Finance Answers

You need P5,000 per year for four years to go to college, your father invested P6,000 in 7% account for your education when you were born. If you withdraw at the end of your 17th, 18th, 19th and 20th birthday, how much will be left in your account at the end of your 21st birthday.

Question - Risk and Risk Avoidance

Prompt: In investments, a higher risk may provide higher returns. It is interesting how people have different comfort levels taking risks. Please consider your own comfort with taking risks; are you a person who is willing to take a risk in order to earn a higher level of return on investment? 

Instructions: Answer this prompt with a comprehensive response that includes reasons for the yes or no prompt.

Context Link: https://saylordotorg.github.io/text_personal-finance/s08-evaluating-choices-time-risk-a.html

Extra Directions: Respond to this prompt as if you were a sixteen-year-old in high school as a sophomore.

Planning to Buy a Home

For this discussion discuss the pros and cons of buying a home. Compare the costs and benefits. Include your alternatives.

Create a list:

• Pros/Cons
• Costs/Benefits
• Alternatives

Use this list as an original post and explain how this list might influence your overall decision to buy or not buy a home.

Context Link: https://saylordotorg.github.io/text_personal-finance/s13-buying-a-home.html

Discussion Questions: According to an article by CNBC, a new survey finds the median American household has $2,729 in a savings account in 2019 and 34% of Americans have nothing saved. What does this say about Americans' financial management? How does the lack of saving impact other Americans?

Prompt: I find this issue to have two sides to it: This represents not only people that let their money slip away from them and spend it all, but also people that do not have the financial ability to save. Some people that are living paycheck to paycheck do not have any spare money to put into a savings account. With bills, rent, groceries, and any dependent/family costs to deal with, some families are not financially able to put any money into a savings account.

Instructions: According to the discussion questions, include in your response whether or not you agree or not and the reason(s) why in regards to the prompt.

Discussion Questions: According to an article by CNBC, a new survey finds the median American household has $2,729 in a savings account in 2019 and 34% of Americans have nothing saved. What does this say about Americans' financial management? How does the lack of saving impact other Americans?

Prompt: I personally think that majority of Americans today just simply cannot afford to put money into saving accounts and that they need to money earned to keep them afloat. Especially in this time of inflation and job loss, poverty and the divide between the haves and the have nots is quite harsh. And the lack of savings for each American individual could mean very bad news and they can easily go into debt from a large purchase or finical risk.

Instructions: According to the discussion questions, include in your response whether or not you agree or not and the reason(s) why in regards to the prompt.

Discussion Questions: According to an article by CNBC, a new survey finds the median American household has $2,729 in a savings account in 2019 and 34% of Americans have nothing saved. What does this say about Americans' financial management? How does the lack of saving impact other Americans?

Prompt: This says that some Americans either can't or won't save money. Those who can either don't put a lot into savings or don't make a lot of money to put into savings. The lack of savings in people's accounts can lead to debts that come from sudden purchases or debts from planned purchases that the person either doesn't have enough money and is forced to have a small amount of debt, or the person who doesn't save and gains tons of debt.

Instructions: According to the discussion questions, include in your response whether or not you agree or not and the reason(s) why in regards to the prompt.

Identify the main causes of the financial crisis of 2008? identify the main risks that contributed to the crisis

Discuss key sources of innovative funding citing relevant examples (10 mrks)

The King Food Corp. currently has no debt in its capital structure. The beta of its capital is 1.5. The King Food Corp’s free cash flow is expected to equal £30 million next year. This cash flow is expected to grow at 2% per year for the foreseeable future. King Food Corp. is considering changing its capital structure by issuing debt and using the proceeds to buy back stock. It will do so in such a way that it will have a 50% debt-to-equity ratio (D/E=50%) after the change, and it will maintain this debt-equity ratio forever. Assuming King Food Corp’s pretax cost of debt will be 5%. King Food Corp. faces a corporate tax rate 40%. Assuming that the CAPM holds, the risk-free rate is 3%, and the expected market index risk premium is 8%.

(b) Using the information provided and your calculations in part (a) and (b), determine the value of tax shield acquired by King Food Corp. if it changes its capital structure with a 50% debt-to-equity ratio (D/E=50%).