1. Derek will deposit $5,287.00 per year for 15.00 years into an account that earns 4.00%, The first deposit is made next year. How much will be in the account 44.00 years from today?

2. Derek will deposit $1,311.00 per year for 18.00 years into an account that earns 6.00%, The first deposit is made next year. He has $14,490.00 in his account today. How much will be in the account 47.00 years from today?

3. Derek will deposit $3,239.00 per year for 11.00 years into an account that earns 9.00%. Assuming the first deposit is made 6.00 years from today, how much will be in the account 37.00 years from today?

What is the end of year wealth for Jane Christine if she receives an annual interest rate of 24% compounded monthly on a $1 investment?

Your firm is purchasing a new telephone system that will last for four years. You can purchase the system for an up-front cost of $150,000, or you can lease the system from the manufacturer for $4,000 paid at the end of each month. The lease price is offered for a 48-month lease with no early termination – you cannot end the lease early. Your firm can borrow at an interest rate of 6% APR with monthly compounding. Should you purchase the system outright by paying $150,000 now or pay $4,000 per month?

Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy, with each outcome being equally likely. The initial investment required for the project is $80,000, and the project's cost of capital is 15%. The risk-free interest rate is 5% . The firm has only this project and $80,000 cash. (Assuming perfect capital market)

(For Q 1-3, please round your answer to the dollar, write as a number, e.g. write "$2,123.45" as "2123")

1. The NPV for this project is $_____;

2.  Suppose the firm does not have enough cash, to raise the funds for the initial investment the firm borrows $40,000 at the risk free rate, then the cash flow that equity holders will receive in one year in a weak economy is $_____;

3.  Under the same condition as question 2,  the initial value of the firm's levered equity is $______;

4.  Under the same condition as question 2,   the cost of capital for the firm's levered equity is ______%. (Please round to an integer, e.g., write "12.34%" as "12")

On the following projects, calculate the difference VPN (A) - VPN (B): YEAR PROJECT A PROJECT B 0 - ($ 50,000) - ($ 50,000) 1 25,625 0 2 15,625 0 3 15,625 0 4 5,625 +75,500

Note: Discount rate = 10%; Given flows are net flows after taxes.

Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 76,700 units of product: Net sales $1,518,660; total costs and expenses $1,744,400; and net loss $225,740. Costs and expenses consisted of the following.

Management is considering the following independent alternatives for 2014.

1) A. Assume you are staring a new job tomorrow and will be paid $100,000/year with 2 paydays/month. If you invest 5% (of each paycheck) in your 401k a mutual fund that returns 9.5%/year, how much will this retirement account be worth after 50 years of work (at retirement)? Check your MAGNATUDES __________________________________

B. Use your answer above as the balance in your retirement account at retirement. How much could you withdraw each and every year from this account assuming that you can invest (the above money) at 5%/year and have zero in the account after 30 years?. _________________________________

2) Assume a stock has $5 dividend that you believe will grow at 6% for the next three years then at 4% forever. If you have a 7% Discount rate, what is the far value of the stock today???__________________________ Show the 5 step process.

Vice President for Sales and Marketing Sam Totter is trying to plan for the coming year in terms of production needs to meet the sales demand. He is also trying to determine ways in which the company’s profits might be increased in the coming year.

Instructions (Do all six parts):

Waterways markets a simple water control and timer that it mass-produces. During last year, the company sold 701,000 units at an average selling price of 4.20 per unit. The variable expenses were $1,857,650 and the fixed expenses were $646,450.

What is the product’s contribution margin ratio? (Round to nearest whole percentage.)

What is the company’s break-even point in units and in dollars for this product?

What is the margin of safety, both in dollars and as a ratio? (Round to nearest whole percentage.)

If management wanted to increase its net operating income from this product by 10%, how many additional units would have to be sold to reach this income level?

If sales increase by 51,000 units and the cost behaviors do not change, how much will net operating income increase on this product?

Waterways’ management believes that increased advertising would increase unit sales by 10%. If management wants to increase its operating income by $50,000, how much could the company spend on additional advertising to reach its goal?

Analysis of Receivables Method

At the end of the current year, Accounts Receivable has a balance of $465,000; Allowance for Doubtful Accounts has a debit balance of $4,000; and sales for the year total $2,090,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $20,800.

a. Determine the amount of the adjusting entry for uncollectible accounts.
$

b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.

c. Determine the net realizable value of accounts receivable.
$

A private college advertised that last year their freshman students, on average, had a score of 1100 on the college entrance exam. Assuming that average refers to the mean, which of the following claims must be true based on this information? Note: More than one statement could be true. If none of the statements is true, mark the appropriate box.

Last year some of their freshman students had a score of more than 1000.

Last year, the number of their freshman students who had a score of more than 1100 or was equal to the number of their freshman students who had a score of less than 1100.

Last year all of their freshman students had a score of at least 1100.

Next year at least one of their freshman students will have a score of at least 1100.

Last year some of their freshman students had a score of exactly 1100.

None of the above statements.

Assume you are looking to buy a house $200,000 with a 20 year mortgage at 12%, estimate the monthly mortgage payment, first months interest, total amount to be repaid and the total interest.

Explain why some financial institutions prefer to sell the mortgages they originate. Research and provide an example either current or historical.

Why do you think it is difficult for investors to assess the financial condition of a financial institution that has purchased a large amount of mortgage-backed securities? Provide an example.