"The revenue for a project in year 8 is $38,000 in constant (year-0) dollars. Expenses (not including depreciation) in the same year is $22,000 in constant (year-0) dollars. Depreciation in that same year is $7675. If there were no inflation, the net income for year 8 would be $5078 in constant (year-0) dollars. If the inflation rate is 3%, what is the net cash flow in year 8 in actual dollars? Assume there are no investments or salvage values in this year. Hint: you will need to calculate the tax rate. The answer could be a negative number."

1. Find the accumulate value at the end of year 10 of a 10-year annuity with annual payments which pays $1000 in one year and each subsequent payment is 3% less than the preceding payment. The annual effective rate of interest is 5%.

2. An annuity immediate has semiannual payments with arithmetic progression of 800, 750, 700, . . . , 350, at i(2) = 0.16. Find the future value of this annuity 3 years after the last payment.

3. ​​​​​​​

The table below shows the number of students in each year at a certain university:

Year of study 1 2 3 4 5 6 7

No. of students 300 280 275 175 92 48 30

You would like to select a random sample of 100 students from this university.

i. Explain how you would choose a simple random sample.

ii. Explain how you would choose a sample using systematic (interval) sampling method.

iii. If you use stratified sampling method to choose a sample, explain how this could be done and how many students from each year group are to be chosen for the sample.

The cash flows for the two projects are as follows? ($ million):

a. What is the IRR of each? project?

b. What is the NPV of each project at your cost of? capital?

c. At what cost of capital are you indifferent between the two? projects?

d. What should you? do?

Prepare a horizontal analysis of the segment data using the prior year as the base year. Round all percents to one decimal place. Enter all amounts in millions. If required, use minus sign to indicate the decreasing values.

b. Prepare a vertical analysis of the segment data. Round all percents to one decimal place and round the total percentage to 100 if necessary.

Feedback

b. For vertical analysis, use the total revenues and show the percentage in a column for that year.

c. Based on the percentages in the vertical analysis, which of Starbucks's operations grew more?

Blue Elk Manufacturing reported sales of $720,000 at the end of last year, but this year, sales are expected to grow by 7%. Blue Elk expects to maintain its current profit margin of 21% and dividend payout ratio of 30%. The following information was taken from Blue Elk’s balance sheet: Total assets: $400,000 Accounts payable: $80,000 Notes payable: $35,000 Accrued liabilities: $70,000 Based on the AFN equation, the firm’s AFN for the current year is _________.

a. -86,174

b. -105,324

c. -95,749

d. -100,536

Because of its excess funds, Blue Elk Manufacturing is thinking about raising its dividend payout ratio to satisfy shareholders. Blue Elk could pay out _______% of its earnings to shareholders without needing to raise any external capital. (Hint: What can Blue Elk increase its dividend payout ratio to before the AFN becomes positive?)

a. 71.4%

b. 89.2%

c. 75.8%

d. 62.4 %

At the beginning of year 1, sub sold 5 year at 6% for $1,000,000 bonds with annual interest payment when market was 8%. At the end of the first year, the parent of the sub purchased 80% of these bonds when market was at 3%. Prepare all the necessary journal entries and eliminations for the 5 years, assume interest method was used by sub and parent.

a. What is the present value of end-of-year cash flows of $7,000 per year, with the first cash flow received five years from today and the last one 40 years from today? Assume interest rate of 10%.

1. $41,271.67
2. $44,496.49
3. $45,733.15
4. $46,264.30
5. $50,218.30

b. What is the value of a 30-year annuity that pays $1250 a year? The annuity’s first payment will be received on year 11. Also, assume that the annual interest rate is 6 percent for years 1 through 10 and 7 percent hereafter.

1. $14,271.67
2. $15,511.30
3. c. $12,733.15
4. $9,969.81
5. $8,661.43

You purchase a 10 year annuity with payments at the end of each year for $10, 000 (where for this annuity effective annual interest is 4%). Immediately after you receive payments, you deposit the payment into an account earning 5% effective annual interest. How much is in this account at the end of 10 years? Use this to find the equivalent effective annual interest rate for this $10, 000 investment over this 10 year period.