Essay Mid Term Exam

The fixed cost is assumed that Larry has discovered the other fixed cost incurred. The total investment is $800,000. The worst case scenario assumes that Larry got a total line of credit from the bank in the amount of $400,000 and invested $400,000 from other source. The Notes payable – short term and the long-term debt is (11.8 + 3.7) = 15.5 % from Table F in the handout. The Loan interest and payment per year is ($400,000 * 0.155)= $62,000. The Income data from Table F indicates that there is a 0.4% of all other expenses net out of the total sales which equals to $109,908 (5,700,666 gallons * $4.82 *0.4%) .

B. The present value of an annuity is unaffected by the number of the annuity payments.

b. What is the present value of this annuity if the opportunity cost rate is 10% annually? 10% compounded semiannually?

$30,000 of liabilities assumed by the corporation is $500 that relates to a personal expenditure. Under these

Complete the following exercises and problems from the textbook. Some problems ask multiple questions; be sure to answer every part of the exercise or problem unless otherwise noted

c) The present value of $500 to be received in one year when the opportunity cost rate is 8 percent (discounting):

a. I = 4%, PV = $74,000, N = 20, FV = $162,143 b. FV = $2 million, N = 25, I = 8%, PMT = $27,357 c. PMT = $160,000, N = 20, I = 4%, PV = $2,174,452 d. FV = $3.5 million, N = 30, I = 7%, PMT = $37,052

(b) Suppose an investor has a $16 million investment in the stock of firm B. What alternative $16 million

A. The interest rate to use is the nominal rate, assets are the discounted sum of their future values, and expected

c. What is the future value if the payments are invested with the First National Bank, which

(B) Based on the budget I did for the first assignment I would be still have $168.384 left over each month.

* Scenario (A): The buyout team plans to maintain the terminal debt level in perpetuity.

3. Compare and contrast the two debt policy alternatives outlined in case Exhibit 8 for 1987. What bond rating would Du Pont receive under each alternative? How would its financial performance, financing needs, access to capital, and financial risk differ under the two alternative debt policies?

b) In obtaining the machine and building for Blast productions no cash payment has been made.

2. At the end of its first year of operations, Matlocke Company has total assets of $2,000,000 and total liabilities of $1,200,000. The owner originally invested $200,000 in the business, but has not made any further investments or taken any withdrawals. What is the first year 's net income for Matlocke Company?