Fi515 Homework 2

813 WordsMay 3, 20124 Pages
Problem 3-1: Greene Sisters has a DSO of 20 days. The company’s average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year. The Days Sales Outstanding: Receivable / Average sales per day DSO= 20 days, Average daily sales = $20,000 Receivable 20 days= 20,000 Receivable = 20 x 20,000 = $400,000 Problem 3-2: Vigo Vacations has an equity multiplier of 2.5. The company’s assets are financed with some combination of long-term debt and common equity. What is the company’s debt ratio? Debt Ratio: Total liabilities / Total assets Problem 3-3: Winston Washers’s stock price is $75 per share. Winston has $10 billion in total as- sets. Its balance sheet shows…show more content…
Ordinary annuity: Annuity due: N =5 N =5 I = 7% I = 7% PMT = 300 PMT = 300 PV = 0 PV = 0 FV = 1,725.22 FV = 1845.99 Problem 4-13: Find the present value of the following ordinary annuities (see the Notes to Problem 4-12). a. $400 per year for 10 years at 10% N = 10 I= 10% PMT = - 400 FV = 0 PV = 2,457.83 b. $200 per year for 5 years at 5% N = 5 I = 5% PMT = - 200 FV = 0 PV = 865.90 c. $400 per year for 5 years at 0% N= 5 I=0% PMT = - 400 FV= 0 PV = 2,000 d. Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due. a. N = 10 b. N =5 c. N= 5 I = 10% I = 5% I= 0% PMT = - 400 PMT = - 200 PMT= -400 FV = 0 FV = 0 FV= 0 PV = 2,703.61 PV = 909.19 PV = 2,000 Problem 4-14: Find the present values of the following cash flow streams. The appropriate interest rate is 8%. b. What is the value of each cash flow stream at a 0% interest rate? A: 100+400+400+400+300 = 1,600 B: 300+400+400+400+100 =

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