You receive an inheritance of a thirty-year annuity, which pays 1 at the end of the first year, 2 at the end of the second year, 1 at the end of the third year, 4 at the end of the fourth year, 1 at the end of the fifth year, etc. This pattern will continue such that 1 will be paid out at the end of 29th year and 30 will be paid out at the end of the 30th year. Find the present value of this inheritance if the annual effective interest rate is 4%(Answer: 120.17)

What is it is about the banking and finance industry that attracts so many talented people to commit so many fraudulent or unethical acts and what can be done to prevent this?

XYZcom is a startup that builds high end BBQs for the consumer market. They commence operations (rather conveniently) on the first of July.

On the first of July they buy the equipment they need to produce their range of BBQs. The equipment they purchase is:

BBQ stamping machine for $220,000
BBQ Seam welder for $25,000
The effective life of the equipment is 10 years.

1) Create a table or other tool you can use as an asset register. Calculate the depreciation (diminishing value method) for the first year and include it in your asset register.

This equipment can be entered in the asset register using the ID numbers PR001 and PR002.

2)XYZcom pays $4,800 for 12 months insurance in July. Rather than recording the whole amount against July’s expenses, it wishes to show the expense equally across the periods for which it paid the premium. In other words, rather than showing a $4,800 expense for July it wishes to use prepayments to show a $400 expense in all months.Show the general journal transactions for July. The general journal transaction number is GL7, the insurance account is 6010, and the prepaid insurance 1945. The transaction is processed on the 31st July.

3) One of XYZcom’s account customers, JZ House and Garden, has gone broke, owing XYZcom $5,700. Prepare a worksheet showing the appropriate journal or ledger entries to write off the debt. Use the docket number JZ345, move the debt into bad debts in April and finalise the transactions on the 31st July. Before the write off, profit is 275,300.00. At the time of write off, theirs is the only receivable and afterwards the only bad debt.

4) XYZcom, being a startup, had a zero beginning inventory. They spent $425,000 on inventory items, receiving $12,000 for prompt payment and paying $10,000 for freight. Their closing inventory is $84,000. Determine the cost of goods sold and the closing entries for a periodic inventory.

5) Prepare a trial balance, an income statement and a balance sheet using your calculations.
You will need the following information:
Sales were $1,181,200.00
Administrative and sales expenses $225,000.00
Interest on debt is $97,000.00
At the end of the period, XYZcom has the following account balances:
Cash 550,000
Accounts receivable 117,000
Inventory 84,000
Prepaid expenses 4,800
Equipment 196,000
Depreciation 49,000
Accounts payable 125,000
Loans payable 361,300
Net Profit 465,500

I just need assistance with part 5. I need help with the trial balance, income statement and balance sheet.

Select all that is /are true about the financial markets.

A.financial markets bring together the buyers and sellers of debt and equity together .

B.stocks trading on an organized exchange such as the NYSE are also referred to as listed securities.

C.Securities traded between two shareholders happen in the primary market.

D.When a firm sells shares to the public this is a primary market transaction

E. The OTC market has a central location and is also an auction market.

F. on a typical day in the US the largest volume of trading in auction markets occurs in the OTC market

As a portfolio manager, you have a portfolio with one liability of a single payment 5 years from now of $7,500 and five bonds, which mature 10 years from now at par ($1,000 each) with annual interest payments of $100 each. Assuming that the bond sold at par, and the nominal interest rate remains at about 10 percent, you should be able to make the balloon payment with the interest on the bonds for 5 years ($500 times 5 = $2,500, not including the interest from receiving the interest) plus redeeming the bonds ($1,000 times 5 = $5,000). Your calculation are simple, and you sleep in blissful ignorance. What is the fallacy in this calculation?

Which of the following statements is CORRECT?

Premium Pie Company needs to purchase a new baking oven to replace an older oven that requires too much energy to run. The industrial size oven will cost $1,200,000. The oven will be depreciated on a straight-line basis over its six-year useful life. The old oven cost the company $800,000 just four years ago. The old oven is being depreciated on a straight-line basis over its expected ten-year useful life. (That is, the old oven is expected to last six more years if it is not replaced now.) Due to changes in fuel costs, the old oven may only be sold today for $100,000. The new oven will allow the company to expand, increasing sales by $300,000 per year. Expenses will also decrease by $50,000 per year due to the more energy efficient design of the new oven. Premium Pie Company is in the 40% marginal tax bracket and has a required rate of return of 10%.

a. Calculate the net present value and internal rate of return of replacing the existing machine

b. Explain the impact on NPV of the following: i) Required rate of return increases ii) Operating costs of new machine are increased iii) Existing machine sold for less

Attempts:  

11

          Keep the Highest:   

1 / 3

Other things held constant, which of the following actions would increase the amount of cash on a company's balance sheet?

You plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows. Which of the following would lower the calculated value of the investment?

Select all that is/are true about the cash flow of a firm

A . in measuring free cash flows we are more interested in considering cash flows an accounting perspective rather than the perspective of the firm;s shareholders and investors.

B. Net cash flow does not include after tax interest expense

C.While an income statement measures a company's profit,profits are not the same as cash flows;profits are calculated on a cash basis rather than an accruals basis.

D.A firm which invested more cash in assets and working capital than operations,will have a positive operating cash flow and a negative cash flow from assets.

E. Free cash flow from an operating perspective must equal free cash flow from a financing perspective

F.If dividends paid is greater than net equity sold for the year,then the cash flow to stockholders is negative.

G.FCF may be defined as net operating profit after taxes (NOPAT) minus the amount of net investment in operating working capital and fixed assets necessary to sustain the business.

Q1

a) If higher leverage is associated with greater risk, explain why the process of deleveraging (reducing leverage) can be destabilizing.

b)

You wish to buy an annuity that makes monthly payments for as long as you live. Describe what happens to the purchase price of the annuity if:

(1) your age at the time of purchase goes up, (10 points)

(2) the size of the monthly payment rises, and (10 points)

(3) your health improves. (10 points)