FIN 3331 Critical Thinking Assignment Essay

1227 Words Dec 24th, 2014 5 Pages
Name: Tung Son Nguyen
ID: 1418366
(Bold letters below are my answers)
Emily Smith just received a promotion at work that increased her annual salary to $42,000. She is eligible to participate in her employer’s 401(k) retirement plan to which the employer matches, dollar for dollar, workers’ contributions up to 5% of salary. However, Emily wants to buy a new $25,000 car in 3 years, and she wants to have enough money to make a $10,000 down payment on the car and finance the balance. Fortunately, she expects a sizable bonus this year that she hopes will cover that down payment in 3 years.
A wedding is also in her plans. Emily and her boyfriend, Paul, have set a wedding date two years in the future, after he finishes medical school. In
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Explain. The longer the mortgage term, the smaller the amount of the monthly payment.
Half of the monthly payment with the 15-year term is smaller than the monthly payment with 30-year term.
Explanation:
If the term is 15 years, then PMT = then PMT = =
If the term is 30 years, then PMT = =
Since <
Then PMT30 years > PMT15 years

Use the following information to answer the following questions. ABC, Inc. Income Statement (in thousands) December 31, 2014
Sales $200,000
Cost of goods sold 140,000
Gross profit on sales 60,000
Operating expenses 56,000
Operating income (EBIT) 4,000
Interest expense 1,000
Earnings before tax 3,000
Income tax 1,050
Net income available to common stockholders $1,950
Number of shares outstanding 1, 500
Market price per share $22 ABC, Inc. Balance Sheet (in thousands) December 31, 2014
Assets
Cash $2,000
Accounts receivable 17,800
Inventories 8,700
Total current assets 28,500
Gross fixed assets 70,000
Accumulated depreciation 26,500
Net fixed assets 43,500
Total assets $72,000
Liabilities and Equity
Accounts payable $18,000
Accruals 13,350
Total current liabilities 31,350
Long-term debt 8,250
Total liabilities 39,600
Common stock (par value and paid in capital) 2,000
Retained earnings 30,400
Total stockholders' equity 32,400
Total
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