Suppose that: S&P 500 index is trading at 2000; index stocks do not pay any dividends; and you can borrow and lend at 5% per annum. You have an index portfolio worth $20 million. An index futures contract with a multiplier of 100 matures in a year – this means one futures contract represents an index basket of stocks with a market value of 100 times the index value. How will you fully hedge your portfolio for a one year horizon? What’s your return if futures are trading at 2100? 2150? 2050? Suppose, you want to hedge only for one month. Do you know what your return will be if index futures are trading at 2100? 2150? 2050? Suppose your portfolio is only $300,000. Can you hedge perfectly? Suppose your portfolio is different from the index basket of stocks – what is the quality of your hedge?

Yakin Consultancy Sdn Bhd providing management consultancy on various corporate
matters since 2000. The company is a service tax registrant with RMC, taking effect on
1.9.2019.
For the taxable period 1.9.2019 to 31.10.2019, the company is required to pay service
tax of RM16,000 by 30.11.2019.The company makes the following payments:
RM
31.10.2019 6,000
11.11.2019 3,000
16.12.2019 5,000
The director of the company, Sam wishes to know the service tax risk.
Required:

(ii) Advice Sam on his service tax risk.

If you could reinvest the cash flow stream of $1000, $1200, $1500, $1700, $2000, $2500, $2900, and $3500 at 11.5% interest, how much will you have from this investment in 8 years? (In other words, what is the future value of this stream of cash flows?) Note that the cash flows are not necessarily the same as the previous problem's cash flows. Round to the nearest cent.

1. Disposable National income 2000 = $4.5 billion                    Consumption = $4.0 billion

Disposable National income 2007 = $5.5 billion                    Consumption = 4.8 billion

1. Given the data above, what is this country’s marginal propensity to consume (MPC)?

2. What is the country’s marginal propensity to save (MPS)?

2. Fred works as an accountant and earns a paycheck of $1000 every week, but $300 are taken out in taxes. Fred’s consumption spending is normally $500.

1. What is Fred’s personal disposable income?

Now assume the Federal Government gives tax cuts to many individuals, including Fred, so as a result, his taxes are only $150 this week. As a result, he increases his consumption to $600.

2. What is Fred’s MPC?

3. What is Fred’s MPS?

4. Who do you think has a higher MPC, the rich or the lower-income? Why?

5. If the government is looking to use monetary or fiscal policy to quickly boost the economy out of a recession, does your answer above give any advice as to whom they should target their policies? In other words, should it target its stimulus at the rich or the poor? Or does it make a difference?

3. You don’t have to share your income if you don’t want to, but write down (or keep in mind) your disposable personal income per month and your estimated consumption for an average month at this point in your life.   

1. Assume your income increases by $500 next month, and you know this is a one-time bonus. Your income will decrease again to its old level next month. How much would you spend? How much would you save?

Use these to estimate your MPC and MPS.

2. Assume your income increases by $500 next month, and you know this is a permanent raise. How much would your spending, on average, increase in the coming months? How much would your saving, on average increase, in the coming months?

Use these to estimate your MPC and MPS.

3. Compare your MPC and MPS in the two scenarios above (temporary increase vs. permanent increase) with your teammates’. Do your answers tend to favor the current income hypothesis or the permanent income hypothesis?

A 7-year $1000 par value bond with 10% semiannual coupons was sold on April 1, 2000, which yields 8% convertible semiannually. The coupons were payable at the beginning of October and April after the purchase. On June 25, 2005, the owner wished to know the dirty and clean values of this bond. Use both theoretical method and practical method, with the “30/360” method for figuring day counts. (Answers: $1055.44, $1032.35 by theoretical method, $1055.64, $1032.31 by practical method). Please show all work and numerical equation.

1. You are thinking of investing £2000. You have found the following investment deals which seem good

The first one pays 4.50% annual interest compounded annually.

The second one pays 4.48% annual interest but compounded quarterly

The third one pays 4.45% annual interest but compounded monthly

1. Which one would be in your benefit to choose? How much money will you have after 3 years? (9 points)

2. Considering the above, explain how using both nominal and effective interest rates make financial decisions easier. (5 points, no more than 100 words)

2. Your company needs a new machine. Two companies are selling this machine in the market, their conditions are as below

Company A: The purchase of the new machine at a cost of £15,000. The purchase price includes maintenance for the first two years, but after that maintenance will cost £1,050 a year (payable at the end of each year).

The machine will have a useful life of five years, after which time it is estimated that it will have a scrap value of £4,000.

The expected income from the machine will be £1,500 at the end of the first year, £2,500 end of the second year, £3,500 end of the third year, £4,500 at the end of the fourth year, and £5,500 at the end of the fifth year.

Company B: The purchase of the new machine at a cost of £10,000. The purchase price includes maintenance for the first year, but after that maintenance will cost £1,000 a year (payable at the beginning of each year).

The machine will have a useful life of five years, after which time it is estimated that it will have a scrap value of £1,500.

The expected income from the machine will be £1000 at the end of the first year, £3000 each year at the end of the second, third and fourth years, and £5000 at the end of the fifth year

Assuming the discount rate is 4%, write a brief report advising the company on which contract will be more profitable and so whether it should accepted. Remember to take all costs and cash availability into consideration. Show any calculations you make in support of your recommendation. (14 points, no more than 500 words)

3. How confident are you about your advice and under what circumstances might it change? (5 points, no more than 100 words)

In outer space a rock with mass 7 kg, and velocity <3400, -2700, 2000> m/s, struck a rock with mass 17 kg and velocity <200, -290, 340> m/s. After the collision, the 7 kg rock's velocity is <3000, -2100, 2300> m/s.
What is the final velocity of the 17 kg rock?
What is the change in the internal energy of the rocks?

CASE STUDY

Mr Sehwag invests Rs 2000 every year with a company, which pays interest at 10% p.a. He allows his deposit to accumulate at C.I. Find the amount to the credit of the person at the end of 5th year. Answer the following question.

Q1. What is the Time Value of Money concept.

Q2. What do you mean by present value of money?

Q3. What is the Future Value of money.

Q4. What the amount to be credited at the end of 5th year.

Initially, $2000 is deposited into a retirement account which pays 5% interest per year, compounded continuously. New money is added to the account at the rate of $1000 per year. How much will be in the account after 10 years?

Please use the method of ordinary differential equations to setup and complete the problem. Also please show all steps and work clearly so I can follow your logic and learn to solve similar ones myself. I will rate your answer for you and leave feedback. Thank you kindly!

Parent Corporation purchased 75 percent of Subsidiary Corporation in 2000; Subsidiary’s current balance sheet shows the following figures: Basis Value Demand Deposit $20,000 $20,000 IBM Stock $30,000 $50,000 Parking Lot $5,000 $30,000 Building 0 $100,000 Mortgage ($15,000) ($15,000) Subsidiary has a net operating loss carryover in 2006 of $7,000 and earnings and profits of $22,000. The subsidiary redeemed in 2003 the 25% shareholder Roy Rogers. The Subsidiary distributed the IBM stock for his 25% interest. In 2006, Subsidary adpots a plan of liquidation. a. What is the tax result to Roy in 2003? (i.e. realized, recognized gain or loss, tax character)? b. Does subsidiary recognize any gain on the redemption and the liquidation? (i.e. realized, recognized, and the tax character)? c. What are Parent’s basis for the assets received? d. What happens to Subsidiary’s NOL and E&P? In your analysi give computation anf the IRC section.