Finance Answers

3. If money is worth 14%, compounded semi-annually, what is the value of a $150 bond bearing interest at 10.5% every six months if it is bought today and matures in five years?

1. An investor bought 5,000 preferred shares (par value $1.00) of BC Resources at $.75.5 and received a dividend of $.05. He then sold them at $.80. What was the investor’s total gain in dollars? What was the percentage gain?

1. What is the value of a $5,200 debt incurred two years ago if money is worth 13.5%, compounded semi-annually?

Now that you have a full time job you are ready to start investing for retirement. Your corporation will match 50 cents of each dollar that you put in your 401K account up to the first $7,000. You have altogether $15,000 that you can afford to save this year. How should you split your money between your 401k account and IRA accounts? Which type of IRA account probably makes the most sense at your age? (age is 21) Explain your decisions.

After multiple years of billion-dollar U.S. budget deficits, why are interest rates so low?

The Blue Lagoon is considering a project with a five-year life. The project requires $110,000 of fixed assets that are classified as five-year property for MACRS. Variable costs equal 71 percent of sales, fixed costs are $9,600, and the tax rate is 35 percent. What is the operating cash flow for year 4 given the following sales estimates and MACRS depreciation allowance percentages?

Silver Bear Golf (SBG) is a manufacturer of top quality golf clubs with a specialty of putters. Currently, each putter they sell brings in $200 of revenue at a cost of $150. This past year, they sold 1,000 putters and they expect this number to grow each year by 12% until this model becomes obselete after 10 more years. The foreman at the SBG factory recently brought to your attention a new technology that could lower the cost of production. This technology requires an upfront fixed investment of $100,000 and has the capacity to produce all the putters you want to sell per year at a unit cost of $135. There is no increased working capital need due to this new technology, and no value of the machine/technology after 10 years. What is the NPV of investing in the new technology? Ignore taxes and assume a discount rate of 9%. (Hint: Think incrementally; the difference between the world without and with this new technology! Also, ignoring taxes will be a big help if you think right.)

vasudevan invested rs 60000at an interest rate of 12 per annum compounded half yearly what ammount would he get after 6 months and 1 year?

The United States purchased Alaska in 1867 for $7.2M (where M stands for million). Assume that federal tax revenue from the state of Alaska (net federal expenditures) will be $50M in 2012 and that tax revenue started in 1868 and has steadily increased by 3% annually since then. Assume that the cost of capital (or interest rate) is 7%. What is the NPV of the Alaska purchase?

2 On its 2012 balance sheet, Barngrover Books showed $510 million of retained earnings, and
exactly that same amount was shown the following year in 2013. Assuming that no earnings
restatements were issued, which of the following statements is CORRECT? Why?

a. Dividends could have been paid in 2013, but they would have had to equal the earnings
for the year.
b. If the company lost money in 2013, they must have paid dividends.
c. The company must have had zero net income in 2013.
d. The company must have paid out half of its earnings as dividends.
e. The company must have paid no dividends in 2013.