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Homework answers / question archive / 1)The most recent financial statements for Bradley, Inc

1)The most recent financial statements for Bradley, Inc

Finance

1)The most recent financial statements for Bradley, Inc., are shown here (assuming no income taxes): Income Statement Sales $ 5,200 Costs (3,432) Net income $ 1,768 Assets Balance Sheet $ 15,600 Debt Equity $ 15,600 Total $ 8,000 7,600 $ 15,600 Total Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year's sales are projected to be $6,500. What is the external financing needed? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole number.) EFN

2)You've just bought a new flat-screen TV for $3,400 and the store you bought it from offers to let you finance the entire purchase at an annual rate of 13 percent compounded monthly. If you take the financing and make monthly payments of $100, how long will it take to pay off the loan? How much will you pay in interest over the life of the loan? a. The number of years it will take to pay off the loan is years. (Round to one decimal place.)
(Comprehensive problem) You would like to have $77,000 in 16 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn 7 percent interest compounded annually. Your first payment will be made at the end of the year. a. How much must you deposit annually to accumulate this amount? b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should the lump-sum deposit be? (Assume you can earn 7 percent on this deposit) c. At the end of year 5, you will receive $10,000 and deposit it in the bank in an effort to reach your goal of $77,000 at the end of year 16. In addition to the lump-sum deposit, how much must you invest in 16 equal annual deposits to reach your goal? (Again, assume you can earn 7 percent on this deposit.) a. How much must you deposit annually to accumulate this amount? $ (Round to the nearest cent.)

3)The state lottery's million-dollar payout provides for $1.4 million to be paid in 25 installments of $56,000 per payment. The first $56,000 payment is made immediately, and the 24 remaining $56,000 payments occur at the end of each of the next 24 years. If 12 percent is the discount rate, what is the present value of this stream of cash flows? If 24 percent is the discount rate, what is the present value of the cash flows? a. If 12 percent is the discount rate, the present value of the annuity due is $ . (Round to the nearest cent.)
(Present value of an annuity due) Determine the present value of an annuity due of $5,000 per year for 25 years discounted back to the present at an annual rate of 11 percent. What would be the present value of this annuity du if it were discounted at an annual rate of 16 percent? . (Round to the nearest a. If the annual discount rate is 11 percent, the present value of the annuity due is $ cent.)

4) What is the present value of a $45 perpetuity discounted back to the present at 12 percent? The present value of the perpetuity is $ (Round to the nearest cent.)
(Related to Checkpoint 6.5) (Present value of a growing perpetuity) What is the present value of a perpetual stream of cash flows that pays $6,500 at the end of year one and the annual cash flows grow at a rate of 4% per year indefinitely, if the appropriate discount rate is 14%? What if the appropriate discount rate is 12%? a. If the appropriate discount rate is 14%, the present value of the growing perpetuity is $ cent.) (Round to the nearest

5)You just won the magazine sweepstakes and opted to take unending payments. The first payment will be $50,000 and will be paid one year from today. Every year thereafter, the payments will increase by 2.5 percent annually. What is the present value of your prize at a discount rate of 7.9 percent?
6)Today, you borrowed $3,200 on a credit card that charges an interest rate of 12.9 percent, compounded monthly. How long will it take you to pay off this debt assuming that you do not charge anything else and make regular monthly payments of $60?

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1)please see the attached file.

2)

  • 1- Time period to repay the loan Using nper function in MS excel =nper(rate,pmt,pv,fv,type) rate = 13/12 =1.0833% pmt =-100 pv =3400 fv =0 type =0 NPER(1.0833%,-100,3400,0,0) 42.63
    2- payment of interest (monthly payment*number of months)-principal amount (42.63*100)-3400 863
             
    2- annual payment Using PMT function in MS excel =pmt(rate,nper,pv,fv,type) rate = 7% nper =16 pv =0 fv = 77000 type =0 PMT(7%,16,0,77000,0) ($2,761.04)
      Lump sum deposit future value/(1+r)^n 77000/(1.07)^16 26082.56403
      future value of 10000 at 16 year present value*(1+r)^n 10000*(1.07)^11 21048.51952
      amount required to attain the target fund of 77000 77000-21048.519   55951.481
      annual amount to be invested to attain the remaining balance =Using PMT function in MS excel pmt(rate,nper,pv,fv,type) rate =7% nper =16 Fv = 55951.481 pv =0 type =0 PMT(7%,16,0,55951.481,0) ($2,006.29)

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3)

1) Present value of an annuity due = C + C[(1-(1/(1+r)^t))/r]          
  where C is the annuity payment that is 56000.            
  r is the interest rate that is 24%.              
  t is the time period in years that is 24.              
                       
  Present value 56000 + 56000*[(1-(1/(1.24)^24))/.24]          
  Present value 56000 + 56000*[(1-(1/174.63))/.24]          
  Present value 56000 + 56000*[(1-.005726)/.24]          
  Present value 56000 + 56000*[.994274/.24]            
  Present value 56000 + 56000*[4.142807]            
  Present value 287997.2                
                       
  If 24% is the discount rate the present value of the cash flows          
  is equal to $287997.2                
                       
  r is the interest rate that is 12%.              
  t is the time period in years that is 24.              
                       
  Present value 56000 + 56000*[(1-(1/(1.12)^24))/.12]          
  Present value 56000 + 56000*[(1-(1/15.17863))/.12]          
  Present value 56000 + 56000*[(1-.065882)/.12]          
  Present value 56000 + 56000*[.934118/.12]            
  Present value 56000 + 56000*[7.784316]            
  Present value 491921.7                
                       
  If 12% is the discount rate, the present value of the annuity due        
  is $491921.7.                  
                       
                       
2) Present value of an annuity due = C + C[(1-(1/(1+r)^t))/r]          
  where C is the annuity payment that is 5000.            
  r is the interest rate that is 11%.              
  t is the time period in years that is 24 ( It is a 25 year annuity and the first payment is made immediately) .
                       
  Present value 5000 + 5000*[(1-(1/(1.11)^24))/.11]          
  Present value 5000 + 5000*[(1-(1/12.23916))/.11]          
  Present value 5000 + 5000*[(1-.081705)/.11]            
  Present value 5000 + 5000*[.918295/.11]            
  Present value 5000 + 5000*[8.348137]            
  Present value 46740.69                
                       
  If 11% is the discount rate the present value of the annuity due        
  is equal to $46740.69.                
                       
  Present value of an annuity due = C + C[(1-(1/(1+r)^t))/r]          
  where C is the annuity payment that is 25000.            
  r is the interest rate that is 16%.              
  t is the time period in years that is 24 ( It is a 25 year annuity and the first payment is made immediately) .
                       
  Present value 5000 + 5000*[(1-(1/(1.16)^24))/.16]          
  Present value 5000 + 5000*[(1-(1/35.23642))/.16]          
  Present value 5000 + 5000*[(1-.02838)/.16]            
  Present value 5000 + 5000*[.97162/.16]            
  Present value 5000 + 5000*[6.072627]            
  Present value 35363.14                
                       
  If 16% is the discount rate the present value of the annuity due        
  is equal to $35363.14.              

4)Dear student, only one question is allowed at a time. I am answering the first question

Present Value of a perpetuity is given by following formula :

Present Value of perpetuity = A / r

Where,

A = Periodic cash flow = $45

r = Interest rate = 12% or 0.12

So, Present value of the perpetuity

= $45 / 0.12

= $375.0

 

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