Question

The treasurer of Parkland Community Hospitals needs to determine the present value of a one-time $1,200,000 investment at the end of year 7. The discount rate is 3% compounded annually, what is the present value?

		$109,400
		$882,000
		$821,780
		$975,710

A B&B Health Plan divisional project has the following financial information:

Revenue: $240,000

Variable Costs: $95,000

Avoidable Fixed Costs: $110,000

Unavoidable Fixed Costs: $60,000

How much is the project's Product Margin?

		$35,000
		-$15,000
		$55,000
		-$25,000

The Chief Financial Officer of UTSW Medical deposits $24,000 at the end of each year for 8 years. What will be the value of this investment at the end of 8 years at a compounded rate of 6% annually?

		$237,539
		$1,054,480
		$239,450
		$325,783

Which of the following potential investments has the least risk?

		Treasury bills
		Real estate
		Common stock
		Commercial paper

plz and asap....

Answer 1

1. Ans $975910

Reference sheet is as follows

2. $35000

Explanation is as follows

Avoidable fixed cost ; It is the cost not incurred if product is not produced .It is relevant for decision making and should be considered while calculating Product’s margin

Unavoidable Fixed cost; It is the cost incurred though no product is produced. It is irrelevant for decision making and should not be considered while calculating Product’s Margin

Statement showing product margin taking relevant cost for decision making

S.no	Particulars	Amount ( in $)
1	Sales Revenue	$240000
2	Less variable cost	-$95000
3	Contribution (1-2)	$145000
4	Less ; Avoidable Fixed cost (Relevant)	-$110000
5	Product margin (3-4)	$35000

Unavoidable fixed cost of $60000is not relevant and hence not considered for decision making

3.Ans $237539

Computation of value of investment at the end of 8 years @6%annually for 8 years

Future value of ordinary annuity =C*[(1+i)^n-1]/i

C= cash flow per period=$24000

I = rate of interest=6%

N= number of payments=8

Therefore future value of investment =$24000*[(1+0.06)^8-1]/0.06

                                                                     =$24000*9.897468

                                                                    =$237539

4.

Answer .Treasury Bills

A risk-free asset is one that has a certain future return—and virtually no possibility of loss. Debt obligations issued by the U.S. Department of the Treasury (bonds, notes, and especially Treasury bills) are considered to be risk-free because the "full faith and credit" of the U.S. government backs them. Because they are so safe, the return on risk-free assets is very close to the current interest rate.