Description
| Balance Sheet & Income Statement may be found on pp. 132-133 of text, answer | |||||||
| only the questions in this assignment. | |||||||
| 1. Using the Balance Sheet & Income Statement complete the following a | |||||||
| Statement of Stockholder’s Equity for the year ending 12/31/2014. | |||||||
| Common Stock | |||||||
| Total | |||||||
| # of Shares | Retained | Stockholders | |||||
| Amount | Earnings | Equity | |||||
| Balances, 12/31/2013 | $ | $ | |||||
| 2014 Net Income | |||||||
| Cash Dividends | |||||||
| Addition/Subtraction to | |||||||
| Retained Earnings | |||||||
| Balances, 12/31/2014 | $ | $ | $ | ||||
| 2. Using the Balance Sheet and Income Statement construct the | |||||||
| Operating Activities section of the Stament of Cash Flows for the period ending 12/31/2014. | |||||||
| Statement of Cash Flows | Bitmap Bitmap | Bitmap | |||||
| Bitmap | |||||||
| Operating Activities | Bitmap | Bitmap | |||||
| Net Income | |||||||
| Depreciation and amortization | |||||||
| Increase in accounts payable | |||||||
| Increase in accruals | |||||||
| Increase in accounts receivable | |||||||
| Increase in inventories | |||||||
| Net cash provided by operating activities | (could be positive or negative) | ||||||
| 3. What is the Market Value Added for Corrigan Corp as of 12/31/2014 | |||||||
| MVA= | Price X # of shares outstanding less total Equity | ||||||
| Price x # of shares = | |||||||
| Less Total Equity= | |||||||
| MVA= | |||||||
| 4. From internet research provide the following ratios for Proctor & Gamble | |||||||
| Corp. as of (symbol pg). | |||||||
| Quick Ratio | |||||||
| Return on Assets | |||||||
| Return on Equity | |||||||
| Inventory Turnover | |||||||
| Price/Earnings Ratio | |||||||
| Site Source of Information and date compiled: __________________________________________ | |||||||
| 5-6 Your brother-in-law has just won the lottery and is coming to you for free advice. There | |||||||
| are two payment options from which to choose. He can elect to receive Option 1) 10 annual | |||||||
| end of yearpayment of $7 million, or Option 2) 30 annualend-of-yearpayments of $4million. | |||||||
| If he expects to earn an 8% return which option offers the highest present value? | |||||||
| 6. Option 1 | 7. Option 2 | ||||||
| N= | N= | ||||||
| I/YR= | I/YR= | ||||||
| PV= | PV= | ||||||
| PMT= | PMT= | ||||||
| FV= | FV= | ||||||
| Option with highest Present Value ______________ | |||||||
| 7. You are the financial advisor for a rookie quarterback that is in the process of negotiating | |||||||
| his first contract. The team’s general manager has offered him three possible contracts. | |||||||
| Each of the contracts lasts for four years. All of the money is guaranteed and is paid | |||||||
| at the end of each year. The payment terms of the contracts are listed below: | |||||||
| Year | Contract 1 | Contract 2 | Contract 3 | ||||
| 1 | $1.5 million | $1.0 million | $3.5 million | ||||
| 2 | 1.5 million | 1.5 million | 0.5 million | ||||
| 3 | 1.5 million | 2.0 million | 0.5 million | ||||
| 4 | 1.5 million | 2.5 million | 0.5 million | ||||
| The quarterback discounts all cash flows at 12%. Based on net present value of cash flows, | |||||||
| which of the three contracts offers the most value? | |||||||
| Contract 1 | Contract 2 | Contract 3 | |||||
| NPV= | NPV= | NPV= | |||||
| Best contract is: | ______#1 | ______#2 | ______#3 | ||||
| 8. You have two credit card offers, your decision on which card to accept is based entirely on | |||||||
| the rate of interest or Effective Annual Rate (EAR). Bank A will charge a rate of 12% | |||||||
| compounded monthly, Bank B will charge 13% compounded quarterly. Calculate the | |||||||
| EAR to determine which card you would choose. | |||||||
| EAR Bank A | 12.68% | ||||||
| EAR Bank B | 13.64% | ||||||
| Most favorable? | Bank A_X_ | Bank B___ | |||||
| 9. You saved $5,000 and intend to use this savings as a down payment on a new car. After careful | |||||||
| examination of income and expenses, you conclude that the most you can afford to spend each | |||||||
| month on a payment is $425. If the APR on your loan is 10%, what is the price of the most | |||||||
| expensive car you can afford if the car is financed for 48 months? | |||||||
| (Be sure to consider your down payment to arrive at the price of the vehicle) | |||||||
| N= | |||||||
| I/YR= | |||||||
| PV= | |||||||
| PMT= | |||||||
| FV= | |||||||
| Price of the car you can purchase: | |||||||
| 10. Your firm is considering a financing opportunity to purchase some equipment. | |||||||
| The loan is for $10,000, interest rate is 5% and it is for a three year term, payments are due in 3 | |||||||
| annual installments. In order to determine the impact on the firm’s income statement | |||||||
| and taxes your boss, who has no use for computers, has asked you to present a three | |||||||
| year amortization schedule indicating the amount of principal and interest due each year, | |||||||
| the repayment of principal and ending balance in each year. On the table below complete | |||||||
| the ammortization schedule for this loan. | |||||||
| Ending | |||||||
| Year | Beg. Bal | Pymt. | Interest | Principal | Balance | ||
| 1 | $10,000 | 3596.51 | $428 | 3168.46 | 6831.54 | ||
| 2 | $6,832 | 3596.51 | $266 | 3330.57 | 3500.97 | ||
| 3 | $3,501 | 3500.97 | $96 | 3500.97 | 0 | ||
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