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In the Wall Bricks, Inc.?s balance sheet lists net fixed asset as $18 million. The fixed assets could currently be sold for $14 million.




1. (7 points) In the Wall Bricks, Inc.’s balance sheet lists net fixed asset as $18 million. The fixed assets could currently be sold for $14 million. Wall Bricks’ current balance sheet shows current liabilities of $7 million and current assets of $10 million. If all the current accounts were liquidated today, the company would receive $2 million cash after paying the $7 million in liabilities. What is the book value of Wall Bricks’ assets today? What is the market value of these assets?



Book Value: ; Market Value:



2. (4 points) Last year a firm had an ROA of 8% and a dividend payout ratio of 40%. What is the internal growth rate? Rate:



3. (4 points) Last year a firm had an ROE of 6% and a dividend payout ratio of 80%. What is the sustainable growth rate? Rate:



4. (3 points) What is the future value in 3 years of $1,000 deposited today, earning a 4% interest rate annually? Future Value:





5. (3 points) Approximately, how many years does it take to double a $2000 investment when interest rates are 6% per year? Years:



10. (8 points) Instead, you opt to purchase a 10-Inch 4K Ultra HD 120Hz Smart LED TV for $149,980 (yes, it’s really there) by getting a loan for $120,980 and paying a $29,000 down payment. You can get a 10-year loan with a 3.6% interest rate.



A. What would be your monthly payment?



B. In 4 years, when a newer, cheaper but nicer TV is available, what would be the loan balance?





Cornett - Chapter 05 #37



11. (3 points) If the present value of an ordinary, 10 year annuity is $20,000 and interest rates are 5%, what is the present value of an annuity due with the same length of life, present values and interest rate? Present Value:





12. (4 points) A credit card is offered with monthly payments and a 21.99% APR. What is the loan\'s effective annual rate (EAR)? EAR:



13. (5 points) Calculate the price of a $1,000 bond, offering a 12% coupon payment with 15 years left to maturity and a market interest rate of 10%. (Assume interest payments are semiannual.) Is this a discount or premium bond? Price: Type:



14. (4 points) On July 25, 2014, the Dow Jones Industrial Average opened $17,083.80 and closed at $16,960.57. What was the effective annual rate return (in percent) of the stock market that day?



Daily Return:






15. (4 points) Financial analysts forecast GDY Inc.’s growth for the future to be 3%. GDY\'s recent annual dividend was $2.00. What is the value of GDY stock when the required return is 11%?



Stock Value: $





16. (5 points) URN Inc. recently paid a $5.00 annual dividend. The dividend is expected to grow at a 4% rate. At a current stock price of $52, what is the return shareholders are expecting?


Paper#77734 | Written in 05-Mar-2016

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