All Finance Questions Solution In Excel Sheet (***** 100 % Correct *****) 3. How many years would it take $50 to triple if you invested it in a bank that pays 8.25% per year? 4. You want to buy a new sports car 4 years from now, and you plan to save $4,400 per year,beginning immediately. You will make 4 deposits in an account that pays 5.75% interest. Under these assumptions, how much will you have 3 years from today? 5. Whats the present value of a 5-year ordinary annuity of $2,250 per year plus an additional $3,500 at the end of Year 5 if the interest rate is 6%? 6. Whats the future value of $2,500 after 5 years if the appropriate interest rate is 7.5%, compounded semiannually? 7. An investment promises the following cash flow stream: $1500 at Time 0; $2,750 at the end of Year 1 (or at t = 1); $3,150 at the end of Year 2; and $4,800 at the end of Year 3. At a discount rate of 10.0%, what is the present value of the cash flow stream? 8. Suppose you are buying your first house for $250,000, and are making a $50,000 down payment. You have arranged to finance the remaining amount with a 10-year, monthly payment, amortized mortgage at a 3.4% nominal interest rate. What will your equal monthly payments be? 9. You plan to borrow $30,000 at an 8% annual interest rate. The terms require you to amortize the loan with 10 equal end-of-year payments. How much interest would you be paying in Year 4? 10. You just deposited $4,000 in a bank account that pays a 6% nominal interest rate, compounded quarterly. If you also add another $9,000 to the account one year (12 months) from now and another $7,500 to the account two years from now, how much will be in the account three years (12 quarters) from now? 11. Your sister turned 35 today, and she is planning to save $6,000 per year for retirement, with the first deposit to be made one year from today. She will invest in a mutual fund that will provide a return of 8.5% per year. She plans to retire 30 years from today, when she turns 65, and she expects to live for 25 years after retirement, to age 90. Under these assumptions, how much can she spend in each year after she retires? Her first withdrawal will be made at the beginning of her first retirement year. 12. You anticipate that you will need $2,000,000 when you retire 40 years from now. You plan to make 40 deposits, beginning today, in a bank account that will pay 7% interest, compounded annually. You expect to receive annual raises of 4%, so you will increase the amount you deposit each year by 4%. (That is, your 2nd deposit will be 4% greater than your first, the 3rd will be 4% greater than the 2nd, etc.) How much must your 1st deposit be if you are to meet your goal? 14. Medium Size Retailers, Inc. (MSR) has EBIT of $225,000, interest expense of $30,000, dividend income of $15,000, short term capital gains of $15,000, and long term capital losses of $18,000. What is MSRs income tax liability? 15. Frederickson Office Supplies recently reported $12,500 of sales, $7,250 of operating costs other than depreciation, and $1,750 of depreciation. The company had no amortization charges and no non-operating income. It had $8,000 of bonds outstanding that carry a 9.0% interest rate, and its federal-plus-state income tax rate was 40%. How much was the firm’s taxable income, or earnings before taxes (EBT)? 16. Over the years, Janjigian Corporation’s stockholders have provided $19,250 of capital, part when they purchased new issues of stock and part when they allowed management to retain some of the firm’s earnings. The firm now has 1,500 shares of common stock outstanding, and it sells at a price of $48.00 per share. How much value has Janjigian’s management added to stockholder wealth over the years, i.e., what is Janjigian’s MVA? 18. HHH Inc. reported $14,500 of sales and $7,025 of operating costs (including depreciation). The company had $18,750 of investor-supplied operating assets (or capital), the weighted average cost of that c…
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