1. Last year, the CPI Index was 102.43. Now (one year later), the index is 110.24.
Calculate the inflation rate over this period.
Enter your answer in decimals (not percent) and round to 4 decimal places, for example 0.1234.
2. Last year, the CPI Index was 205.49. Now (one year later), the index is 214.87.
Over the past year, you earned 7.6% on your deposits at the bank.
Calculate your real rate of return over the year.
Enter your answer in decimals (not percent) and round to 4 decimal places, for example 0.1234.
3.
Company A and Company B recently sold bonds to investors.
You notice that investors require a return of 4.55% to invest in the bonds of Company A, and they require a return of 8.75% to invest in the bonds of Company B.
Which of the following options would be the most likely explanation for the extra return investors require from Company B?
Group of answer choices
Company B has more default risk than Company A
Company A has more default risk than Company B
Investors are not sure how much liquidity risk there is for Company B
Investors expect more profits from Company B
4.
What is the present value of a 8-year annuity that will pay you $3,000 per year if interest rates are 10%?
Round your answer to 2 decimal places, for example 100.12.
In: Finance
If you set aside $5,000 per year (i.e., one deposit of $5,000 each year) in a Roth IRA for the next 25 years (the first contribution is to be made exactly one year from now, so use an ordinary annuity setup), how much will you have at your retirement in 25 years if your IRA earns 6% APR, compounded monthly?
In: Finance
You will need $100,000 per year for 25 years starting in year 45. You are able to save $3000 per year from year 3 to year 15, inclusive. How much must you save from years 16 through 37, inclusive, if interest rates will be 4% from years 0 through the end of year 25 and 7% starting at the beginning of year 26 and on? Solve for the unknown payments:
Please show work: I do not understand my professors work
In: Finance
A closed-end fund starts the year with a net asset value of $30. By year-end, NAV equals $31.90. At the beginning of the year, the fund is selling at a 2% premium to NAV. By the end of the year, the fund is selling at a 7% discount to NAV. The fund paid year-end distributions of income and capital gains of $3.30. a. What is the rate of return to an investor in the fund during the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Rate of return % b. What would have been the rate of return to an investor who held the same securities as the fund manager during the year? (Round your answer to 2 decimal places.) Rate of return %
In: Finance
Typically, salaries do not increase or increase very little from year to year; however, the prices of things are steadily increasing (which is often quite a pain) Why do you think this happens? How do we deal with this? Do you you have any thoughts on how we could correct this? Do you have any personal examples you can provide regarding this
In: Economics
Calculate the ratios for year 2 that are listed below:
COMPANY XYZ
Income Sheet
|
Year 1 |
Year 2 |
||
|
Sales (all on credit) |
$1,400,000 |
$1,375,000 |
|
|
Cost of Goods sold |
850,000 |
900,000 |
|
|
Gross profit |
$550,000 |
$475,000 |
|
|
Selling and administrative expense* |
240,000 |
230,000 |
|
|
Operating profit (EBIT) |
$310,000 |
245,000 |
|
|
Interest expense |
40,000 |
37,000 |
|
|
Net income before taxes |
$270,000 |
208,000 |
|
|
Taxes |
81,000 |
62,400 |
|
|
Net income |
$189,000 |
145,600 |
|
|
Shares |
30,000 |
30,001 |
|
|
Earnings per share |
$6.30 |
$4.85 |
|
|
*Includes $15,000 in lease payments for each year. |
|||
COMPANY XYZ
|
Balance Sheet Assets |
Year 1 |
Year 2 |
|
Cash |
$50,000 |
$55,000 |
|
Marketable securities |
20,000 |
20,000 |
|
Accounts receivable |
150,000 |
150,000 |
|
Inventory |
200,000 |
210,000 |
|
Total current assets |
$420,000 |
435,000 |
|
Net plant and equipment |
650,000 |
650,000 |
|
Total assets |
$1,070,000 |
$1,085,000 |
|
Liabilities and Stockholders’ Equity |
||
|
Accounts payable |
$175,000 |
190,000 |
|
Accrued expenses |
25,000 |
25,000 |
|
Total current liabilities |
$200,000 |
215,000 |
|
Long-term liabilities |
310,000 |
310,000 |
|
Total liabilities |
$510,000 |
525,000 |
|
Common stock ($2 par) |
60,000 |
60,000 |
|
Capital paid in excess of par |
190,000 |
190,000 |
|
Retained earnings |
310,000 |
310,000 |
|
Total stockholders’ equity |
$560,000 |
560,000 |
|
Total liabilities and stockholders’ equity |
$1,070,000 |
$1,085,000 |
Create your response to this:
| Ratio Description | Ratio |
Formula - showing numbers (labels) 435,000 (Current Assets)/215,000 (Current Liabilities) |
|
Current Ratio |
||
| Quick Ratio (Acid Test Ratio) | ||
| Days Sales Outstanding (Average Collection Period) | ||
| Inventory Turnover | ||
| Fixed Asset Turnover | ||
| Total Asset Turnover | ||
| Debt Ratio | ||
| Times Interest Earned | ||
| Gross Profit Margin | ||
| Net Profit Margin | ||
| Return on Assets | ||
| Return on Equity |
In: Accounting
An investment offers $5,500 per year for 15 years, with the first payment occurring one year from today.
If the required return is 6%, what is the present value of the investment?
In: Finance
The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:
| 2016 | ||
| July | 1 | Issued $71,100,000 of 20-year, 12% callable bonds dated July 1, 2016, at a market (effective) rate of 14%, receiving cash of $61,621,133. Interest is payable semiannually on December 31 and June 30. |
| Oct. | 1 | Borrowed $250,000 by issuing a six-year, 5% installment note to Nicks Bank. The note requires annual payments of $49,254, with the first payment occurring on September 30, 2017. |
| Dec. | 31 | Accrued $3,125 of interest on the installment note. The interest is payable on the date of the next installment note payment. |
| 31 | Paid the semiannual interest on the bonds. The bond discount amortization of $236,972 is combined with the semiannual interest payment. | |
| 31 | Closed the interest expense account. | |
| 2017 | ||
| June | 30 | Paid the semiannual interest on the bonds. The bond discount amortization of $236,972 is combined with the semiannual interest payment. |
| Sept. | 30 | Paid the annual payment on the note, which consisted of interest of $12,500 and principal of $36,754. |
| Dec. | 31 | Accrued $2,666 of interest on the installment note. The interest is payable on the date of the next installment note payment. |
| 31 | Paid the semiannual interest on the bonds. The bond discount amortization of $236,972 is combined with the semiannual interest payment. | |
| 31 | Closed the interest expense account. | |
| 2018 | ||
| June | 30 | Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $8,530,979 after payment of interest and amortization of discount have been recorded. (Record the redemption only.) |
| Sept. | 30 | Paid the second annual payment on the note, which consisted of interest of $10,662 and principal of $38,592. |
Required:
| 1. | Journalize the entries to record the foregoing transactions. Round all amounts to the nearest dollar. Be sure to include the year in the date for the entries. Refer to the Chart of Accounts for exact wording of account titles. |
| 2. | Indicate the amount of the interest expense in (a) 2016 and (b) 2017. |
| 3. | Determine the carrying amount of the bonds as of December 31, 2017. |
In: Accounting
How much interest will you pay during the eighth year of a 25-year $350,000 loan with an APR of 5.5% if you only make the minimum monthly payments?
A. $17,293
B. $15,941
C. $16,139
D. $28,989
In: Finance
Suppose most investors expect the inflation rate to be 5% next year, 6% the following year, and 8% thereafter. The real-risk free rate is 3%. The maturity risk premium is zero for bonds that mature in 1 year or less and 0.1% for 2-year bonds; then the MPR increased by 0.1% per year thereafter for 20 years, after which it is stable. What is the interest rate on 1-, 10-, and 20- year treasury bonds? Draw a yield curve with these data. What factors can explain why this constructed yield curve is upward sloping?
In: Finance