1. You contributed $5,000 to your retirement account. If the interest rate is 10.5%, how much will you have in 45 years? How much will you have if you wait 10 years?
2. ACME is deciding where to invest. Project 1 will produce cash flows of $52,000 a year for 6 years. Project 2 has cash flows of $48,000 a year for 8 years. If the interest rate is 15%, which project should ACME select and why?
3. Tom owes $3,400 on his credit card. The card has an APR of 13.9 %. How much longer will it take him to pay off the $3,400with monthly payments of $50 instead of $60?
4. ACME has accounts receivable of $700, sales of $4,200, inventory of $1,200, and cost of goods sold of $3,400. How long does it take ACME to both sell its inventory and then collect the payment?
5. Allstate is selling a perpetual annuity contract that pays $3,100 monthly. The contract sells for $325,000. What is the EAR?
6. Given the following information, calculate the depreciation:
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Sales
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$51,000
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Costs
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$39,800
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Retained Earnings
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$2,300
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Dividends
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$925
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Interest
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$1,580
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Taxes rate
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40%
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7. The company's net income was $8,912 with a tax rate of 34%. The firm paid $3,987 in total expense with a depreciation of $4,873. What was the company's cash coverage ratio?
8. ACME has a ROE of 9.8 %, a profit margin of 4.5 % and a retention ratio of 60 %. The company paid dividends of $378 with a net working capital of $100. Current liabilities are $520 and the net fixed assets are $18,550. What is the total equity?
9. A firm will sell an asset for $75,000 in three years and the cost of producing the asset today is $36,000. If the interest rate is 12 % per year, will the firm make a profit? What is the breakeven interest rate?
10. A finance company is willing to lend you money at 15%. For example, if you borrow $20,000 you must repay a total of $23,000 in one year. The company requires $23,000/12 or $1,915.67 per month for the next twelve months. What is the EAR?