Question 1
You just sold one of your cars for 20,000, and plan on using this money to invest. In addition to the 20,000, you plan on saving 18,000 a year each ear for the next 30 years. the investments will earn 8% annually. After solving for the future value ofthis invrestment, you are blown away by how large the investment will be in 30years. You can invest the 18,000 at the begining of each year or at the end of each year. what is the differance in the future values depending on if you save the 18,000 at the begining of the year or at the end of the year?
Question 2
Flora? Co.'s bonds, maturing in 18 ?years, pay 6 percent interest on a $1,000 face value.? However, interest is paid semiannually. If your required rate of return is 13 ?percent, what is the value of the? bond? How would your answer change if the interest were paid? annually?
a. If the interest is paid? semiannually, the value of the bond is ?___________?(Round to the nearest? cent.)
b. If the interest is paid? annually, the value of the bond is ?____________?(Round to the nearest? cent.)
Question 3
During the year, the Senbet Discount Tire Company had gross sales of $1.18 million. The company's cost of goods sold and selling expenses were $537,000 and $227,000, respectively. The company also had debt of $920,000, which carried an interest rate of 5 percent. Depreciation was $142,000. The tax rate was 35 percent.
a.) What was the company's net income?
b.) What was the company's operating cash flow?
Question 4
The Arkham Company has a ratio of long-term debt to long-term debt plus equity of .31 and a current ratio of 1.7. Current liabilities are $870, sales are $6,290, profit margin is 8.7 percent, and ROE is 19.2 percent. What is the amount of the firm's net fixed assets?
Question 5
Find the IRR of the following investments and determine which should be accepted, given a required rate of return of 10%:
Investment A: An investment costing $31,140 promising a cash flow of $34,000 next year.
Investment B: An investment costing $46,000 promising a cash flow of $51,000 next year.