Question 1Bill is considering two life insurance plans.Plan A would involve opening the account with
Question 1Bill is considering two life insurance plans.Plan A would involve opening the account with
Question 1Bill is considering two life insurance plans.Plan A would involve opening the account with a $100 deposit and then depositing $40 bi-weekly (every two weeks).In thirty years, the plan would be worth thirty years the plan would be worth $100,000.Plan B would require opening the account with a $250 deposit and then depositing $120 monthly. It would be worth$100,000 in thirty years.If both options are financially feasible for Bill and everything else is equal, which offer is the best from strictly a financialperspective.Question 2Jan is trying to decide between two cars that will be leased. The interest rate on leases for both cars is 6.25% NAR withmonthly compounding for a four year lease. The trade-in from her present car is $5,000 for both car options, that wouldbe deducted from the price.Car A is more expensive at $40,000 and has an estimated value of $15,000 when returned to the dealer at the end of thelease.Car B has a negotiated price of $30,000 and has an estimated value of only $5,000 when returned to the dealer at the end of the lease.If the down payment is deducted from the price, which offer would have the lowest payments?Question 3 Score 0 Maria and Salvador have accepted positions at a company for which they can work nine years and then have a 1 year off. During this 1 year of sabbatical, health insurance only will be provided them by their employer. They will use thesabbatical to re-educate, “recharge” and travel.They plan to finance this by depositing $25,000 annually (annual end of year deposits) from their combined annualbonuses and other savings into an annuity in each if the nine years and then live off these savings during the sabbatical yearby withdrawing $15,000 monthly at the beginning of each of the 12 months. The annuity in which they will invest pays an nominal annual rate of 5.25% compounded monthly.The plan is to repeat this 9+1= 10 year cycle 4 times and then retire. How much will they have in the account at thestart of their retirement after the four 10-year cycles have been completed ?Question 4 Score 0Frugal Fran has diligently saved for retirement and has accumulated $350,000 . Since she will not have a mortgagewhen she retires, she estimates that in addition to social security, she will need $2,000 monthly (end of month) whenshe retires.She will invest $1,500 monthly, starting at the end of the upcoming month, into an annuity that has a nominal annualrate of 3.75% with monthly compounding.If this cash flow is to go on forever (when she dies the $2,000 monthly is to go to the local animal shelter forever,where she presently volunteers), how long will she have to continue working to fund this plan?Question 5 Score 0 Barney is considering whether to refinance his home loan.a He bought the home using a 30-year loan of $400,000 that had a nominal annual rate of 6.75% with monthly compounding. His monthly payments include insurance and tax escrow. Determine what his monthly payment has been for servicing the loan only?b Barney has made monthly payments for 12 years? How much is still owed on the loan that will have to be refinanced?c The bank said they would deduct all of the $5,000 in fees and charges for the new loan from the existing equity, and therefore Barney does not have to add any additional cash. What would the payment be on the new 16-year loan if it had a nominal rate of 3.50% with monthly compounding?Question 6 Score 0 Anisette is preparing to start a new business. The expected cash flow, including all investments, revenues and costs for the first four years are estimated below. She is working to raise the cash upfront for all years. She will deposit the full amount upfront in an account that has a nominal annual rate with monthly compounding of 1.5%, and then withdraw funds as needed. How much does Anisette have to deposit up front? Year 0 1 2 3 4 Needed cash $250,000 $100,000 $75,000 $50,000 $25,000Question 7 Score 0 A municipal bond has a face value of $500,000 and matures in 10 years. It coupons are paid semi-annually and the coupon rate is 1.5%. What is the most that should be paid for the bond today to earn an effective annual rate of 8% if it is held to maturity?Question 8 Score 0 Ceyland Choice Cupboards, Inc. (CCC) has collected the following data for the past year. Prepare a formalincome statement that contains the relevant subtotals. Show values in whole dollars (no cents). Assumethat no taxes are due on asset purchases or sales.Quantity Sold 1,987Selling Price each $1,299Standard Cost each $458Future Orders $478,000Staff Expenses $611,600Facility Expenses $302,200Production machinery purchases $2,500,000Production machinery sales $81,000Interest Paid on Loans $48,500Principle paid on loans $1,000,000Dividends paid to shareholders $41,200Depreciation $244,250Income Tax rate 25% Beginning of year End of year Materials Inventory $11,250 $11,400Finished Inventory $32,780 $32,600Accounts Receivable $27,400 $23,800Accounts Payable $26,800 $36,200Cash On Hand $330,500 $221,547Question 9 Score 0Hatcher Home Housewares, Inc. (HHH) has collected the following data for the past year. Assume that no taxes are due on asset purchases or sales. Prepare a formal cash flow statement that contains the relevant subtotals. Show values in whole dollars (no cents).Data Block Beginning of year During Year End of year Materials Inventory $245,000 $224,000Finished Inventory $148,000 $120,000Accounts Receivable $840,000 $980,000Accounts Payable $1,480,000 $1,670,000Cash On Hand $390,500Revenue $1,480,360COGS $587,860Depreciation $81,000Interest Paid on Loan $66,000Income Taxes $125,000Net Income $620,500Direct Production Costs $412,560Future Orders $127,000Staff Expenses $424,600Facility Expenses $287,200Asset Sale $465,000Asset Purchase $1,800,000New loan $500,000Dividends paid to shareholders $22,800Income Tax Rate 20% Question 10 Score 0 Acme Action Accessories, Inc., a large privately-held corporation (stock is all held by the family) needs to raise cashto finance a large expansion, The obvious sources are 1) a bank loan, 2) issue (sell) bonds, or 3) sell stock to anoutside investor. Briefly summarize the advantages and disadvantages of each approach.