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BUSN 380 Problem Set 7 Solutions

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Problem Set 7;1. Calculating Net Asset Value. Given the information below, calculate the net asset value for the Boston Equity mutual fund.;Total assets $225,000,000;Total liabilities 5,000,000;Total number of shares 4,400,000;Ans.;NVA = Value of portfolio ? Liabilities / No. shares outstanding;Thus, 225,000,000 ? 5,000,000 = 220,000,000;220,000,000 / 4,400,000 = $50.00;2. Calculating the Rate of Return of Investment Using Financial Leverage. Suppose Shaan invested just $10,000 of his own money and had a $90,000 mortgage with an interest rate of 8.5 percent. If after three years he sold the property for $120,000.;Ans.;a. What is his gross profit?;Selling Price ? Purchase Price;= $120,000 ? $100,000 = $20,000;b. What is his net profit/loss?;Gross Profit ? Interest Paid for 3 years;= $20,000 ? ($90,000 x.085 = $7,650 x 3);= $20,000 ? $22,950`= ? $2,950.;c. What is the rate of return on investment?

 

Paper#23005 | Written in 18-Jul-2015

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