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STORY (very similar to what was shown in class): YOU and your BEST FRIEND just graduated from college. You both went to the same college and majored in the same field. You both started working at age 22 in the same workplace. Each of you decided upon a different course of action for your respective retirement plans. Assuming each plan earned 10% and both of you decided to retire at age 60, calculate the earnings each plan generated.
Upon the advice of your Personal Finance professor (hint, hint), YOU began immediately putting $6,000 per year in an individual retirement account (IRA) and $19,500 per year in a 401K. You contributed for a total of 15 years. After 15 years, you made no further contributions into the account.
Your BEST friend, did not contribute to their retirement accounts until they turned 30, even though you both worked in the same place and received the same plans. They had planned to simply invest $6000 and $19,500 each year for the remaining years until they retired at age 60.
1. How much did You contribute OUT of pocket in total into your plan?
2. How much did your BEST FRIEND contribute OUT of pocket in total into their plan?
3. How much did You accumulate in Your retirement account with interest?
ANSWER: This answer is two parts, first it is an annuity (FVA) for 15 years, but then after you stop contributing to it, it will still compound interest (FV) until the end.
4. How much did your BEST FRIEND accumulate in their retirement account with interest?
Kim bought a new bicycle at the store when they were having 20% off sale. If the regular price of the bicycle was R5 000, how much did Kim pay with the discount?
Question no 1
HnH Solutions acquired a machine by making the following payments:
Net cash price Rs. 116,000 including 16% Sales tax; Carriage in Rs. 6,000; Insurance in transit Rs. 5,000; Fire insurance for the next 4 years Rs. 8,000; Installation charges Rs. 20,000; Overhauling Charges (Before Use); Charges to repair the damage caused during installation Rs. 2,000.
REQUIRED:
1) Classify the above payments into capital expenditures and revenue expenditures.
2) Give and entry to record acquisition of machine, and another entry to record expenditures by Debiting General Expenses Account.
Find the measure of the following .in circle V.mAVE=90° mIVD=(2x)° and mEVS=(6X-28)°
- Perform the following calculations to total gross earnings for a number of employees, based on the information provided:
Employee 001
Employee 002
Employee 003
Employee 004
Payment frequency:
Weekly
Fortnightly
Monthly
Weekly
Pay Rate:
$17.80 p/h
$22.60 p/h
$27.50 p/h
Salaried: $67,500
Regular Hours worked:
17
76
122
38
Overtime hours:
8.5
3
Bonus
125.00
72
Total Gross Earnings
If you are being supported by your parents, use the total amount of support you are getting as your income. If you are living with your parents, try to estimate Your portion of the household expenses. For example, if you use one room of their 5-room house, find out the monthly mortgage payment that your parents make and divide that number by five to get the rent expense for the room that you are using (This will be your rent amount). Use similar logic for all the other expenses that they are paying while you are living at home such (utilities) the light, gas, and water bill; insurance for car and groceries and etc. I want you to (experience) get an idea of how much it costs for you to live your life for a month.
There are four sections for this assignment:
1. Following the example provided in class: Prepare a Budget (what you think you will earn and spend) for the month of February 2021. After you make the budget, keep track of your actual expenses throughout the entire month. Then after the month is over, you will compare the Actual against your Budget to create Variances.
Make sure the Budget has three columns (Budget, Actual, and Variance). Keep track of your income and expenses. You will need these actual numbers to fill in the “Actual” column to calculate your variances. (5 points)
2. Following the examples provided in class: Prepare your Personal Income Statement for the month ending February 28th, 2021. (10 points)
3. Prepare your Personal Balance Sheet as of February 1st, 2021. (10 points)
4. Using your financial statements Calculate the following ratios: (10 points)
a. Current ratio
b. Month’s living expenses covered ratio (Emergency fund ratio)
c. Debt ratio
d. Inverse debt coverage ratio (look it up in the book)
e. Savings ratio
f. Tell me what you think (interpret) about each of your ratios and what can you do to improve them (if necessary)?
The firm is Costco Wholesale Corporation. Beta is 0.67. Please provide the following
a. A SML calculation for your firm’s stock, using this beta and 5 year averages of historical market (NYSE or S&P 500) returns and historical Treasury bill returns.
b. A comparison of the SML required return on your firm’s stock and the discounted stock valuation required return on the stock. {P0= D1/ (rs-g) implies rs = D1/P0 + g}.
Rapido SA provides fast-paced on-demand personal tuition in finance through an app. Started only nine years ago, demand for the company’s services has quadrupled during 2020 due to the COVID pandemic, with increased profitability as a result. The most recent pay-out was EUR3.25 per share and is expected to grow at 4.5% per annum. Assume Rapido pays 7% interest on their 5-year bank loan and that investors’ required rate of return on equity is 8%.
Rapido’s main competitor, Superio AG, is part-way through a debt-reduction plan and aims to hit a net debt target of EUR215 million in early 2021. The company has said it will then aim to distribute 55% of net profit to shareholders; a substantial increase on the current 30%. In the last financial year Superio’s turnover was EUR950 million, net profit margin was 5% and total asset turnover was 1.6. The company expects no change in these metrics within the next couple of years. That is the information given.
The question is -
One of Superio’s Board Directors is adamant that investors could be tempted to buy into a new bond issue. If she is correct, how could this change the company’s growth prospects, assuming that Superio does not alter its leverage? Shareholder’s equity was EUR255 million at last financial year-end. Assume that all other metrics remain as outlined in the 2nd paragraph above and that the company has adopted the new 55% pay-out policy. Calculate the new possible rate of growth and explain your results.
Mr. Robert (33 years old), unmarried, is a Malaysian tax resident. Details of his income in the year 2020 were as follows:
Mr. Robert commenced employment with QB Printing Sdn Bhd on 1.11.2017. His monthly gross salary was RM2,500. His share of Employees Provident Fund contribution during the period was 11% and employees’ contribution to Social Security Organisation scheme was RM12.25 per month. He also received petrol allowance of RM400 per month (exclusively in performing his duties). On 31.3.2020, he was retrenched by the company where he was paid compensation for loss of employment amounting RM24,000.
After his retrenchment, he had been jobless for 3 months. During that period, he helped his friend who is a property agent to recommend potential buyers. He successfully sold 2 properties and received RM35,000 broker’s commission. He incurred printing charges of RM100 for photocopy plans and titles.
Further, he owns a sole proprietor business for selling stationeries. His mother helps him to run the business. She was paid RM1,200 per month since 1.1.2015. The followings were extracted from the accounts:
Adjusted loss (5,000)
Balancing charge 12,000
Balancing allowance 3,000
Capital allowance 5,000
There was an unabsorbed capital allowance of RM2,000 brought forward from the year of assessment 2019.
Income from other source:
Fixed deposit interest amounting to RM3,200 was received from Public Bank Berhad on 12.12.2020.
The followings were his expenditures in the year 2020:
Donations of clothing, books and magazines to an approved institution amounting to RM1,500.
He purchase a computer costing RM3,500 for his own use at home on 12.2.2020.
Additional information:
Mr. Robert is the only son and he stays with his parents. Both of them are 75 years old and residents in Malaysia. His father receives monthly rental income amounting to RM500 from a low cost house.
Required:
(a) Compute the income tax liability (if any) of Mr. Robert for the year of assessment 2020. (18 marks)
(b) Pursuant to sections 77(1), 103 and 82(1) of the Income Tax Act 1967, advise Mr. Robert for his responsibilities as a taxpayer in Malaysia for the year of assessment 2020 and penalties for noncompliance if he committed to offences. (10 marks)
(c) Assuming that Mr. Robert has a sister, a resident and taxpayer in Malaysia, she shares the parents’ expenses with him and they equally pay for their father’s medical expenses amounting to RM8,000 on 30.6.2020. Other relevant information remains unchanged. In accordance to Section 46(1)(c) and 46(1)(o) of the Income Tax Act 1967, advise them on the claim of reliefs. Your answers must be supported by reasons, qualifying criteria and comparison of the reliefs
The interest rate per year is 16 and the compounding occurs every quarter then the interest rate per compounding period is..
