3-2. Dixon Shuttleworth has a large sum of money that he wants to invest to finance his retirement. He has been presented with three options. The first investment offers a 5% return for the first five years, a 10% return for the next five years, and a 20% return thereafter. The second investment offers 10% for the first ten years and 15% thereafter. The third investment offers a constant 12% rate of return. Determine which of these investments the best for Dixon is if he plans to retire in the following number of years. a. fifteen years

b. twenty years
c. thirty years

3-4. You have a trust fund that will pay $1 million exactly ten years from today. You want cash now, so you are considering an opportunity to sell the right to the trust fund to an investor. a. What is the least you will sell your claim for if you could earn the following rates of return on similar risk investments during the ten-year period? a. 6%

b. 9%
c. 12%
b. Rework part (A) under the assumption that the $1 million payment will be received in fifteen rather than ten years. c. Based on your findings in parts (a) and (b), discuss the effect of both the size of the rate of return and the time until receipt of payment on the present value of future sum.

3-5. You have saved $10,000 toward a down payment on a home. The money is invested in an account earning 7% interest. You will be ready to purchase the new home once your savings account grows to $25,000. d. Approximately how many years will it take for the account to reach $25,000? e. If the interest rate doubles to 14%, how many years will pass before you reach your $25,000 target?

3-10. Liliana Alvarez’s employer offers its workers a two-month paid sabbatical every seven years. Liliana, who just started working for the firm, plans to spend her sabbatical touring Europe at an estimated cost of $25,000. To finance her trip, Liliana plans to make six annual...

...Unit 5 : Week Five - Midterm
Time Remaining:
1. The ultimate owner(s) of an ongoing corporation are (Points : 2)
the federal government.
the debt holders.
the equity holders.
the executive staff of the corporation.
2. Which of the following is a valid criticism concerning the goal of firms to maximize profits? (Points : 2)
profit maximization ignores expenses
profit maximization is completely unrelated to shareholder wealth
profit maximization may ignore the timing of those profits
there are no valid criticisms of profit maximizing firms
3.
Balance Sheet: 12/31/04
Assets
2004
2003
Cash and Marketable Securities
10
80
Accounts Receivable
375
315
Inventories
615
415
Total Current Assets
1,000
810
Net plant and equipment
1,000
870
TOTAL ASSETS
2,000
1,680
Liabilities and Equity
2004
2003
Accounts Payable
60
40
Notes Payable
140
60
Accruals
110
130
Total Current Liabilities
310
230
Long Term Bonds
754
580
TOTAL DEBT
1,064
810
Preferred Stock
40
40
Common Stock
130
130
Retained earnings
766
700
TOTAL COMMON EQUITY
896
830
TOTAL LIABILITIES AND EQUITY
2,000
1,680
Income Statement: 12/31/04
2004
2003
Net Sales
3,200...

...Chapter 2
The Time Value of Money
and Net Present Value
Solutions to Questions 2.1 to 2.43 appear in the text.
2.44 What is a perfect market? What were the assumptions made in this chapter that were not part of the perfect market scenario?
Answer: A perfect market is one with no taxes, no transaction costs, no differences in opinion, and many buyers and sellers. In this chapter, we also are assuming no uncertainty and no inflation.
2.45 What is the difference between a bond and a loan?
Answer: No difference really. A bond is a loan.
2.46 In the text, I assumed you received the dividend at the end of the period. In the real world, if you received the dividend at the beginning of the period instead of the end of the period, could this change your effective rate of return? Why?
Answer: Yes, because dividends could then be reinvested and earn extra returns themselves.
*2.47 Your stock costs $100 today, pays $5 in dividends at the end of the period, and then sells for $98. What is your rate of return?
Answer: ($98 + $5)/$100 − 1 ’ 3%.
2.48 The interest rate has just increased from 6% to 8%. How many basis points is this?
Answer: 200 basis points.
*2.49 Assume an interest rate of 10% per year. How much would you lose over 5 years if you had to give up interest on the interest—that is, if you received 50% instead of compounded interest?
Answer: You would lose 11.1%.
[pic]
2.50 Over 20 years,...

...ENG 360 Final Exam
1. 19th Century Detective Fiction – a genre which deals with fictionalized mystery crimes, which are often solved by the main story characters. In this genre it is common for the story to include clues and evidence for the readers to put together and try to solve the mystery independent of the detective.
Doyle’s “A Scandal in Bohemia” is an example of 19th century detective fiction.
2. Whodunit – a plot driven detective story which allows the audience to participate in the deduction process. Additionally, the reader is given clues as to who the villain is in the story. The detective in the story is usually one who has extensive experience.
Agatha Christe’s The Murder of Roger Ackroyd is an example of a Whodunit.
3. Hardboiled Detective Fiction – began in early 1940s as an alternate to the traditional murder mystery. This genre relies more on physical force than imagination to solve the crime. The settings usually occur in cities versus villages and take the readers through the sleazy and glamorous sides the city.
Hammett’s The Second Story Angel is an example of a hardboiled detective fiction.
4. Postmodern Detective Fiction – This genre usually has the author appear as a character, sometimes even a suspect. The reader is usually given clues, and needs to gather evidence. Characteristics contain elements of irony, playfulness, and even humor. Many also contain a story within a story.
The Real Inspector Hound is...

...the future value of $2000 in
a. Five years at an interest rate of 5% per year.
FV = C x (1 + r ) ^ n (Page 100)
b. Ten years at an interest rate of 5% per year.
FV = C x (1 + r ) ^ n (Page 100)
c. Five years at an interest rate of 10% per year.
FV = C x (1 + r ) ^ n (Page 100)
d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)?
4. What is the present value of $10,000 received
a. Twelve years from today when the interest rate is 4% per year?
PV = C / (1 + r ) ^ n = C / (1 + r ) ^ n ( Page 102)
b. Twenty years from today when the interest rate is 8% per year?
PV = C / (1 + r ) ^ n = C / (1 + r ) ^ n ( Page 102)
c. Six years from today when the interest rate is 2% per year?
PV = C / (1 + r ) ^ n = C / (1 + r ) ^ n ( Page 102)
11. Suppose you receive $100 at the end of each year for the next three years.
a. If the interest rate is 8%, what is the present value of these cash flows?
b. What is the future value in three years of the present value you computed in (a)?
c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with your answer in (b)?
12. You have just received a windfall from an investment you made in a friend’s business. He will be paying you $10,000 at the end of this year, $20,000...

...University of Phoenix Faculty Material
Week Two:
Objective 2.1 Secured and unsecured debt
Which of the following is considered unsecured debt?
a. A mortgage
b. A car loan
c. A 401k loan
d. Credit-card debt
If you have applied for your first credit card and been denied, what is the best thing to do?
a. Call up the card company and ask if you can be approved if you agree to a higher interest rate.
b. Apply for a secured credit card
c. Add money from a cash loan to your checking account so it appears you have more funds available.
d. Have someone cosign for a credit card for you.
Objective 2.2 Paying off and avoiding credit card debt
When you have serious credit card debt, where is the best place to seek help?
a. From a debt consolidation company
b. From an independent consumer credit counseling agency, such as AICCCA or the National Foundation for Credit Counseling
c. From a credit deferral service
d. From a private loan organization, such as a bank or credit union.
When you keep getting calls from a credit-card company about a bill you do not remember charging, what is the first thing you should do?
a. Pay it off in full.
b. Verify the debt.
c. Refuse to pay the debt since you do not have a personal record of it.
d. Change your phone number.
What is the rule of thumb about using money in a savings account to pay off a credit card balance?
a. Use savings when your credit card balance is over $5,000
b. Use savings when your savings balance is over...

...3-1 Days Sales Outstanding
Greene Sisters has a DSO of 20 days. The company’s average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year.
Formula for DSO = Receivables/ Ave sales per day = Receivables/( Annual sales/365)
= 20 days x $20,000= $400,000
Solution: AR = $400,000
3-2 Debt Ratio
Vigo Vacations has an equity multiplier of 2.5. The company’s assets are financed with some combination of long-term debt and common equity. What is the company’s debt ratio?
Formula for Debt ratio = Debt Ratio + Equity Ratio = 1
Equity Multiplier = 2.5
Therefore Equity Ratio = 1/EM
Equity Ratio = 1/2.4 = 0.40
MEMORIZE this formula:
Debt Ratio + Equity Ratio = 1
There for Debt Ratio = 1 - Equity Ratio = 1 - 0.40 = 0.60%
Solution: D/A 60%
3-3 Market/Book Ratio
Winston Washers’s stock price is $75 per share. Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt, and $6 billion in common equity. It has 800 million shares of common stock outstanding. What is Winston’s market/book ratio?
Winston market = $75 x 800 million = $60 billion
Book Value = Assets ($10b in total asset) – Liabilities ($1b current liabilities + $3b long term debt)
= $10b - $4b = $6b
M/B = $60b/$6b = $10b
Solution/B = $10b
3-4 PE Ratio
A company has an EPS of $1.50, a cash flow per share of $3.00, and a price/cash flow ratio of 8.0. What is its P/E ratio?...

...
The file NTC 360 Riordan Manufacturing Service Request SR-rm-019 includes overview of the following parts:
Background
Current Systems
Network Protocols
Topologies in Use
Switching
Network security
Conclusion.
Business - General Business
NTC 360Week 5 Improving the Riordan Manufacturing Network
Building friendships is going to take some time. You can be proactive by going to your class a little early on the first day. By doing this, you can provide assistance to those who aren't sure whether or not they're in the right class. You can start to have conversations with those who also arrive early.
The file NTC 360 Riordan Manufacturing Service Request SR-rm-019 includes overview of the following parts:
Background
Current Systems
Network Protocols
Topologies in Use
Switching
Network security
Conclusion.
Business - General Business
NTC 360Week 5 Improving the Riordan Manufacturing Network
Building friendships is going to take some time. You can be proactive by going to your class a little early on the first day. By doing this, you can provide assistance to those who aren't sure whether or not they're in the right class. You can start to have conversations with those who also arrive early.
The file NTC 360 Riordan Manufacturing Service Request SR-rm-019 includes overview of...

...CLICK TO DOWNLOAD
MAT 540 Week2 Quiz
Question 1
If variable costs increase, but price and fixed costs are held constant, the break even point will decrease.
Question 2
Parameters are known, constant values that are usually coefficients of variables in equations.
Question 3
Probabilistic techniques assume that no uncertainty exists in model parameters.
Question 4
In general, an increase in price increases the break even point if all costs are held constant.
Question 5
P(A | B) is the probability of event A, if we already know that event B has occurred.
Question 6
A continuous random variable may assume only integer values within a given interval.
Question 7
The events in an experiment are mutually exclusive if only one can occur at a time.
Question 8
A bed and breakfast breaks even every month if they book 30 rooms over the course of a month. Their fixed cost is $4200 per month and the revenue they receive from each booked room is $180. What their variable cost per occupied room?
Question 9
The indicator that results in total revenues being equal to total cost is called the
Question 10
If the price increases but fixed and variable costs do not change, the break even point
Question 11
A university is planning a seminar. It costs $3000 to reserve a room, hire an instructor, and bring in the equipment. Assume it costs $25 per student for the administrators to provide the course materials. If we know that...