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Answer the following questions and solve the following problems in the space provided. When you are done, save the file in the format flastname_Week_2_Problem_Set.docx, where flastname is your first initial and you last name, and submit it to the appropriate dropbox.

Chapter 4 (pages 132–136):

3. Calculate the future value of $2000 in

a. five years at an interest rate of 5% per year;

b. ten years at an interest rate of 5% per year; and

c. five years at an interest rate of 10% per year.

d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)?

4. What is the present value of $10,000 received

a. twelve years from today when the interest rate is 4% per year;

b. twenty years from today when the interest rate is 8% per year; and

c. six years from today when the interest rate is 2% per year?

5. Your brother has offered to give you either $5,000 today or $10,000 in 10 years. If the interest rate is 7% per year, which option is preferable?

6. Consider the following alternatives.

i. $100 received in 1 year ii. $200 received in 5 years iii. $300 received in 10 years

a. Rank the alternatives from most valuable to least valuable if the interest rate is 10% per year.

b. What is your ranking if the interest rate is only 5% per year?

c. What is your ranking if the interest rate is 20% per year?

8. Your daughter is currently 8 years old. You anticipate that she will be going to college in 10 years. You would like to have $100,000 in a savings account to fund her education at…...

...UNIVERSIDAD CATOLICA DE SANTIAGO DE GUAYAQUIL Finances 2 tutorial PORTFOLIO INTERNACIONAL BUSINESS MANAGEMENT Student: KEVIN MERO 23/08/2012 Financial products refer to those instruments that help you save, invest, get insurance or get a mortgage. These are issued by various banks, financial institutions, stock brokerages, insurance providers, credit card agencies and government sponsored entities. Financial products are categorized in terms of their type or underlying asset class, volatility, risk and return. First, it is necessary to analyze some important aspects like: the financial market that is any type of financial transaction that you can think of that helps businesses grow and investors make money. To know how and where put your money it’s difficult. Investment involves purchasing an asset, giving a loan or keeping funds in a bank account with the aim of generating future returns. Various investment options are available, offering differing risk-reward trade offs. An understanding of the core concepts and a thorough analysis of the options can help an investor create a portfolio that maximizes returns while minimizing risk exposure. There are many types of investment, one of them is: Cash investments that include savings bank accounts, certificates of deposit (CDs) and treasury bills. These investments pay a low rate of interest and are risky options in periods of inflation. Debt securities that provide returns in the form of fixed periodic payments and......

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...levered equity return to systematic risk? How does its sensitivity compare to that of unlevered equity? How does its risk premium compare to that of unlevered equity? Risk premium=45%-5%=40% Return sensitivity=145%-(-55%)=22% How does its sensitivity compare to that of unlevered equity? 4x How does its risk premium compare to that of unlevered equity? 50% d. What is the debt-equity ratio of the firm in this case? 750/250=3 e. What is the firm’s WACC in this case? 25%(45%)+75%(5%)=15% PROBLEM 14-18 BASED ON CHAPTER 14: WACC AND MODIGLIANI & MILLER EXTENSION MODELS WITH GROWTH ASSUMPTIONS In mid-2012, AOL Inc. had $100 million in debt, total equity capitalization of $3.1 billion, and an equity beta of 0.90 (as reported on Yahoo! Finance). Included in AOL’s assets was $1.5 billion in cash and risk-free securities. Assume that the risk-free rate of interest is 3% and the market risk premium is 4%. a. What is AOL’s enterprise value? EV=market capitalization+ debt+ preferred shared capital+ minority interest-cash equivalents =$3.1B+$100M-$1.5B =$1.5B b. What is the beta of AOL’s business assets? Beta=B*(market rate- risk free rate) =.90*(4%-3%)= 9% c. What is AOL’s WACC? WACC=(E/V)*Re+(D/V)*Rd*(1-Tc) E=$3.1B D=$100M V=$3.2M Re=.063 Rd=.04 Tc=35% =(3.1B/3.2M)*.063+(100M/3.2M)*.04*(1-35%) =(968.75)*.063+(31.25)*.04*(.65) =2.4% PROBLEM 15-15 BASED ON CHAPTER 15:DEBT and TAXES Acme Storage has a market capitalization of $100 million and......

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...Managerial Finance ; FIN515 1. What is the most important difference between a corporation and all other organizational forms? A corporation is a legal entity separate from its owners. 2. What does the phrase limited liability mean in a corporate context? Owners’ liability is limited to the amount they invested in the firm. Stockholders are not responsible for any encumbrances of the firm; in particular, they cannot be required to pay back any debts incurred by the firm. 3. Which organizational forms give their owners limited liability? Corporations and limited liability companies give owners limited liability. Limited partnerships provide limited liability for the limited partners, but not for the general partners. 4. What are the main advantages and disadvantages of organizing a firm as a corporation? The advantages would include limited liability, liquidity, and infinite life. The disadvantages are double taxation, separation of ownership and control. 5. Explain the difference between an S corporation and a C corporation. C corporations must pay corporate income taxes; S corporations do not pay corporate taxes, but must pass through the income to shareholders to whom it is taxable. S corporations are also limited to 75 shareholders and cannot have corporate or foreign stockholders. 6. You are a shareholder in a C corporation. The corporation earns $2 per share before taxes. Once it has paid taxes it will distribute the rest of its......

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...FIN 515 Managerial Finance Week 2 Problem Set To Buy this Class Copy & paste below link in your Brower http://homeworkregency.com/downloads/fin-515-managerial-finance-week-2-problem-set/ Or Visit Our Website Visit : http://www.homeworkregency.com Email Us : homeworkregency@gmail.com FIN 515 Managerial Finance Week 2 Problem Set Answer the following questions and solve the following problems in the space provided. When you are done, save the file in the format flastname_Week_2_Problem_Set.docx, where flastname is your first initial and you last name, and submit it to the appropriate dropbox. Chapter 4 (pages 132–136): 3. Calculate the future value of $2000 in a. five years at an interest rate of 5% per year; b. ten years at an interest rate of 5% per year; and c. five years at an interest rate of 10% per year. d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)? 4. What is the present value of $10,000 received a. twelve years from today when the interest rate is 4% per year; b. twenty years from today when the interest rate is 8% per year; and c. six years from today when the interest rate is 2% per year? 5. Your brother has offered to give you either $5,000 today or $10,000 in 10 years. If the interest rate is 7% per year, which option is preferable? 6. Consider the following alternatives. i. $100 received in 1 year ii. $200 received in 5 years iii. $300 received in 10 years a. Rank...

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...FIN 515 Week 2 Problem Set Managerial Finance http://hwguiders.com/downloads/fin-515-week-2-problem-set-managerial-finance FIN 515 Week 2 Problem Set Managerial Finance Answer the following questions and solve the following problems in the space provided. When you are done, save the file in the format flastname_Week_2_Problem_Set.docx, where flastname is your first initial and you last name, and submit it to the appropriate dropbox. Chapter 4 (pages 132–136): 3. Calculate the future value of $2000 in a. five years at an interest rate of 5% per year; b. ten years at an interest rate of 5% per year; and c. five years at an interest rate of 10% per year. d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)? 4. What is the present value of $10,000 received a. twelve years from today when the interest rate is 4% per year; b. twenty years from today when the interest rate is 8% per year; and c. six years from today when the interest rate is 2% per year? 5. Your brother has offered to give you either $5,000 today or $10,000 in 10 years. If the interest rate is 7% per year, which option is preferable? 6. Consider the following alternatives. i. $100 received in 1 year ii. $200 received in 5 years iii. $300 received in 10 years a. Rank the alternatives from most valuable to least valuable if the interest rate is 10% per year. b. What is your ranking if the interest rate is only 5% per year? c. What...

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...FIN 515 Managerial Finance Week 2 Problem Set http://homeworkfy.com/downloads/fin-515-managerial-finance-week-2-problem-set/ To Get this Tutorial Copy & Paste above URL Into Your Browser Hit Us Email for Any Inquiry at: Homeworkfy@gmail.com Visit our Site for More Tutorials: (http://homeworkfy.com/ ) Answer the following questions and solve the following problems in the space provided. When you are done, save the file in the format flastname_Week_2_Problem_Set.docx, where flastname is your first initial and you last name, and submit it to the appropriate dropbox. Chapter 4 (pages 132–136): 3. Calculate the future value of $2000 in a. five years at an interest rate of 5% per year; b. ten years at an interest rate of 5% per year; and c. five years at an interest rate of 10% per year. d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)? 4. What is the present value of $10,000 received a. twelve years from today when the interest rate is 4% per year; b. twenty years from today when the interest rate is 8% per year; and c. six years from today when the interest rate is 2% per year? 5. Your brother has offered to give you either $5,000 today or $10,000 in 10 years. If the interest rate is 7% per year, which option is preferable? 6. Consider the following alternatives. i. $100 received in 1 year ii. $200 received in 5 years iii. $300 received in 10 years a. Rank the alternatives from most......

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...FIN 515 Week 2 Problem Set Managerial Finance http://hwguiders.com/downloads/fin-515-week-2-problem-set-managerial-finance FIN 515 Week 2 Problem Set Managerial Finance Answer the following questions and solve the following problems in the space provided. When you are done, save the file in the format flastname_Week_2_Problem_Set.docx, where flastname is your first initial and you last name, and submit it to the appropriate dropbox. Chapter 4 (pages 132–136): 3. Calculate the future value of $2000 in a. five years at an interest rate of 5% per year; b. ten years at an interest rate of 5% per year; and c. five years at an interest rate of 10% per year. d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)? 4. What is the present value of $10,000 received a. twelve years from today when the interest rate is 4% per year; b. twenty years from today when the interest rate is 8% per year; and c. six years from today when the interest rate is 2% per year? 5. Your brother has offered to give you either $5,000 today or $10,000 in 10 years. If the interest rate is 7% per year, which option is preferable? 6. Consider the following alternatives. i. $100 received in 1 year ii. $200 received in 5 years iii. $300 received in 10 years a. Rank the alternatives from most valuable to least valuable if the interest rate is 10% per year. b. What is your ranking if the interest rate is only 5% per year? c. What...

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...Dennis Suler FIN 534 Assignment Set #1 1. What is the Free Cash Flow for 2014? Free Cash Flow = NOPAT – Net Investment In Operating Capital To find NOPAT = EBIT * (1 – Tax Rate) = 502,640 * (1-.4) = 502,640 *.6 = 301,584 So, FCF = 301,584 – Net Investment in Operating Capital 2014 Net Operating Working Capital= Operating current assets – Operating Current Liabilities = (Cash+Accounts receivable+Inventories) – (Accounts payable + accruals) = (14000+878000+1716480)- (359800+380000) =2,608,480 – 739,800 = 1,868,680 2013 NOWC was NOWC = (7282+632160+1287360)-(324000+284960) = 1926802-608960 =1,317,842 Net Investment in Operating Capital is 1868680 – 1317842 = 550,838 So, FCF = 301,584 – 550,838 = -249,254 2. Suppose Congress Changed the tax laws so that Berndt’s depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and net cash flow? If depreciation doubled, reported profit shrinks by 120,000 for 2014 (253,584 – 120,000) to 138,584 in 2014. Net cash flow would actually increase by $120,000, so it would be $498,584 3. Calculate the2014 current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company’s liquidity position in 2013? Current ratio = current assets/current liabilities Current ratio= 2680112/1039800 = 2.577 = 2.6 Quick ratio= (current assets – inventory)/current liabilities = (2680112-1716480)/1039800 = 963632/1039800 =...

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...Fin 370 Week 2 Individual Assignment Chap. 14 Questions 14-1, 14-3, 14-4 Chap. 15 Questions 15-12A, 15-13A Question 14-1 What are financial markets? What function do they perform? How would an economy be worse off without them? Financial markets report price for each good; they are institutions and procedures that facilitate transactions in all types of financial claims (securities). Each financial market performs a different function. Such as the stock markets primary function is to provide a platform for investors to buy shares of ownership of a public corporation which are sold to investors to allow the companies to raise a lot of cash at once. The investors profit when the companies increase their earnings. Mutual funds give you the ability to buy a lot of stocks at once. In a way this makes them an easier tool to invest in than individual stocks. By reducing stock market volatility, they have also had a calming effect on the United States economy. In commodities, such as oil, the price is determined in the commodities futures market. The futures market are a way to pay for something today that is delivered tomorrow, which helps to remove some of the volatility in the United States economy. However, futures also increase the trader’s leverage by allowing him to borrow the money to purchase the commodity. Hedge funds are supposed have higher returns for high-end investors. Since hedge funds invest heavily in futures, some argue that they have......

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...Managerial Finance Week 2 assignment 03/13/2011 (3-1) DSO = (A/R) / (Annual sales)/365) (A/R)= (DSO) X (Annual sales)/365) = 20,000X20 = 400,000 (3-2) The company’s debt ratio = 1- (1/equity multiplier) = 1- (1 / 2.5) = 1- 0.4 = 0.60 = 60% (3-3) The market price for the shares = $75.00 x 800 Millions = 60 Billions The book value for the share’s price = 6 Billion/800 = 7.5 The Winston’s market/book ratio = 75/7.5 = 10 (3-4) The EPS = $1.50, cash flow per share = $3.00, price/cash flow ratio = 8.0. The price of the share = 8 x 3 = 24. P/E ratio = 24/1.5 = 16. (3-5) ROE = Profit Margin x TA Turnover x Equity Multiplier TA Turnover = Sales/Total Assets = 100 Million / 50 Million = 2 ROE = 3% X 2 X 2.0 = 12% (3-6) A. ROA = NI/Total Assets, ROE = NI/Common Equity, NI = ROE x Common Equity ROA = ROE x Common Equity/Total assets, 10%/15% = Common Equity/Total assets Common Equity/Total assets = 1/Equity Multiplier, Equity Multiplier = 1/(10%/15%) = 1.5 B. Profit margin x TA turnover x Equity Multiplier = ROE TA turnover = ROE/ (profit margin x equity multiplier) = 15%/ (2% x 1.5) = 5 (3-7) Current ratio = current assets/current liabilities. Current liabilities = current assets/current ratio = 3,000,000/1.5 = 2,000,000. Quick ratio = (Current assets – inventory)/current liability. Quick ratio x current liabilities......

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...FIN 515 Managerial Finance Week 2 Problem Set To Buy this Class Copy & paste below link in your Brower http://homeworkregency.com/downloads/fin-515-managerial-finance-week-2-problem-set/ Or Visit Our Website Visit : http://www.homeworkregency.com Email Us : homeworkregency@gmail.com FIN 515 Managerial Finance Week 2 Problem Set Answer the following questions and solve the following problems in the space provided. When you are done, save the file in the format flastname_Week_2_Problem_Set.docx, where flastname is your first initial and you last name, and submit it to the appropriate dropbox. Chapter 4 (pages 132–136): 3. Calculate the future value of $2000 in a. five years at an interest rate of 5% per year; b. ten years at an interest rate of 5% per year; and c. five years at an interest rate of 10% per year. d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)? 4. What is the present value of $10,000 received a. twelve years from today when the interest rate is 4% per year; b. twenty years from today when the interest rate is 8% per year; and c. six years from today when the interest rate is 2% per year? 5. Your brother has offered to give you either $5,000 today or $10,000 in 10 years. If the interest rate is 7% per year, which option is preferable? 6. Consider the following alternatives. i. $100 received in 1 year ii. $200 received in 5 years iii. $300 received in 10 years a. Rank...

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...Jamie Lyons Finance W2 4-1 Questions Annuity-A financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. Annuities are primarily used as a means of securing a steady cash flow for an individual during their retirement years. Lump-sum payment- A one-time payment for the total or partial value of an asset. Cash flow- A revenue or expense stream that changes a cash account over a given period Uneven cash flow stream- Any series of cash flows that doesn’t conform to the definition of an annuity is considered to be an uneven cash flow stream. 4-1 problem Solve for FV 10,000 × (1.10)5 power 10,000 × 1.6105 16,105.10 4-2 At = A0 * (1+r/100m)^mt At= 5000 A0 =? r= 7%, m = 1 t = 20 Answer =$1,292.10 4-3 (FV) = 1,000,000 (PV) = 250,000 (n) = 18 years (i) = ? 1,000,000 = 250,000 (1 + i)15 power = .801% 4-4 i = 6.5% n =? PV = 1000 FV =2000 1000 = 2000 / (1+0.065)n power (1.065)n power=2 I put 11 in for n 11.01 4-6 S = R(((1 + i)n - 1) / i) *(1 + i) $300(((1 + .07)n - 1)/.07) S = $1725.22 * 1.07 S = $1845.99 Each year – $1,725.22 Due- $1,845.99 4-8 Financial calculator used N = 60 I = 1 PV = -20000, FV = 0 PMT = $444.89 EAR formula = (1.01)12 – 1.0 = 12.68%. NOM% = 12 P/YR =12 EFF% = 12.6825% PMT= $444.89 EAR= 12.6825% ...

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...Finance 260 Assignment 2 To Buy this Class Copy & paste below link in your Brower http://homeworkregency.com/downloads/finance-260-assignment-2/ Or Visit Our Website Visit : http://www.homeworkregency.com Email Us : homeworkregency@gmail.com Finance 260 Assignment 2 1. First City Bank pays 7% simple interest on its savings account balances, whereas Second City Bank pays 7% compounded annually. If you made a $6,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 9 years? 2. At 6.5 percent interest, how long does it take to quadruple your money? 3. You are scheduled to receive $15,000in two years. When you receive it, you will invest it for six more years at 7.1 percent per year. How much will you have in eight years? 4. Investment X offers to pay you $5,200 per year for eight years, whereas investment Y offers to pay you $7,300 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? 5. First National Bank charges 13.2 percent compounded monthly on its business loans. First United Bank charges 13.5 percent compounded semiannually. As a potential borrower, which bank would you go to for a new loan? 6. You want to have $75,000 in your savings account 12 years from now, and you are prepared to make equal annual deposits into the account at the end of each year. If the account pays 6.8 percent interest, what amount must you deposit......

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...Finance 260 Assignment 2 To Buy this Class Copy & paste below link in your Brower http://homeworkregency.com/downloads/finance-260-assignment-2/ Or Visit Our Website Visit : http://www.homeworkregency.com Email Us : homeworkregency@gmail.com Finance 260 Assignment 2 1. First City Bank pays 7% simple interest on its savings account balances, whereas Second City Bank pays 7% compounded annually. If you made a $6,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 9 years? 2. At 6.5 percent interest, how long does it take to quadruple your money? 3. You are scheduled to receive $15,000in two years. When you receive it, you will invest it for six more years at 7.1 percent per year. How much will you have in eight years? 4. Investment X offers to pay you $5,200 per year for eight years, whereas investment Y offers to pay you $7,300 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? 5. First National Bank charges 13.2 percent compounded monthly on its business loans. First United Bank charges 13.5 percent compounded semiannually. As a potential borrower, which bank would you go to for a new loan? 6. You want to have $75,000 in your savings account 12 years from now, and you are prepared to make equal annual deposits into the account at the end of each year. If the account pays 6.8 percent interest, what amount must you deposit......

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...Finance 260 Assignment 2 To Buy this Class Copy & paste below link in your Brower http://homeworkregency.com/downloads/finance-260-assignment-2/ Or Visit Our Website Visit : http://www.homeworkregency.com Email Us : homeworkregency@gmail.com Finance 260 Assignment 2 1. First City Bank pays 7% simple interest on its savings account balances, whereas Second City Bank pays 7% compounded annually. If you made a $6,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 9 years? 2. At 6.5 percent interest, how long does it take to quadruple your money? 3. You are scheduled to receive $15,000in two years. When you receive it, you will invest it for six more years at 7.1 percent per year. How much will you have in eight years? 4. Investment X offers to pay you $5,200 per year for eight years, whereas investment Y offers to pay you $7,300 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? 5. First National Bank charges 13.2 percent compounded monthly on its business loans. First United Bank charges 13.5 percent compounded semiannually. As a potential borrower, which bank would you go to for a new loan? 6. You want to have $75,000 in your savings account 12 years from now, and you are prepared to make equal annual deposits into the account at the end of each year. If the account pays 6.8 percent interest, what amount must you deposit......

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