Question 1
Veronica has saved $5,000 that will be a down payment on a new car that can be purchased for $38,000.
a The loan to finance this will have a rate of 7.125% APR compounded monthly. What will the monthly payments on the car be if the loan is for 4 years??
b How long would it take to pay off the loan if she would pay $1,000 monthly?
c Veronica has been offered a lease for this car with payments of $600 a month for 5 years. There would not be any down payment. As happens with leases, she would essentially receive the full value of the car today and she would return the car to the dealer at the end of the lease (essentially paying out the value of the car at that time). The value of this car in 5 years, with no damage or excessive mileage, is expected to be $12,000. What APR with monthly compounding would she be paying?
Question 2
Leticia has decided to make a $500 monthly investment in a retirement fund. The three funds in which she is interested all pay 2.00% APR but with different compounding frequencies.. How much will Leticia accumulate in 30 years for each of the three investment alternatives?
a Interest of 2.00% APR compounded weekly (52 times per year)
b Interest of 2.00% APR compounded monthly (12 times per year)
c Interest of 2.00% APR compounded annually (1 time per year)
Question 3
Renaldo has won $250,000 in a lottery that he is going to invest. He has narrowed down his search to three funds that each have different stated rates. How much will Renaldo accumulate in 30 years for each of the three investment alternatives?
a 6.15% APR with monthly compounding
b 0.50% monthly PIR
c 6.25% EAR
Question 4
Shaum is considering whether to invest monthly, quarterly or annually in a fund that earns 7% APR with monthly compounding. How much will Shaum accumulate in 30 years for each of the three investment alternatives shown below? Assume that months are equal in length and that there is no initial deposit in year 0.
Years 30
APR 7.00% Monthly Compounding
Alternative Payments
a Monthly $500
b Quarterly $1,500
c Annually $6,000
Question 5
The Save-Your-Bucks used car dealer offers the following automobile finance opportunity. Monthly payments on the loan are 3% of the loan amount for 36 months. The loan amount is after any down payment. In addition the loan will require a $1,500 up front loan processing fee that is not included in the loan.
a For a loan of $20,000, what is the APR with monthly compounding without the up front fee?
b For a loan of $20,000, what is the APR with monthly compounding with the inclusion of the up front fee?
Question 6
John Doe has developed a financial retirement strategy. His plan is to invest in somewhat risky stocks for 15 years and then move everything to low risk bonds for the retirement years as described below.
John presently has $250,000 in a retirement account that will be invested in a stock fund that has historically earned 12% annually (EAR) with no dividends. The plan is to add an additional $25,000 to the fund at the beginning of each of the upcoming 15 years.
When he retires, he will reinvest the stock fund in a tax-free municipal bonds and live on the coupons only that have a coupon rate of 2.5% paid semi-annually. (the bonds will be donated to charity upon his death).
How much will John receive semi-annually during retirement?
Question 7
Kay Kinder is starting a new company with an investment of $500,000. She expects sales to grow arithmetically by $100,000 a year for five years, with sales in year 1 being $100,000, year 2 $200,000, etc.. Then for years 6-10 sales are forecast to grow geometrically at a rate of 30% per year (year 6 sales grow 30% over year 5, year 7 30% over year 6, etc.)
At the end of each year, for years 1-10, Kay expects profits to be al least 10% of the sales each year and she will invest 10% of profits in a fund that earns 6% APR compounded monthly.
a What will be the value of the invested funds in year 10?
b Did the 10 years of profits cover her initial investment?
Question 8
The Houser Group, Inc. has collected the following data for the past year. Prepare a formal income statement that contains the relevant subtotals. Show values in whole dollars (no cents). Assume that no taxes are due on asset purchases or sales.
| Data Block |
Beginning of year |
During Year |
End of year |
|
Cash On Hand |
$330,500 |
|
|
|
Quantity Sold |
|
45,200 |
|
|
Quantity Produced |
|
38,000 |
|
|
Sales Price |
|
$54.00 |
|
|
Cost per unit to produce |
|
$24.50 |
|
|
Staff Expenses |
|
$424,600 |
|
|
Facility Expenses |
|
$387,200 |
|
|
Asset Sale |
|
$1,575,300 |
|
|
Asset Purchase |
|
$2,204,000 |
|
|
Tax rate |
|
20% |
|
|
Inventory |
$57,000 |
|
$24,000 |
|
Accounts Receivable |
$74,000 |
|
$38,000 |
|
Accounts Payable |
$68,000 |
|
$62,000 |
|
Depreciation |
|
$48,000 |
|
|
Interest Paid on Loan |
|
$46,000 |
|
|
Loan Principle payment |
|
$125,000 |
|
|
Dividends |
|
$128,000 |
|
Question 9
Prepare a cash flow statement using the following data. Assume that no taxes are due on asset purchases or sales. Prepare a formal cash flow statement that contains the relevant subtotals. Show values in whole dollars (no cents).
| Data Block |
Beginning of year |
During Year |
End of year |
|
Cash |
$630,600 |
|
|
|
Net Income |
$1,200,000 |
|
|
|
Staff Expenses |
|
$724,600 |
|
|
Facility Expenses |
|
$887,200 |
|
|
Asset Sale |
|
$156,530 |
|
|
Asset Purchase |
|
$1,240,400 |
|
|
Tax rate |
|
22.5% |
|
|
Inventory |
$87,000 |
|
$84,000 |
|
Accounts Receivable |
$73,000 |
|
$78,000 |
|
Accounts Payable |
$78,000 |
|
$75,000 |
|
Depreciation |
|
$89,500 |
|
|
Interest Paid on Loan |
|
$76,000 |
|
|
Loan Principle payment |
|
$50,000 |
|
|
Dividends Paid |
|
$200,000 |
|
Question 10
Anita and Andrew have started a small business that seems to be thriving. Friends have suggested that they should consider legally organizing as something other than the present proprietorship. They are asking for your advice via email (you do not know them). Compose up to five questions. and state the purpose of each question. that could be used to collect information about Anita and Andrew and their business that is relevant to making a recommendation on how they should legally organize their business.
Answer below using approximately 50 words per question)
1) what profits they are earning on their business .does it can satisfy the norms for any business to be legalized?
2) does they are paying taxes as per the rules. can also be taken in to consideration while legalzing the business?
3) the business that they are doing will cause any harm to the society will also be used while legalising?
4 ) proving that their business will help the growth in the economy and also showing that their business increases the gdp and national income
5) proving that their business gives employment to lots of people and also provides many other facilties to their employees