2 Questions

7. You have an opportunity to buy a $1,000 bond that matures in 10 years. The bond pays 6% annual interest, and interest is payable every six months. The current market interest rate for similar bonds is 8%. What is the most you would be willing to pay for this bond? 8. Mr. Sullivan is borrowing $2,000,000 to expand his business. The loan will be for ten years at 12% annual interest and will be repaid in equal quarterly installments. How much will each quarterly payment be?

2 Questions

9. Marcia is planning for her golden years. She will retire in 20 years, at which time she plans to begin withdrawing $60,000 annually. She is expected to live for 20 years following her retirement. Her financial advisor thinks she can earn 9% annually, both before and after retirement. How much does she need to invest each year while working to prepare her for her financial needs after retirement? 10. The law firm of Dewey, Cheatham & Howe is considering investing in a new computer system. The initial investment will be $35,000. The computer system is expected to generate cash flow over the next six years as follows: Year 1: $18,880 Year 2: $20,308 Year 3: $18,785 Year 4: $17,868 ... click for more

Financial Management

Calculate selected ratios and obtain industry averages for comparison For each of the financial statement ratios listed below calculate the ratio for the current year and for the prior year. (Note that in most textbooks, some of the ratios call for averaging the beginning and ending balances. However, for this project, use only the year's ending balances.) After calculating the ratio, compare your calculations with the industry ratio as shown in Moneycentral's "Key Ratios" under "Financial Results". Note that there are six or seven groups of ratios in which these ratios might be contained: a. Current Ratio b. Inventory turnover (not applicable to service companies) c. Debt to Eq... click for more

Economics problems

1. C = 500 + 0.75Y, I = 1,000,G = 1,600, X = 300, M = 400. Calculate the equilibrium values of C and S. Is there any evidence of “crowding out”? Explain. According to Okun’s Law, what is the current unemployment rate, if the natural rate of unemployment = 7% and full-employment GDP = 12,766? SHOW ALL WORK CLEARLY 2. Recall that for equilibrium, AD = AS, Suppose AD and AS , both functions of real GDP (Y) and the price level (P), are known to be: AD : Y = 3000 – 200P AS : Y = 1500 + 100P Determine : i the equilibrium GDP and P ii V if the money supply = 2,500 iii. the equilibrium rate of int... click for more

Ski Lodge operations- Capital Budgeting (before tax and after tax NPV)

I have a friend who owns a ski lodge and wants to add 5 new chairlifts at the cost of 2 million per lift. One new lift will allow 300 additional skiers, and there are only 40 days days of ticket sales, and each customer 55 dollars a day. Running the new lift will cost him 500 dollars a day for the 200 days his lodge is open. I would like to know what the before tax required rate of return 14 percent is on the net present value on the new lift and whether it will be profitable for him to invest, and if the after tax rate of return is at 8 percent, and the income tax rate is 40 percent and the modified accelerated cost recovery system is 10 years and compute the after tax of the net present... click for more