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4-5 Multiyear Future Value How much would be in your
savings account in 11 years after depositing $150
today if the bank pays 8 percent per year? (LG4-3) 4-7
Compounding with Different Interest Rates A deposit of
$350 earns the following interest rates: a. 8 percent in
the first year. b. 6 percent in the second year. c. 5.5
percent in the third year. What would be the third year
future value? 4-8 Compounding with Different Interest
Rates A deposit of $750 earns interest rates of 9
percent in the first year and 12 percent in the second
year. What would be the second year future value?
(LG4-3) 4-11 Present Value What is the present value of
a $1,500 payment made in nine years when the
discount rate is 8 percent? (LG4-4) 4-13 Present Value
with Different Discount Rates Compute the present
value of $1,000 paid in three years using the following
discount rates: 6 percent in the first year, 7 percent in
the second year, and 8 percent in the third year. (LG4-
4)
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Which financial statement reports the amounts of cash
that the firm generated and distributed during a
particular time period? statement of retained earnings
Income statement Statement of cash flows Balance
sheet Which of these provide a forum in which
demanders of funds raise funds by issuing new
financial instruments, such as stocks and bonds?
Money markets Investment banks Primary markets
Secondary markets The top part of Mars, Inc.s 2013
balance sheet is listed as follows (in millions of dollars).
What are Mars, Inc.s current ratio, quick ratio, and
cash ratio for 2013? 4.2, 1.0, 0.2 2.3333, 0.5556,
0.1111 10.5, 6.0, 1.0 0.1111, 0.5556, 0.2 Which of
these ratios show the combined effects of liquidity,
asset management, and debt management on the
overall operation results of the firm? Financial
Profitability Coverage Liquidity As new capital
budgeting projects arise, we must estimate__________.
the cost of the stock being sold for the specific project
when such projects will require cash flows the cost of
the loan for the specific project the float costs for
financing the project Whats the current yield of a 6
percent coupon corporate bond quoted at a price of
101.70? 6.1 percent 10.2 percent 6.0 percent 5.9
percent We call the process of earning interest on both
the original deposit and on the earlier interest
payments: computing. multiplying. compounding.
discounting. Which financial statement reports a firms
assets, liabilities, and equity at a particular point in
time? Balance sheet Income statement Statement of
retained earnings Statement of cash flows You are
trying to pick the least-expensive machine for your
company. You have two choices: machine A, which will
cost $50,000 to purchase and which will have OCF of -
$3,500 annually throughout the machines expected
life of three years; and machine B, which will cost
$75,000 to purchase and which will have OCF of -
$4,900 annually throughout that machines four-year
life. Both machines will be worthless at the end of their
life. If you intend to replace whichever type of machine
you choose with the same thing when its life runs out,
again and again out into the foreseeable future, and if
your business has a cost of capital of 14 percent, which
one should you choose? Machine A Machine B Neither
machine A nor B Both machines A and B When firms
use multiple sources of capital, they need to calculate
the appropriate discount rate for valuing their firms
cash flows as__________. a simple average of the capital
components costs a weighted average of the capital
components costs a sum of the capital components
costs they apply to each asset as they are purchased
with their respective forms of debt or equity Which of
these is used as a measure of the total amount of
available cash flow from a project? Operating cash flow
Investment in operating capital Free cash flow Sunk
cash flow Which of these does NOT perform vital
functions to securities markets of all sorts by
channeling funds from those with surplus funds to
those with shortages of funds? Secondary markets
Mutual funds Insurance companies Commercial banks
Wills Wheels, Inc. reported a debt-to-equity ratio of
0.65 times at the end of 2013. If the firms total debt at
year-end was $5 million, how much equity does Wills
Wheels have? $7.69 million $5 million $0.65 million
$3.25 million Which of these is the term for portfolios
with the highest return possible for each risk level?
Total portfolios Modern portfolios Optimal portfolios
Efficient portfolios What are the tools available for the
manager in financial planning? Delaying disbursement
of cash, reducing collection period, cash management,
and Increasing inventory turnover Reducing collection
period and delaying disbursement of cash Increasing
inventory turnover and reducing collection period
Delaying disbursement of cash and cash management
Suppose that Model Nails, Inc.s capital structure
features 60 percent equity, 40 percent debt, and that
its before-tax cost of debt is 6 percent, while its cost of
equity is 10 percent. If the appropriate weighted
average tax rate is 28 percent, what will be Model
Nails WACC? 7.73 percent 8.40 percent 8.00 percent
16.00 percent We commonly measure the risk-return
relationship using which of the following? Coefficient of
variation Standard deviation Expected returns
Correlation coefficient Financial plans include which of
the following? Schedule of Sales, Expenses, and Capital
Expenditure All of the above Short Term and Long Term
Plan Pro forma Income Statement, Balance Sheet
Which of the following terms means that during periods
when interest rates change substantially, bondholders
experience distinct gains and losses in their bond
investments? Interest rate risk Credit quality risk
Reinvestment rate risk Liquidity rate risk What are
reasons for the firm to go abroad? Access to raw
materials Diversification Lower production cost All of
the above Which of these statements is true regarding
divisional WACC? Using a simple firmwide WACC to
evaluate new projects would give an unfair advantage
to projects that present more risk than the firms
average beta. Using a divisional WACC versus a WACC
for the firms current operations will result in quite a
few incorrect decisions. Using a firmwide WACC to
evaluate new projects would have no impact on
projects that present less risk than the firms average
beta. Using a simple firmwide WACC to evaluate new
projects would give an unfair advantage to projects
that present less risk than the firms average beta. The
Rule of 72 is a simple mathematical approximation
for__________. the number of years required to double
an investment the payments required to double an
investment the present value required to double an
investment the number of years required to double an
investment the future value required to double an
investment We can estimate a stocks value
by__________. using the book value of the total
stockholder equity section using the book value of the
total assets divided by the number of shares
outstanding discounting the future dividends and future
stock price appreciation compounding the past
dividends and past stock price appreciation Which of
these is the process of estimating expected future cash
flows of a project using only the relevant parts of the
balance sheet and income statements? Substitutionary
analysis Incremental cash flows Cash flow analysis Pro
forma analysis Five years ago, Jane invested $5,000
and locked in an 8 percent annual interest rate for 25
years (ending 20 years from now). James can make a
20-year investment today and lock in a 10 percent
interest rate. How much money should he invest now in
order to have the same amount of money in 20 years
as Jane? $7,346.64 $5,089.91 $3,160.43 $3,464.11 The
overall goal of the financial manager is to__________.
maximize net income maximize earnings per share
maximize shareholder wealth minimize total costs
Which of the following can create ethical dilemmas
between corporate managers and stockholders?
Auditors Board of directors Agency relationship Venture
Capitalist A firm is expected to pay a dividend of $2.00
next year and $2.14 the following year. Financial
analysts believe the stock will be at their target price of
$75.00 in two years. Compute the value of this stock
with a required return of 10 percent. $79.14 $65.40
$65.57 $66.67 Which financial statement shows the
total revenues that a firm earns and the total expenses
the firm incurs to generate those revenues over a
specific period of time generally one year?
Statement of cash flows Statement of retained
earnings Balance sheet Income statement Which of the
following is a true statement? If interest rates fall, all
bonds will enjoy rising values. If interest rates fall,
corporate bonds will have decreasing values. If interest
rates fall, no bonds will enjoy rising values. If interest
rates fall, U.S. Treasury bonds will have decreasing
values.
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This Tutorial contains 2 Set of Answers FIN 370 Week 1
Calculating Ratios Worksheet 1. What is agency
theory? How can setting the appropriate goals for the
firm minimize the agency problem? 2. Differentiate
between profit maximization and wealth maximization.
3. Why must organizations focus on both shareholder
wealth and the stakeholders? 4. Differentiate between
the three financial statements with which managers
should be familiar. How are they linked?
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FIN 370 Week 1 Calculating Ratios Review the financial
statements for Lake of Egypt Marina, Inc. Complete the
following problem sets from Chapter 3 in Microsoft
Excel: 3-29 Spreading the Financial Statements 3-
30 Calculating Ratios Format your assignment
consistent with APA guidelines. Click the Assignment
Files tab to submit your assignment
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Purpose of Assignment Complete the following
Questions and Problems (Concepts and Critical
Thinking Questions for Ch. 1 Only) from each chapter
as indicated. Show all work and analysis. Prepare in
Microsoft Excel or Word. Ch. 1: Questions 3 & 11
(Concepts Review and Critical Thinking Questions
section) Ch. 2: Questions 4 & 9 (Questions and
Problems section): Microsoft Excel template
provided for Problem 4. Ch. 3: Questions 4 & 7
(Question and Problems section) Ch. 4: Questions 1 &
6 (Questions and Problems section): Microsoft Excel
template provided for Problem 6. Format your
assignment consistent with APA guidelines if submitting
in Microsoft Word. Click the Assignment Files tab to
submit your assignment. Ch. 1: Questions 3 & 11
(Concepts Review and Critical Thinking Questions
section) 3. Corporations [LO3] What is the primary
disadvantage of the corporate form of organization?
Name at least two advantages of corporate
organization. 11. Goal of the Firm [LO2] Evaluate the
following statement: Managers should not focus on the
current stock value because doing so will lead to an
overemphasis on short-term profits at the expense of
long-term profits. Ch. 2: Questions 4 & 9 (Questions
and Problems section): Microsoft Excel template
provided for Problem 4. Building an Income Statement
[LO1] Billys Exterminators, Inc., has sales of $817,000,
costs of $343,000, depreciation expense of $51,000,
interest expense of $38,000, and a tax rate of 35
percent. What is the net income for this firm? 3.
Dividends and Retained Earnings [LO1] Suppose the
firm in Problem 2 paid out $95,000 in cash dividends.
What is the addition to retained earnings? 4. Per-Share
Earnings and Dividends [LO1] Suppose the firm in
Problem 3 had 90,000 shares of common stock
outstanding. What is the earnings per share, or EPS,
figure? What is the dividends per share figure? 9.
Calculating Additions to NWC [LO4] The 2014 balance
sheet of Steelo, Inc., showed current assets of $4,630
and current liabilities of $2,190. The 2015 balance
sheet showed current assets of $5,180 and current
liabilities of $2,830. What was the companys 2015
change in net working capital, or NWC? Ch. 3:
Questions 4 & 7 (Question and Problems section) 4.
Calculating Inventory Turnover [LO2] The Green
Corporation has ending inventory of $417,381, and cost
of goods sold for the year just ended was $4,682,715.
What is the inventory turnover? The days sales in
inventory? How long on average did a unit of inventory
sit on the shelf before it was sold? 7. DuPont Identity
[LO4] If Roten Rooters, Inc., has an equity multiplier of
1.15, total asset turnover of 2.10, and a profit margin
of 6.1 percent, what is its ROE? Ch. 4: Questions 1 & 6
(Questions and Problems section): Microsoft Excel
template provided for Problem 6. 1. Pro Forma
Statements [LO1] Consider the following simplified
financial statements for the Yoo Corporation (assuming
no income taxes): 6. Calculating Internal Growth [LO3]
The most recent financial statements for Schenkel Co.
are shown here: Assets and costs are proportional to
sales. Debt and equity are not. The company maintains
a constant 30 percent dividend payout ratio. What is
the internal growth rate?
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FIN 370 Week 2 Cash Flow Problem Sets (5-1,5-3,5-5,5-
7,5-12,5-15,5-39)
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FIN 370 Week 2 Cash Flow Problem Sets Complete the
following problem sets from Chapter 5 in Microsoft
Excel: 5-1 5-3 5-5 5-7 5-12 5-15 5-39
(Calculate monthly payment only) 5-1FutureValue
Compute the future value in year 9 of a $2,000 deposit
in year 1 and another $1,500 deposit at the end of year
3 using a 10 percent interest rate. 5-3 Future Value of
an Annuity What is the future value of a $900 annuity
payment over five years if interest rates are 8 percent?
5-5 Present Value Compute the present value of a
$2,000 deposit in year 1 and another $1,500 deposit at
the end of year 3 if interest rates are 10 percent. 5-7
Present Value of an Annuity Whats the present value of
a $900 annuity payment over five years if interest
rates are 8 percent? 5-12 Present Value of an Annuity
Due If the present value of an ordinary, 6-year annuity
is $8,500 and interest rates are 9.5 percent, whats the
present value of the same annuity due? 5-15Effective
Annual Rate A loan is offered with monthly payments
and a 10 percent APR. Whats the loans effective
annual rate (EAR)? 5-39 Loan Payments You wish to buy
a $25,000 car. The dealer offers you a 4-year loan with
a 9 percent APR. What are the monthly payments? How
would the payment differ if you paid interest only?
What would the consequences of such a decision be?
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This Tutorial contains 2 Papers FIN 370 Week 2
Financial Markets and Institutions Report Create a
1,050-word report, and include the following:
Describe the role of the financial institutions and
financial markets in our economy Differentiate
between primary and secondary markets.
Differentiate between money and capital markets.
Format your assignment consistent with APA
guidelines.
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Prepare in Microsoft Excel or Word. Ch. 5:
Questions 3 & 4 (Question and Problems section):
Microsoft Excel templates provided for Problems 3
and 4 Ch. 6: Questions 2 & 20 (Questions and
Problems section) Ch. 7: Questions 3 &11
(Questions and Problems section) Ch. 8: Questions
1 & 6 (Questions and Problems section): Microsoft
Excel template provided for Problem 6 Format your
assignment consistent with APA guidelines if submitting
in Microsoft Word. Click the Assignment Files tab to
submit your assignment. Ch. 5: Questions 3 & 4
(Question and Problems section): 3. Calculating Present
Values [LO2] For each of the following, compute the
present value: 4. Calculating Interest Rates [LO3] Solve
for the unknown interest rate in each of the following:
Ch. 6: Questions 2 & 20 (Questions and Problems
section) 2. Present Value and Multiple Cash Flows [LO1]
Investment X offers to pay you $4,700 per year for
eight years, whereas Investment Y offers to pay you
$6,700 per year for five years. Which of these cash flow
streams has the higher present value if the discount
rate is 5 percent? If the discount rate is 15 percent? 20.
Calculating Loan Payments [LO2, 4] You want to buy a
new sports coupe for $79,500, and the finance office at
the dealership has quoted you an APR of 5.8 percent
for a 60-month loan to buy the car. What will your
monthly payments be? What is the effective annual
rate on this loan? Ch. 7: Questions 3 &11 (Questions
and Problems section) 3. Valuing Bonds [LO2] Even
though most corporate bonds in the United States
make coupon payments semiannually, bonds issued
elsewhere often have annual coupon payments.
Suppose a German company issues a bond with a par
value of 1,000, 23 years to maturity, and a coupon
rate of 5.8 percent paid annually. If the yield to
maturity is 4.7 percent, what is the current price of the
bond? Excel Sheet 11. Valuing Bonds [LO2] Union Local
School District has a bond outstanding with a coupon
rate of 3.7 percent paid semiannually and 16 years to
maturity. The yield to maturity on this bond is 3.9
percent, and the bond has a par value of $5,000. What
is the price of the bond? Ch. 8: Questions 1 & 6
(Questions and Problems section): Microsoft Excel
template provided for Problem 6 1. Stock Values [LO1]
The JacksonTimberlake Wardrobe Co. just paid a
dividend of $1.95 per share on its stock. The dividends
are expected to grow at a constant rate of 4 percent
per year indefinitely. If investors require a return of
10.5 percent on The JacksonTimberlake Wardrobe Co.
stock, what is the current price? What will the price be
in three years? In 15 years? 6. Stock Valuation [LO1]
Suppose you know that a companys stock currently
sells for $63 per share and the required return on the
stock is 10.5 percent. You also know that the total
return on the stock is evenly divided between a capital
gains yield and a dividend yield. If its the companys
policy to always maintain a constant growth rate in its
dividends, what is the current dividend per share?
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This tutorial contains 2 Papers FIN 370 Week 3 Risk and
Return Analysis Create a 1,050-word report, and
include the following: Explain the relationship
between risk and return Identify an example of risk
and return. Explain which is more risky bonds or
common stocks. Explain how understanding risk and
return will help you in future business ventures. Format
your assignment consistent with APA guidelines. Click
the Assignment Files tab to submit your assignment.
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FIN 370 Week 3 Risk and Return Problem Sets
Complete the following problem sets from Chapter 7 in
Microsoft Excel: 7-21 7-27 Complete the
following problem sets from Chapter 8 in Microsoft
Excel: 8-19 8-21 Complete the following problem
sets from Chapter 9 in Microsoft Excel: 9-33 Click
the Assignment Files tab to submit your assignment.
Complete the following problem sets from Chapter 7 in
Microsoft Excel: 7-21 Compute Bond Price
Compute the price of a 3.8 percent coupon bond with
15 years left to maturity and a market interest rate of
6.8 percent. (Assume interest payments are
semiannual.) Is this a discount or premium bond? 7-
27 Yield to Maturity A 5.65 percent coupon bond with
18 years left to maturity is offered for sale at
$1,035.25. What yield to maturity is the bond offering?
(Assume interest payments are semiannual.) Complete
the following problem sets from Chapter 8 in
Microsoft Excel: 8-19 Value a Constant Growth
Stock Financial analysts forecast Safeco Corp.s (SAF)
growth rate for the future to be 8 percent. Safecos
recent dividend was $0.88. What is the value of Safeco
stock when the required return is 12 percent? 8-21
Expected Return Ecolap Inc. (ECL) recently paid a $0.46
dividend. The dividend is expected to grow at a 14.5
percent rate. At a current stock price of $44.12, what is
the return shareholders are expecting? Complete the
following problem sets from Chapter 9 in Microsoft
Excel: 9-33 Risk, Return, and Their Relationship
Consider the following annual returns of Estee Lauder
and Lowes Companies (Table Attached)
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FIN 370 Week 3 Team Assignment Precision Machines
Part 1 (annotated bibliography and excel calculation)
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This Tutorial contains both annonated bibliography and
excel file FIN 370 Week 3 Team Assignment Precision
Machines Part 1 Precision Machines is preparing a
financial plan for the next six months to determine the
financial needs of the company. The historical analysis
of the companys sales shows that the companys total
sales are 30% cash sales and 70% credit sales. Further
analysis of credit sales shows that the company
receives 50% of the credit sales one month after the
sale and the remaining 50% in the second month after
the sale. This means the cash collections from sales are
30% in the first month of the sale, 35% in the second
month, and 35% in the third month. The materials
purchased by the company amounts to 50% of the
sales for the month. The company pays for the
purchases one month after the initial purchase. The
company likes to maintain a cash balance of $5,000.
The cost of borrowing is 10%. The company plans to
pay off the loan whenever there is a surplus and
borrow when there is a deficit. The attached
spreadsheet shows revenues (sales), expenses, capital
expenditures, and other expenses for Precision
Machines next six months. Using the information given
on the spreadsheet, prepare a cash budget for January
through June and determine the cash surplus, deficit,
and the financing needs of the company. Note: There
are two parts to this learning team assignment; Part 2
will be completed in Week 5. Review the Learning Team
Assignment due in Week 5. Create an outline for the
essay. Develop a 700-word annotated bibliography
using at least 3 resources. Format your paper
consistent with APA guidelines. Click the Assignment
Files tab to submit your assignment.
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This tutorial includes both calculation and 2 Papers FIN
370 Week 4 Cash Flow Analysis Analyze the case study,
Frank Smith Plumbing. Analyze the Frank Smith
Plumbings Financial Statement spreadsheet. Compare
the cost of the truck to the cash flow records Compile
your calculations in a Microsoft Excel document
Develop a 1,050-word analysis and include the
following: Explain why limited leverage is good for
business.Show the profitability of the project so that
Stephanie can convince her father to purchase the
truck by borrowing money. Explain how Stephanie
should convince her mother that it is inappropriate to
call the bank manager and his wife for assistance in
getting the loan approval? Analyze whether the
investment in the truck is profitable. Explain whether
it is more beneficial for Frank to close his business.
Explain what you would do in this same situation.
Format your assignment consistent with APA
guidelines. Click the Assignment Files tab to submit
your assignments.
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FIN 370 Week 5 Precision Machines Part 2 Note: There
are two parts to this learning team assignment; Part 1
was completed in Week 3. Review the Precision
Machines document and spreadsheet. Prepare a cash
budget for Precision Machines in Microsoft Excel.
Create a 1,225-word strategic analysis and include the
following: Recommend a cash management strategy
for the company that will minimize the financing cost
and increase the cash flows for the company. Explain
two economic and market forces that will impact the
financial plan of this company. Format your documents
consistent with APA guidelines. Click the Assignment
Files tab to submit your assignment. Review the
"Precision Machines" document and spreadsheet.
Prepare a cash budget for Precision Machines in
Microsoft Excel. Precision Machines