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Accounting Midterm 987

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Question;Accounting Midterm 987;Question;Score;1;0;2;0;3;0;4;0;5;0;6;0;7;0;8;0;9;0;10;#REF!;Late;0;Total;#REF!;MidtermExam,2014;Name;Question1;Joicehassaved$5,000thatwillbeadownpayment;onanewcarthatcanbepurchasedfor$38,000.;Theloantofinance;thiswillhavearateof7.125%;APRcompoundedmonthly.;Whatwillthemonthlypaymentsona thecarbeiftheloanisfor4years??;b;Howlongwouldittaketopayofftheloanifshewouldpay$1,000;monthly?;Joicehasbeenoffered;aleaseforthiscarwithpaymentsof$600amonthfor5years.;Therewouldnotbeanydownpayment.Ashappenswithleases;shewouldessentiallyreceive;thefullvalueofthecartodayandshewouldreturn;c;thecartothedealerattheendofthelease(essentiallypayingoutthevalueofthecaratthattime).;Thevalueofthiscarin5years;withnodamageorexcessivemileage;isexpectedtobe$12,000.;WhatAPRwithmonthlycompoundingwouldshebepaying?;Solution;Tony has decided to make a;$500 monthly investmentin;a retirement fund.The;three funds in which he is interestedall pay2.00% APR but with different;compounding frequencies.. How much will Tony accumulate in 30;years for each of the threeinvestmentalternatives?;a Interest of;2.00% APR compoundedweekly (52 times per year)b Interest of;2.00% APR compoundedmonthly (12 times per year);c Interest of 2.00%;APR compoundedannually (1 time per year);Solution;Peter has won $250,000 in a lottery that he is;goingto invest. He has;narrowed down his search to three funds that eachhave different;stated rates.How much will Peteraccumulate;in 30 years for each of the;three investmentalternatives?;a 6.15% APR with;monthlyb 0.50% monthlyPIR;c 6.25%;EAR;Solution;Question 4;Jackson is consideringwhether to invest;monthly, quarterly or annually in a fund that earns7% APR with monthlycompounding. How much will Jackson accumulate in 30 years for each of the;three investmentalternatives shown below?Assume;that months are equal in length and that there is no;initial deposit in year0.;Years;30;APR;7.00%;Monthly Compounding;Solution;Question5;Cheapskateusedcardealer;offersthefollowing;automobilefinance;opportunity.Monthly;paymentsontheloanare3%oftheloanamountfor36months.Theloanamountisafteranydownpayment.;Inadditiontheloanwillrequire;a$1,500upfrontloanprocessingfeethatisnotincluded;intheloan.;a;Foraloanof$20,000;whatistheAPRwithmonthly;compoundingwithouttheupfrontfee?;b;Foraloanof$20,000;whatistheAPRwithmonthly;compoundingwiththeinclusion;oftheupfrontfee?;Solution;Question 6;Michael has developed;a financial retirement strategy.His plan is to invest;in somewhat;risky stocks for 15 yearsand thenmove everythingto low risk bonds for;the retirementyearsas described;below.;Michael presently;has $250,000 in a retirementaccount;that will be invested in a stock fund;that has historicallyearned12% annually (EAR) with no dividends. The plan is to add an additional $25,000to the fund;at the beginning of each;of theupcoming 15 years.;When he retires, he will reinvestthe;stock fund in a tax?free municipal bonds and live on the coupons only that have acoupon rate of 2.5% paid semi?annually. (the;bonds will be donated to charity;upon his death).;How much will Michael receive semi?annually during retirement?;Solution;Question7;Maxisstartinganewcompanywithaninvestmentof$500,000.Heexpectssalestogrowarithmeticallyby$100,000;ayearforfiveyears;withsalesinyear1being$100,000,year2$200,000;etc..Thenforyears6?10salesareforecasttogrowgeometricallyatarateof30%peryear(year6salesgrow30%overyear5,year730%overyear6,etc.);Attheendofeachyear,foryears1?10,Maxexpects;profitstobealleast10%ofthesaleseachyearandhewillinvest10%ofprofitsinafundthatearns6%APRcompoundedmonthly.;a What;willbethevalue;oftheinvested;fundsinyear10?b Didthe10yearsofprofits;coverherinitial;investment?;Solution;Question8;TheMarketing,Inc.hascollected;thefollowingdataforthepastyear.Prepareaformalincomestatementthat;containstherelevantsubtotals.Showvalues;inwholedollars;(nocents).Assumethatnotaxesaredueonassetpurchasesorsales.;Data;Block;Beginningofyear;During;Year;End;ofyear;CashOnHand;$330,500;QuantitySold;45,200;QuantityProduced;38,000;SalesPrice;$54.00;Costperunittoproduce;$24.50;StaffExpenses;$424,600;FacilityExpenses;$387,200;AssetSale;$1,575,300;AssetPurchase;$2,204,000;Taxrate;20%;Inventory;$57,000;$24,000;AccountsReceivable;$74,000;$38,000;AccountsPayable;$68,000;$62,000;Depreciation;$48,000;InterestPaidonLoan;$46,000;LoanPrinciplepayment;$125,000;Dividends;$128,000;Solution;Question 9;Prepareacashflowstatement;usingthefollowing;data. Assume;thatnotaxesaredueonassetpurchasesorsales.Prepareaformalcashflowstatementthatcontains;therelevantsubtotals. Showvaluesinwholedollars;(nocents).;Data Block;Beginning;of year;During Year;End of year;Cash;$630,600;Net Income;$1,200,000;Staff Expenses;$724,600;Facility Expenses;$887,200;Asset Sale;$156,530;AssetPurchase;$1,240,400;Tax rate;22.5%;Inventory;$87,000;$84,000;Accounts Receivable;$73,000;$78,000;AccountsPayable;$78,000;$75,000;Depreciation;$89,500;Interest Paid on Loan;$76,000;Loan Principle payment;$50,000;Dividends Paid;$200,000;Solution;Score;Question10;Nina and Noah have started a small business that seems to be;thriving. Friends have suggested that;they should consider legally organizing as something other than the present;proprietorship.They are asking for;your advice via email (you do not know them).;Compose up to five questions and state the purpose of each question that;could be used to collect information about Nina and Noah and their business;that is relevant to making a recommendation on how they should legally organize;their business.;Answer below using approximately 50 words per question);1;2;3;4;5

 

Paper#41509 | Written in 18-Jul-2015

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