x [1-(1+ (0.03/12) x 180]/ (0.03/12) = $160000 So PMT =$1104.93 If the term is 30 years, the monthly payment will be $674.57 Question 6 Answer: The longer the number of period, the less amount of monthly mortgage has to be paid. ABC, Inc. Income Statement (in thousands) Question 1 Current ratio=current assets/curre ...
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