The insurance settlement pays you $50,000 in one year, growing at 6$ per year for a total of 10 years.

a. The discount rate is 4%

b. What is the value today?

Acme Corporation uses the calendar year as their fiscal year for reporting purposes. Acme Corporation is owned 100% by Jesse Smith. Jesse Smith is quite wealthy - he has over $3 million in a personal savings account which is currently earning 2 one hundredths of 1% interest (or .0002 rate resulting in $600 per year). He also has many other investments. Acme Corporation has $300,000 of current assets. Acme has Accounts Payable of $40,000 and various Payroll liabilities totaling $109,000. Acme also has a Note Payable in the amount of $800,000. There are no other liabilities. Interest has been paid every year when due on December 31. The Note Payable is due in $200,000 installments on June 30 of each year for the next 4 years. The current interest rate on the note is 4%. However, according to the loan terms, if Acme's current ratio falls below 2, the interest rate will automatically increase to 7%. Since the note is due in installments over the next 4 years, management is presenting the Note on the balance sheet as a long term liability. Is Acme's management reporting their balance sheet appropriately? What recommendations do you have for management? How do these recommendations impact the current ratio?

A 5-year bond with a face value of $1,000 pays a coupon of 4% per year (2% of face value every six months). The reported yield to maturity is 3% per year (a six-month discount rate of 3/2 =1.5%). What is the present value of the bond?

1.The yield of a one-year bond this year equals to 6.5%, and people expect the yield of a one-year bond to remain the same on the second year but fall to 5% on the third year. Also, people also require a 0.25% term premium for each additional year of bond maturity.

a.Calculate the yield of a two-year bond and a three-year bond according to the theory of liquidity premium. Compare the yields of the three-year bond, two-year bond, and one-year bond, what does it tell you about the shape of the yield curve? (10 points)

b.Calculate the yield of a two-year bond and a three-year bond according to the expectations theory. Compare the yields of the three-year bond, two-year bond, and one-year bond, what does it tell you about the shape of the yield curve? (10 points)

Octaone produces luxury water cooler. This is their first year in operation (i.e. starting the year with $0 balances). The company produced 9,000 units (started and completed) and sold 8,000 units for $560,000. Octaone paid $10 per unit in direct materials and $5 per unit in wages for production workers. Lease payments and utilities on the production facilities amounted to $22,500 and selling & administrative expenses were $17,000.

Answer the following questions about Octaone.

A. What is the cost per unit of a water cooler?

B. What is the gross margin per unit of a water cooler?

C. What is the balance in the inventory account before any water coolers were sold?

D. What is the cost of goods sold for the year?

E. What is the cost of inventory on the balance sheet at the end of the year?

F. What is the net income for the year?

Label and place your final answer for A-F at the top of the answer box. Then after the answer to F, label and show your work for each part of the question. Just show me numbers – that is usually enough for me to follow your logic.

Derive the probability distribution of the 1-year HPR on a 30-year U.S. Treasury bond with an 4.0% coupon if it is currently selling at par and the probability distribution of its yield to maturity a year from now is as follows: (Assume the entire 4.0% coupon is paid at the end of the year rather than every 6 months. Assume a par value of $100.) (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" & "%" signs in your response.)

Please fill in the rest.

. Suppose that an investor with a five-year investment horizon is considering purchasing a seven-year 9% coupon bond selling at par. The investor expects that he can reinvest the coupon payments at an annual interest rate of 9.4% and that at the end of the investment horizon two-year bonds will be selling to offer a yield to maturity of 11.2%. What is the five-year total return for this bond?

Skysong, Inc. began the year with retained earnings of $308000. During the year, the company issued $417000 of common stock, recorded expenses of $1193000, and paid dividends of $80400. If Skysong ending retained earnings was $328000, what was the company’s revenue for the year? $1293400 $1213000 $1630000 $1710400

Micky earns $200 this year and will earn $210 next year. The interest rate is 5 percent (r=0.05), whether Micky borrows or saves.

1. Draw his intertemporal budget constraint. Calculate and show on your diagram the horizontal intercept and the vertical intercept.
2. Suppose Micky saves $100 this year so that he can consume more next year. Show his consumption choice on your diagram. How much does he consume this year and next?
3. Now suppose the government introduces a 40 percent tax on investment income, but allows any interest payments to be tax deductible (even interest payments on consumer debt). Show the effect of taxing investment income on Micky’s budget constraint.
4. Now try to draw a more realistic scenario: if Micky borrows money on his credit card, he pays an interest rate of 20 percent, and interest payments are not tax deductible. Micky pays no tax on his interest income for the first $40 he saves. Only for savings above $40 does he start to pay tax at 40 percent. Show his new budget constraint.

On the first day of the fiscal year, a company issues a $8,400,000, 12%, 10-year bond that pays semiannual interest of $504,000 ($8,400,000 × 12% × ½), receiving cash of $7,115,493. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.