# i need someone help me finish a finance home work in 5 hours.

*label*Business

*timer*Asked: Jan 29th, 2015

**Question description**

FIN 3331 Assignment

Emily Smith just received a promotion at work that increased her annual salary to $42,000. She is eligible to participate in her employer’s 401(k) retirement plan to which the employer matches, dollar for dollar, workers’ contributions up to 5% of salary. However, Emily wants to buy a new $25,000 car in 3 years, and she wants to have enough money to make a $10,000 down payment on the car and finance the balance. Fortunately, she expects a sizable bonus this year that she hopes will cover that down payment in 3 years.

A wedding is also in her plans. Emily and her boyfriend, Paul, have set a wedding date two years in the future, after he finishes medical school. In addition, Emily and Paul want to buy a home of their own in 5 years. This might be possible because two years later, Emily will be eligible to access a trust fund left to her as an inheritance by her late grandfather. Her trust fund has $80,000 invested at an interest rate of 5%.

1. Justify Emily’s participation in her employer’s 401(k) plan using the time value of money concepts by calculating the actual annual return on her own contributions. She will contribute $1,000 per year to her 401(k) for 25 years and the employer will match dollar for dollar. Assume that her 401(k) earns 6% per year for 25 years and all contributions are made at the end of each year.

2. Calculate the amount of money that Emily needs to set aside from her bonus this year to cover the down payment on a new car, assuming she can earn 4% on her savings. What if she could earn 10% on her savings?

3. What will be the value of Emily’s trust fund in 36 years, assuming she takes possession of $20,000 in 2 years for her wedding, and leaves the remaining amount of money untouched where it is currently invested?

4. Suggest at least two conditions that Emily and Paul could take to accumulate more for their retirement.

5. Suppose that Emily and Paul purchase a $200,000 home in 5 years and make $40,000 down payment immediately. Find the monthly mortgage payment assuming that the remaining balance is financed at a 3% fixed rate for 15 years. What if its mortgage term is 30 years?

6. What can you conclude about the relationship between the mortgage term and the amount of the monthly payment? From Question 5, is the monthly payment with the 30-year term half as large as the monthly payment with the 15-year term? Explain.

Use the following information to answer the following questions.

**ABC, Inc. Income Statement (in thousands)**

December 31, 2014

Sales $200,000

Cost
of goods sold
__140,000__

Gross profit on sales 60,000

Operating
expenses __56,000__

Operating income (EBIT) 4,000

Interest
expense __1,000__

Earnings before tax 3,000

Income
tax __ 1,050__

Net
income available to common stockholders __$1,950__

Number of shares outstanding 1, 500

Market price per share $22

**ABC, Inc. Balance Sheet (in thousands)**

December 31, 2014

Assets

Cash $2,000

Accounts receivable 17,800

Inventories
__ 8,700__

Total current assets 28,500

Gross fixed assets 70,000

Accumulated
depreciation __26,500__

Net
fixed assets __43,500__

Total
assets __$72,000__

Liabilities and Equity

Accounts payable $18,000

Accruals
__ 13,350__

Total current liabilities 31,350

Long-term
debt __ 8,250__

Total liabilities 39,600

Common stock (par value and paid in capital) 2,000

Retained
earnings __ 30,400__

Total
stockholders' equity __ 32,400__

Total
liabilities and equity __$72,000__

**Industry
****Key Ratios**

Industry Average Ratios

Current ratio 1.1

Quick ratio 0.60

Days Sales Outstanding (DSO) 25 days

Fixed assets turnover 5.8

Total asset turnover 2.95

Liabilities-to-assets ratio 65%

Times-interest-earned 3.2

Net profit margin 1.3%

Return on equity 7.32%

Price/earnings ratio 20.38

Market/book ratio 3.19

1. Calculate current ratio and acid test ratio for the firm.

2. Calculate DSO, fixed assets turnover, and total asset turnover for the firm.

3. Calculate liabilities-to-assets ratio and times-interest-earned ratio for the firm.

4. Calculate net profit margin and return on equity for the firm.

5. Evaluate the performance of the firm in the following areas:

Liquidity management

Asset management

Debt management

Profitability management

When you explain the firm’s strength or weakness in each area, you must support your arguments through the evaluative reasoning process by providing reasons, methods, criteria, or assumptions behind the claims made.

6. Deductive reasoning starts with a general principle and deduces that it applies to a specific case. Deductive reasoning moves with exacting precision from the assumed truth of a set of premises to a conclusion which cannot be false if those premises are true. Explain the deductive reasoning process applied to analyze the firm’s performance.