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BUS 3115 Financial Management Exam Spring 2014

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Question;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 carefulexamination 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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