Personal Budget

At the beginning of the school year, Katherine Malloy decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:

a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except an overall cash decrease which should be indicated with a minus sign.

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Sometimes an item may be a decrease in one period and an increase in a different period.

Review the definitions of static budgets and flexible budgets.

What weaknesses are shown by this cash budget?

b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?

Static

c. Malloy can see that her present plan will not provide sufficient cash. If Malloy did not budget but went ahead with the original plan, she would be $ short at the end of December, with no time left to adjust.

Equipment with a ten-year estimated useful life and no salvage value is sold at the end of the third year of its useful life. How would using the straight-line method of depreciation instead of the double-declining balance method of depreciation affect revenues and expenses?

1. What is the return on total assets (assuming a 30% tax rate)? (Round percentage answer to 1 decimal place. i.e., 0.123 should be considered as 12.3%)

2. What is the return on equity? (Round your answer to the nearest whole percentage place. i.e., 0.1234 should be considered as 12%)

3. What is the book value per share at the end of this year? (Round your answer to 2 decimal places.)

4. What is the average collection period? (Use 365 days in a year. Round your intermediate and final answers to 2 decimal places.)

5. What is the equity multiplier? (Round your answer to 2 decimal places.)

As part of President Trump’s first and second year in office and during the recent discussions

of the American Health Care Act, there has been a lot of policy discussion about Obamacare. Using

the rationales for government intervention, give at least one rationale for why the

government should intervene in health insurance.

What is the price value of a basis point (DV01) for a 10 year 6% Treasury bond trading at par?

Normally, capital gains earned in the mutual fund during the year are paid out to the investor as capital gains, at the end of the year.

REQUIRED:

1. What happens in a year in which the mutual fund suffers net capital losses.
2. What happens, if anything, to the Net Asset Value of a mutual fund after it pays out to investors all of the income it earned during the year.
3. What information in the Fund Facts document helps investors compare management fees among different mutual funds.   
4. Explain how a “bell curve” diagram helps investors to measure a stock’s price volatility.

Consider a 4​-year lease for a $ 250000 bottling​ machine, with a residual market value of $ 87500 at the end of 4 years. If the​ risk-free interest rate is 5.4 % APR with monthly​ compounding, compute the monthly lease payment in a perfect market for the following​ leases:

a. A fair market value lease.

b. A $ 1.00 out lease.

c. A fixed price lease with an $ 58000 final price

At the end of its fiscal year, the adjusted trial balance of Carla Vista Company is as follows: CARLA VISTA COMPANY Adjusted Trial Balance July 31, 2017 Debit Credit Cash $4,560 Accounts receivable 11,420 Prepaid rent 500 Supplies750 Debt investments8,000 Equipment19,950 Accumulated depreciation—equipment $5,700 Patents 18,300 Accounts payable 4,275 Interest payable 750 Unearned revenue 2,050 Notes payable (due on July 1, 2019) 45,900 B. Carla Vista, capital 28,285 B. Carla Vista, drawings 16,800 Service revenue74,900 Interest revenue320 Depreciation expense2,850 Interest expense3,000 Rent expense18,550 Salaries expense36,650 Supplies expense20,850 $162,180 $162,180 Make an income statement for the year. Mr. Carla Vista invested $5,000 cash in the business during the year. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) CARLA VISTA COMPANY Income Statement $ $ $ Make a statement of owner's equity for the year. Mr. Carla Vista invested $5,000 cash in the business during the year. (List items that increase owner's equity first.) CARLA VISTA COMPANY Statement of Owner's Equity $ : : $ $ Make a classified balance sheet at July 31, 2017. (List Current Assets in order of liquidity.) CARLA VISTA COMPANY Balance Sheet Assets $ $ : $ Liabilities and Owner's Equity $

If your grandmother’s estate will pay you $280 a year for 7 years, at an interest rate of 6%, what will the present value of these payments?

A firm is considering a $12,000 risky project. The expected cash flows are $3,000 in year 1, $5,000 in year 2, and $7,000 in year 3. The firm's cost of capital is 11%, but the financial manager uses a hurdle rate of 9% for less-risky projects and 13% for riskier projects. Should the firm invest in this riskier project?

No, the NPV is -$578.05

No, the NPV is -$120.85

Yes, the NPV is $578.05

Yes, the NPV is $120.85

Yes, the NPV is $365.98