You plan to invest Rs. 2000 in a fixed deposit today that pays a stated annual interest rate of 8 percent which is expected to apply to all future years.

a) How much will you have in the account at the end of 10 years if interest is compounded as follows

i) Annually ii) Semiannually iii)Monthly

b) What is the effective annual rate (EAR) for each compounding frequency in part a ?

1. You deposit $2000, $3000, and $4000 respectively at the end of years 1,2, and 3 from today in a mutual fund providing 10% return. Draw a timeline and compute how much your savings will be worth in 3 years.

2. Patricia starts college in 5 years for which she will need $15,000 payable at the end of each of the 4 years. Suppose she can buy an annuity in 5 yrs. that will enable her to make the four $15,000 annual payments. Draw a timeline for all cash flows. What will be the cost of the annuity 5 years from today? What is the most she should be willing to pay for it if purchased today? Assume an interest (discount) rate of 6% during these 9 years.

In the United States during the early 2000's there were a plethora of accounting scandals. Many times, the CEO was the cause of the problem. Congress passed the Sarbanes-Oxley Act in 2002. A large portion of the act was devoted to making CEO's more responsible for control over accounting. How do the actions of CEOs and upper management affect accounting and financial reporting?

A 2000-pound, couterbalanced, electric forklift can be purchased for $25,000 plus $3000 for the charger and $3000 for a battery. The forklift's market value is 15% less for each of its first 6 years of service. After this period the market value declines at a rate of 7.5% for the next 6 years.

The battery has a life of 12 years and a salvage value of $300. The charger has a 12-year life and a $100 salvage value. The charger's market value declines 20% per year of use. The battery's market value declines by 15% of its purchase price each year. Maintenance of the charger and battery are minimal. The battery will most likely not work with a replacement forklift.

Maintenance of the forklift is $400 per year during Year 1 and 2 while the warranty is in place. In year 3 it jumps to $800 and increases $500 per year thereafter. What is the optimal ownership policy using i =10%?

You want to buy a $2000 corporate bond maturing in 3 years with a coupon rate of 9%. The current market rate is of 7%. Answer the following questions:
1) How much is the bond going to cost you today?
2) Will the coupon rate change if the market rate rises to 8%?
3) What will the price be of the bond if market rate is 6%?

Under the leadership of President Bill Clinton, in 2000 the U.S. government normalized trade relations with China. This paved the way for China’s becoming a member of the World Trade Organization in 2001. Clinton maintained that this was good for America since China would become a major customer for American-made products and political relations would improve for the governments of China and the United states. However, American labor unions worried about additional competition coming from poorly paid Chinese workers. Do you feel that China’s entry into the WTO was a mistake? Form an argument that supports your view on this matter.

You can afford to pay up to $2000 in payments every month for housing and have $80,000 in savings (you don't anticipate and increase in income/savings). Which of the following mortgages would allow you to buy the most expensive property?

a)

In the 1999-2000 NHANES report, the reported cancer rate for women subjects age 65 and older is 14%. Using this estimate as the true percentage of all females ages 65and over who have been told by a health care provider that they have cancer, find the probability that if 210 women are selected at random from the population, more than 20% will have been told they have cancer.

b)

In the same report, the cancer rate for men ages 65 and older is 23%. Use this estimate as the percentage of all men ages 65 and older who have been told by a health care provider that they have cancer. Find the probability that among 250 men selected at random that fewer than 20% will have been told they have cancer.

c)

Find the probability that the male cancer rate is at least 3% higher than the female cancer rate in the two samples given above.

1. In 2000, the P/E ratio of the stock market reached about 10. If you assume that these corporations will grow roughly at the overall economy’s (GDP) growth rate of 4.5% per year, what should investors have reasonably expected in terms of a likely future rate of return implied by the stock market’s level? Show your work.

Read the Seligman (2000) article, 24-7 Accounting. Based on the content presented in the article, in conjunction with this week’s lecture and other readings, discuss the U.S. Securities and Exchange Commission (SEC) fair disclosure regulation and how an organization complies with this regulation utilizing their accounting information system. Provide at least two practical examples from your research.