Problem 1. You will receive $8,000 in 5 years from a rich uncle. A money advance company has offered you $6,300 right now if you'll sign a contract assigning the future payment to them. You think the proper discount rate over the next 5 years is about 6 percent. As such, you calculate the present value of the cash to be?
Problem 2: ABC Widget Company has 100,000 shares of its stock outstanding. The company had sales of $800,000 last year. The company's cost of goods sold was $300,000. The company also recorded interest expense of $20,000, selling and administrative expenses of $40,000, and depreciation expense of $30,000. During the year, the company's board of directors declared a dividend to its common stockholders. The total dividend, which was paid during the year, was $80,000. Finally, the company paid taxes of $110,000 during the year.
What was the company's net income for the year? __________. What was the earnings per share? _____________
Problem 3: All of the following are functions of security exchanges except:
a. Allocating scarce capital
b. Aiding in new financing
c. Holding demand deposits
d. Creating continuous markets
Problem 4: When Tri-C Corp. compares its financial ratios to industry averages, it has a higher current ratio, an average quick ratio, and a low inventory turnover. What might you assume about Tri-C?
a) Its cash balance is too low.
b) Its cost of goods sold is too low.
c) Its current liabilities are too low.
d) Its average inventory is too high.