1) Given following information for Tandoori Grill Restaurant, compute the total asset turnover and return on equity ratios: Net Profit Margin 8% Return on Assets 15% Debt Ratio 30%.
2) B.J. Industries has the present ratio of 2.5, with $2.5 million in present assets. Due to sales growth, company wishes to expand accounts receivable and inventories by taking on extra short-term debt. If B.J. Industries wants to maintain a minimum present ratio of 2.0, what is the maximum extra short-term funding it can borrow?
3) You are comparing two investment options. Cost to invest in either option is the same today. Both options give you with $20,000 of income. Option A pays five annual payments of $4,000 each. Option B pays five annual payments starting with $8,000 the first year followed by four annual payments of $3,000 each. Which one of the following statements is correct given these two investment options?
4) Mr. Moore would be 35 years at the end of the month and he wants to retire in 25 years. He plans to invest in a mutual fund earning 7.5 percent annual return compounded monthly and has a $1.5 million retirement fund at age 60. How much shoulkd be deposited at the end of each month to achieve his goal?
5) You are a manager of the annuity settlement company. Jim Patton just won a state lottery which promises to pay him $1,000 per year for 20 years, starting from today, and $2,000 per year for years 21-45, given a 9% discount rate. Your company wishes to purchase the proceeds from the lottery from Jim. What is the most that your company could offer?
6) Jean Cleveland currently has $5,750 in a money market account paying 5.65 percent compounded semi-annually. She plans to use this amount and her savings over the next 5 years to make a down payment on a townhouse. She estimates that he will need $15,000 in 5 years. How much should she invest in the money market account semi-annually over the next 5 years to achieve this target?
7) You are the beneficiary of a life insurance policy. The insurance company informs you that you have two options for receiving the insurance proceeds. You can receive a lump sum amount of $50,000 today, or receive payments of $641 a month for 10 years. You can earn 6.5% on your money. Which option should you take and why?
8) BioMax Inc. offers 8 percent coupon bond which has a $1,000 par value, semi-annual coupon payments and 20 years of its original 25 years left to maturity. Which of the following statements is true if the market return on similar bonds is 10%?
9) Aquaman stock has exhibited the standard deviation in returns of 0.7, while Green Lantern stock has exhibited the standard deviation of 0.8. Correlation coefficient between the stock returns is 0.1. What is a standard deviation of the portfolio composed of 70% Aquaman and 30% Green Lantern?
10) The stocks of Microsoft and Apple have a correlation coefficient of 0.6. Variance of Microsoft stock is 0.4 and variance of Apple stock is 0.3. What is the covariance between two stocks?