A 50 year old employee contributes 20000 per year to her 401k, and her employer matches her contributions by 40%. The investment company has provided her with two options:

The employee wants to retire at 65. The average rates of return presented are 5% on equity, 3% on bonds, and 1% on money market funds. Calculate the total amount of money at the time of retirement under each option.

On July 1, Year 1, Danzer Industries Inc. issued $68,000,000 of 20-year, 11% bonds at a market (effective) interest rate of 14%, receiving cash of $54,404,080. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required:

For all journal entries: If an amount box does not require an entry, leave it blank.

1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.

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2. Journalize the entries to record the following:

a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.)

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b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.)

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3. Determine the total interest expense for Year 1.
$

Last year Swensen Corp. had sales of $303,225, operating costs of $267,500, and year-end assets of $163,000. The debt-to-total-assets ratio was 27%, the interest rate on the debt was 8.2%, and the firm's tax rate was 37%. The new CFO wants to see how the ROE would have been affected if the firm had used a 45% debt ratio. Assume that sales and total assets would not be affected, and that the interest rate and tax rate would both remain constant. By how much would the ROE change in response to the change in the capital structure? Select the correct answer. a. 3.27% b. 4.47% c. 4.17% d. 3.87% e. 3.57%

Hampton Industries had $70,000 in cash at year-end 2018 and $21,000 in cash at year-end 2019. The firm invested in property, plant, and equipment totaling $300,000 — the majority having a useful life greater than 20 years and falling under the alternative depreciation system. Cash flow from financing activities totaled +$170,000. Round your answers to the nearest dollar, if necessary.

1. What was the cash flow from operating activities? Cash outflow, if any, should be indicated by a minus sign.

   $  

2. If accruals increased by $10,000, receivables and inventories increased by $125,000, and depreciation and amortization totaled $29,000, what was the firm's net income?

   $  

3. A firm has the following three projections of revenue estimates:

Current Year1 Year 2 Year 3

Revenue $1,500 $1,650 $1,815 $2,000

EAT $95 $106 $117 $130

The company also receives a royalty net after taxes of $10 million per year. It is expected that the cash flows equal to depreciation will have to be reinvested to keep the firm operating. Further, capital expenditures equal to 60 percent of the net cash flow will need to be invested to keep the firm growing. Other items on the balance sheet remain unchanged. The CFO believes that it will just forecast for the first three years and then simply assume a 6 percent annual growth rate after the third year.

T-bills yield 8 percent and the market return is 13 percent. The company’s beta using Hamada equation is 1.2. What is the value of the company or what would you pay for the firm if you were interested in it.

A poll taken last year found alcohol consumption at a 30-year low. Sales figures from the industry confirm the findings of the poll. Seagram’s is the largest firm in the industry. Based upon what you have learned about strategic management, what should Seagram’s be doing in response to this information?

A stock has had the following year-end prices and dividends:

What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

A 5-year Treasury bond has a 4.7% yield. A 10-year Treasury bond yields 6.15%, and a 10-year corporate bond yields 8.05%. The market expects that inflation will average 2.25% over the next 10 years (IP₁₀ = 2.25%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: DRP = LP = 0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described.

What is the yield on this 5-year corporate bond? Round your answer to two decimal places.

%

A 60-year old person buys a 25-year term annuity in arrears contract for a single upfront premium of $1,000,000. Interest earnt by the insurance company is assumed to be 5% over the first 10 years of the contract and then 4% for the remaining term. The amount paid in the first 10 years is two-thirds of the amount paid in the remaining 15 years. Find out the amount paid in year 1 of the contract.

Assume that select mortality applies and there is an annual fee of $20 which is paid at the time of the annuity payment

Hampton Industries had $35,000 in cash at year-end 2018 and $10,000 in cash at year-end 2019. The firm invested in property, plant, and equipment totaling $140,000 — the majority having a useful life greater than 20 years and falling under the alternative depreciation system. Cash flow from financing activities totaled +$110,000. Round your answers to the nearest dollar, if necessary.

1. What was the cash flow from operating activities? Cash outflow, if any, should be indicated by a minus sign.

   $   

2. If accruals increased by $10,000, receivables and inventories increased by $140,000, and depreciation and amortization totaled $33,000, what was the firm's net income?