Assignment help for Financial Statement

HW I: Show your approach to each problem (formulas, variables, etc.) You can use Excel sheet formulas to show the work or use the Finance calculator terms. For the ABC answers: choose the correct answer and delete the rest.

1. (a) How large a retirement "nest egg" will I need at retirement to provide a $60,000 per year income for 30 years? Assume a once-per-year, end-of-year withdrawal, and a 6% annual return on the invested funds; further assume that the nest egg would be fully exhausted at the end of the 30th year. (This last point is not a "special wrinkle" in this problem; that is what our normal techniques normally provide for.)

(b) Recalculate for part (a), based on monthly withdrawals totaling $60,000 per year (i.e. $5,000 per month) with the same annual rate-of-return, how large your nest egg must be. (If you are not comfortable with the use of a calculator, just show the set-up of the problem including the formula you would use; define the knowns and unknowns in the context of this formula.)

2. How long will it take me to pay off a $100,000 loan carrying an 8% interest rate if I make annual, end-of-year payments of $13,270. (Round to nearest whole year.)

3. How much will be owed as a lump-sum pay-off on a 30-year, 6% mortgage with an initial principal of $200,000 after you have made 10 years of payments? Hint: First, calculate your monthly payment for this loan. (Again, just show a detailed problem set-up as described for Problem 1(b) if you are not comfortable using the calculator.)

4. A firm had the following accounts and financial data for 2010. (All amounts in $ Thous.)

Sales Revenue


Cost of goods sold


Accounts Receivable


Preferred stock dividends


Interest expense


Tax rate


Total oper. expenses


Number of shares of common


Accounts payable


 stocks outstanding


Note: Total Operating Expenses do not include COGS.

The firm's earnings available to common shareholders for 2010 (rounded to nearest thousand $) were _________.

(a)  -$224

(b)  $195

(c)  $302

(d)  $516

5. $100 is received at the beginning of year 1, $200 is received at the beginning of year 2, and $300 is received at the beginning of year 3. If these cash flows are deposited at 12 percent, their combined future value at the end of year 3 is _________.

6. (a) If I have $100,000 in my IRA on 1 January 2011 that will remain invested and want to have $1,000,000 invested by 31 December 2030, how much do I have to make as an annual, end-of-year contribution through 2030 beginning on 12/31/2011? I am assuming a conservative 6% return on invested funds. (note that the value of n here = 20)

(b) Recalculate the required calculation from Part (a) if you make monthly contributions over the same period. (Again, just show the set up if you are not comfortable with the calculator approach.)

7. A balloon mortgage is a loan which is repaid via a combination of monthly payments and a single, large lump-sum payment of the remaining amount due along with the last monthly payment. What would the balloon payment be in five years to satisfy a 10%, $100,000 equipment loan if I have made 60 monthly payments of $1,500 each? (At least show the step-by-step approach to solve this problem even if you can't use the calculator for the solution.)

8. What is the yield to maturity, to the nearest percent, for the following bond: current price is $950, coupon rate is 11 percent, $1,000 par value, interest paid annually, eight years to maturity?

(a)  11 percent

(b)  12 percent

(c)  13 percent

(d)  14 percent

9. What is the current price of a $1,000 par value bond maturing in 12 years with a coupon rate of 9 percent, paid annually, that has a YTM of 11 percent? (choose the closest value; you may have some small rounding error.)

(a)  $604

(b)  $870

(c)  $1,000

(d)  $1,073

10. Lincoln Corp. has two bonds outstanding. One (Bond A) is a 10-year original term bond with five years to maturity and a 7% annual coupon rate. The second (Bond B) is a five-year original term with two years remaining and also pays a 7% annual coupon. These bonds both carry the same credit rating and each have a par value of $1,000. The market's required rate-of-return for these bonds is currently 8%. Which of the following should be true:

            (a) Bond A's premium will be greater than Bond B's premium;

            (b) Bond A and B should carry the same premium;

            (c) Bond A's discount should be greater than Bond B's discount;

            (d) Bond A's discount should be less than Bond B's discount.

11. The _________ summarizes the firm's funds flow over a given period of time.

(a)  income statement

(b)  balance sheet

(c)  statement of cash flows

(d)  statement of retained earnings




   Related Questions in Corporate Finance

  • Q : What is Financial Analysis Financial

    Financial Analysis: It is the investigation and interpretation of financial statements and associated financial reports. Trained and certified accountants generally complete this kind of analysis. The role of a financial analyst is to

  • Q : Explain market efficiency hypothesis

    According to what I read inside a book, market efficiency hypothesis means that the expected average value of variations is zero in the shares price. Thus, the best estimate of the future price of a share is its price now, as this incorporates all the available inform

  • Q : What is nonlinearity in option pricing

    What is nonlinearity in option pricing model?

  • Q : Calculating Super normal profit The

    The case study of an economic analysis is done for Schlumberger, oilfield Service Company.  They are No. 1 in terms of market caps, revenue and employees globally. When any references are used/outside sources (except for Schlumberger's annual reports and financia

  • Q : What is the required rate of return on

    Woidtke Manufacturing's stock currently sells for $29 a share. The stock just paid a dividend of $2.50 a share (i.e., D0 = $2.50), and the dividend is expected to grow forever at a constant rate of 9% a year. What st

  • Q : Problem on annual obligation payment

    ABC Corp. has a challenge: The CEO wants to set aside annual, end of year payments into a sinking fund account earning 5% over the next 6 years in order to retire $25 million in bonds that will be outstanding at that time. Determine the annual payment required each ye

  • Q : Market for Corporate Bonds Write some

    Write some point regarding Market for Corporate Bonds.

  • Q : State capital formation Capital

    Capital formation: It is an increase in the stock of capital in particular period is termed as capital formation.

  • Q : Financing EBIT problem Rusk Inc needs

    Rusk Inc needs $50 million in new capital that it might obtain by selling bonds at par with coupon of 12% or by selling stock at $40 (net) per share. The current capital structure of Rusk consists of $300 million (face value) of 10% coupon bonds selling at 90 and 10 m

  • Q : Finance You expect KT industries (KTI)

    You expect KT industries (KTI) will have earnings per share of $3 this year and expect that they will pay out $1.50 of these earnings to shareholders in the form of a dividend. KTI's return on new investments is 15% and their equity cost of capital is 12%. The value of a share of KTI's stock is clos