do you think this process is reasonable and why/whynot? September 2019 $4,500,000 September 2020. $5,050,000
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As an analyst for a big technology company. The company has decided that this is the time to retire some of its debt. The company has decided the best way to do this is if us government bonds are used to match the principle as well as the interest payments on the liabilities chosen. Set up a strategy to accomplish this showing your work and discussion your result. do you think this process is reasonable and why/whynot?
September 2019 $4,500,000
September 2020. $5,050,000
September 2021. $3,750,000
September 2022 $6,450,000
The Government debt
1.50% coupon due September 2019
1.75% coupon due September 2020
2.35% coupon due September 2020
2.6% coupon due September 2021
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- Instructions: 1. Analyze the given scenario and choose what type of investment is best for Mr. Santos. Explain your answer. (include your analysis through computations) Scenario: Mr. Santos is a government employee, His time deposit account of P 500,000 with 4% interest p.a. maintained with BDO generates a monthly interest of P 1,334.00 (net of 20% withholding tax). He is not satisfied with the earnings that he was receiving. One day, he talked to a BDO financial adviser to seek advice on where to place his money with a higher interest rate. The financial adviser explained to him the following options: 1. Treasury-Bills -placement 30 days 6% one year 2. Bonds issued by San Miguel Corporation Face Value per bond P 100,000, 6% yield, quarterly coupon rate, term 10 years. 3. PLDT preferred 12 % Shares of stocks par value, P 100 per share with Market value P 150 per share. If you are Mr. Santos, what option are you going to choose?The "Your Business or Mine" is a manufacturer of high-altitude balloons in Waco, Texas. The company is planning to expand its operations in 2023 and is interested in securing a loan for Tex-Mex National Bank of Waco. Four banks were visited, and their interest rates for the 15-year loan were recorded. As someone knowledgeable about the engineering economy and capital investment justification, which bank would you recommend to this company? Bank A) 1.5% per month compounded monthly Bank B) 16.5% per year compounded continuously Bank C) 4.85% per quarter compounded monthly Bank D) 8.92% per six months compounded semiannuallyIn 2018, a businessman borrowed Php500 000.00 at a 10% interest rate, payable for 1 year for a new business venture. How much will he pay after a year? Present your answer using Polya's 4-steps in problem-solving.
- Review the following scenario. Use the information provided to answer questions about the taxpayers’ 2020 return.Chris (45) and Allison (46) Castillo are married, and they will file a joint return. During the year, they earned $82,500 in wages. They also had investment income consisting of: $200 interest income from a savings account with their local bank, reported on Form 1099-INT. $350 interest income from a certificate of deposit held with another local bank, reported on Form 1099-INT. $250 interest income from a U.S. Treasury note, reported on Form 1099-INT. $500 tax-exempt interest income from a municipal bond investment, reported on Form 1099-INT. $1,700 in ordinary dividends from a mutual fund investment, reported on Form 1099-DIV. They had no other income. Question 1 What amount will Chris and Allison report for taxable interest on their Form 1040? The couple's partially completed Form 1040, page 1, is shown below. You may use the form to assist you in answering this…Review the following scenario. Use the information provided to answer questions about the taxpayers’ 2020 return.Chris (45) and Allison (46) Castillo are married, and they will file a joint return. During the year, they earned $82,500 in wages. They also had investment income consisting of: $200 interest income from a savings account with their local bank, reported on Form 1099-INT. $350 interest income from a certificate of deposit held with another local bank, reported on Form 1099-INT. $250 interest income from a U.S. Treasury note, reported on Form 1099-INT. $500 tax-exempt interest income from a municipal bond investment, reported on Form 1099-INT. $1,700 in ordinary dividends from a mutual fund investment, reported on Form 1099-DIV. They had no other income. Question 1: What amount will Chris and Allison report for their total income on Form 1040? You may refer to the couple's partially completed Form 1040, page 1, which is shown below, to assist you in answering this question.…On January 1, 2020, Norma Smith and Grant Wood formed a computer sales and service company in Soapsville, Arkansas, by investing $90,000 cash. The new company, Arkansas Sales and Service, has the following transactions during January. 1. Pays $6,000 in advance for 3 months’ rent of office, showroom, and repair space. 2. Purchases 40 personal computers at a cost of $1,500 each, 6 graphics computers at a cost of $2,500 each, and 25 printers at a cost of $300 each, paying cash upon delivery. 3. Sales, repair, and office employees earn $12,600 in salaries and wages during January, of which $3,000 was still payable at the end of January. 4. Sells 30 personal computers at $2,550 each, 4 graphics computers for $3,600 each, and 15 printers for $500 each; $75,000 is received in cash in January, and $23,400 is sold on a deferred payment basis. 5. Other operating expenses of $8,400 are incurred and paid for during January; $2,000 of incurred expenses are payable at January 31.…
- Computer Solutions’ success in the fourth quarter of 2022 has attracted the attention of David Wright,who considered investing in the company. A price of $15 per share was offered by Ramona, whichDavid accepted (a great way to start out the new year). The following transactions occurred betweenJanuary 1 and January 31, 2023, and need to be recorded in the general journal. Based on the initial success of Computer Solutions, David Wright invested an additional $15,000 cash in the company in exchange for 1,000 shares of the Company’s $10 par value common stock. (Reminder: anything paid in excess of par goes to Paid in Capital in Excess of Par. Can someone please help me with the general journal entry for this problem?Answer the following problems and explain it step by step: 1. A man who is 30 years old at the start of the year, is considering getting an MFM degree. He currently earns $40,000 per year and expects to continue earning that amount for the rest of his working life (until age 65). He will give up his income for two years and will pay $20,000 per year in tuition, if he attends business school. In exchange, he expects a raise in his salary after completing his MFM. Assume that the post-graduation salary grows at a 5% annual rate and that the discount rate is 8%. What is the minimum expected starting salary after graduation for him that makes attending business school a positive-NPV investment? (Assuming that all cash flows happen at the end of each year.) 2. Bob and Rose are both 62 years old and plan to retire in 3 years. They will receive $5,000 per month after taxes from pension plans and $1,000 per month after taxes from Social Security after retirement. Regrettably, their living…It is important to consider the time value of money along with financial risk when making financial decisions. Determine the best course of action for your company using the information below: Assume the stock market returns 11.3% per year on average. Your company has $100,000 to spend on the down payment on the purchase of a new office. A new office will cost $500,000 To rent a new office it will cost your company $3,500 per month and you will need to sign a 3-year lease. Find any other information that is necessary to perform the calculation such as the current market rate for a commercial loan. What should you do: buy an office or lease? Choose the best answer and justify your answer by calculating the time value of money. What other factors should you use besides the time value of money? Why?
- James Smith is a financial adviser at a reputable financial institution in Jamaica. He was the keynote speaker on financial management at a recent conference and was asked questions on the time value of money. James is asking you to provide the answers to the following questions asked by the attendees at the conference. Sandra is currently saving $1,250 each month at 12% per annum. How much money will be in her account at the end of 5 years? 2. How much money should Anny invest today, so that she will have $10,500 in her bank account in four years’ time, assuming that the interest rate is 5% compounded annually? 3. A typical credit card agreement quotes an interest rate of 15% per annum. Monthly payments are required. Calculate the actual interest rate that will be paid on such a credit card (i.e. EAR)?THIS IS A SCENARIO QUESTION NOT A WRITING ASSIGNMENT. ANSWER THIS QUESTION WITH THE MIND OF A FINANCIAL ADVISOR OR KNOWLEDGE. First, if I were to offer you $5,000 today or $10,000 10 years from now, which would you take based on the time value of money? Or would you need some additional information in order to answer that question? If so, what information would you like to have? Second, time value of money is based on the ability to grow money - to create wealth through investing. If I made you the above offer, in addition to considering the time value of money, what other factors might influence your decision to take cash now or to wait to receive cash in the future?You have just been employed as an investment analyst in an investment bank. You took over fromsomeone who left with a number of issues that need answers. The issues are itemized below:a) A client just deposited ¢7,000,000 in one of your investment funds which is currently earning10% return. The bank has advised the client to deposit an additional ¢4,000,000 at the end ofeach of the next three years. The client would like to know how much the total amount in thisinvestment will be in three years’ time.b) A client has been offered an investment product which requires that he pays ¢200,000 in oneyear, ¢400,000 the next year, ¢600,000 the year after, and ¢800,000 at the end of the followingyear. The client could have earned 12% on similar investments being offered on the marketbut has decided to take your firm’s offer. How much is this investment worth today assumingthe client proceeds to invest?c) Kassim has just been offered a job at ¢600,000 a year. He anticipates his salary will…
