Assume the appropriate discount rate is 8%. You will receive a payment every year for the next 13 years, which will grow at 4% annually. The amount of the first payment will be $6,000. What is the current value of this series of payments?

At the end of each fiscal year, companies with public securities are required to provide shareholders with an annual report. The annual report includes financial statements such as the balance sheet and additional disclosures, which may include items such as relating to business conditions, risk factors, legal proceedings, stock performance, and internal control procedures. Also, disclosure notes explain data presented in financial statements themselves or provide information not directly related to any specific item in the statements. Some examples are Pensions Long-term Debt, Income Taxes, Property Plant and Equipment, Leases, Investments, Employee Benefits Plan. It must include a summary of significant accounting policies, descriptions of subsequent events, and related third-party transactions. Specific Disclosure Notes summary of Significant Accounting Policies. It conveys valuable information about a company’s choices from among various alternative accounting methods. Subsequent Events occur after a company’s fiscal year-end but before the financial statements are issued. Examples: Issuance of debt or equity securities, Business combination or the sale of a business, Sale of assets, Event that sheds light on the outcome of a loss contingency.

Noteworthy Events and Transactions some transactions and events occur only occasionally but are potentially important to evaluating a company’s financial statements. In this category are Related-party transactions—Transactions between the company and owners, management, families of owners, etc. Errors and fraud—Misstatements that are unintentional (errors) or intentional (fraud). Illegal acts—Bribes, kickbacks, illegal contributions to political candidates, and other violations of the law. The more frequent of these is related-party transactions.

Review the Disclosure notes to determine which items you think should be included and which items of the disclosure can be omitted. Remember who looks at these notes and who they are intended to benefit.

Accounts receivable at the beginning of the year are 300. The company has a 30-days collection period. Calculate cash collections in each of the four quarters by completing the following.

            A 10-year bond has a 10 percent annual coupon and a yield to maturity of 12 percent. The bond can be called in 5 years at a call price of $1,050 and the bond’s face value is $1,000. Which of the following statements is most correct? Please explain why.

            a.   The bond’s current yield is greater than 10 percent.

            b.   The bond’s yield to call is less than 12 percent.

            c.   The bond is selling at a price below par.

            d.   Both answers a and c are correct.

5. None of the above answers is correct.

Incubus Corporation began with an investment by shareholders of $36,000.

a. In its first year, its income showed a deficit of $6,600. What would the equity section of its balance sheet show at year end? (Negative answers should be indicated by a minus sign. Omit $ sign in your response.)

b. In the second year, it had income of $16,400 and a dividend of $5,600 was paid. What would the equity section of its balance sheet show at year end?

c. In the third year, Incubus sold more shares for a value of $18,000, earned income of $11,600, and paid a dividend of $5,600. What would the equity section of its balance sheet show at year end?

Portfolio A consists of a 2-year zero-coupon bond with a face value of $8,000 and a 10-year zero-coupon bond with a face value of $2,000. The current yield on all bonds is 11.75% per annum. (Answer with two decimal digits accuracy)

The duration of portfolio A is

At the end of every year you deposit $2,000 into an account that earns 6% interest per year. What will be the balance in your account immediately after the 30th deposit?