QUESTION You are to make monthly deposits of $500 into a retirement account that pays 10.3 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 35 years? Concept: Future Value of asset provides a value of an asset in the future […]
QUESTION Distinguish among the following bases of comparison: (1) intracompany, (2) industry averages, and (3) intercompany. Intra company Industry Averages Inter company 1 Comparisons that are done within a company are helpful to detect changes in financial structures and trends Comparisons with industry averages such as S&P, Moodys provide information about a companys relative positioning […]
QUESTION Comparative Ratio AnalysisUse the comparative data for Sunshine State Equipment, Inc., as given in Problem 22-42. In addition, the year-end price per share of Sunshines stock was $50 for 2006, $25 for 2007, and $35 for 2008.Instructions:1. Compute financial ratios for the three years 20062008 as follows (for ratios normally using average balances, assume […]
QUESTION Foreign Currency TranslationU.S. Multi Company established a foreign subsidiary, called For Sub Company, on January 1, 2008. The local currency is the crown; on the date the subsidiary was established, the exchange rate was 2 crowns to 1 U.S. dollar. U.S. Multi invested U.S. $6,000 to get things started. In addition, a local loan […]
QUESTION WESTERN MONEY MANAGEMENT INC.BOND VALUATION Robert Black and Carol Alvarez are vice presidents of Western Money Management and codirectors of the companys pension fund management division. A major new client, the California League of Cities, has requested that Western present an investment seminar to the mayors of the represented cities. Black and Alvarez, who […]
QUESTION Understanding the Terms of a Forward ContractThe company is a golf course developer that constructs approximately 10 courses per year. Next year the company will buy 10,000 trees to install in the courses it builds. In recent years, the price of trees has fluctuated wildly. To eliminate this uncertainty, the company has found a […]
QUESTION REQUIRED ANNUITY PAYMENTS A father is now planning a savings program to put his daughter through college. She is 13, she plans to enroll at the university in 5 years, and she should graduate in 4 years. Currently, the annual cost (for everythingfood, clothing, tuition, books, transportation, and so forth) is $15,000, but these […]
QUESTION Accounting for a Non-Interest-Bearing NoteZobell Corporation sells equipment with a book value of $8,000, receiving a non interest bearing note due in three years with a face amount of $10,000. There is no established market value for the equipment. The interest rate on similar obligations is estimated at 12%. Compute the gain or loss […]
QUESTION LOAN AMORTIZATION Jan sold her house on December 31 and took a $10,000 mortgage as part of the payment. The 10-year mortgage has a 10% nominal interest rate, but it calls for semiannual payments beginning next June 30. Next year Jan must report on Schedule B of her IRS Form 1040 the amount of […]
QUESTION An analysis of the accounts receivable balance of $8,702 on the records of Jorgenson, Inc., on December 31 reveals the following:Accounts from sales of last 3 months(appear to be fully collectible)$7,460Accounts from sales prior to October 11,312(of doubtful value) 320Accounts known to be worthlessDishonored notes charged back to customers accounts800Credit balances in customers accounts1,190(a) […]
