Question 1) Rocking Horse Corporation reported net income for 2004 of $100,000, sales of $300,000, expenses (excluding depreciation) of $150,000, and depreciation expense of $50,000. The company's accounts receivable balance increased by $25,000 during the year and its accounts payable balance remained the same. The company's change in cash for the year is estimated to be:
Question 2) Charlie Spleen wants to retire in 25 years, and he wants to have an annuity of $20,000 a year for 20 years after retirement. Charlie wants to receive the first annuity payment at the end of the 25th year. Using an interest rate of 8%, how much must Charlie invest today in order to have his retirement annuity (round to nearest $10).
Question 3) How much would you be willing to pay for a 10-year ordinary annuity if the payments are $500 per year and the rate of return is 6.25% annually?
Question 4) You purchased 1,000 shares of Oliver Inc. common stock one year ago for $50 per share. You decided to take your profit today by selling at $55.00 per share. What is your holding period return?