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Homework answers / question archive / Michal has just received $5,000

Michal has just received $5,000

Finance

Michal has just received $5,000. He plans to invest this money at 6.5 percent, compounded annually, until he has $50,000. At that time he plans to donate all of this money to Kids-Free foundation. How long from now will it be until he can make this donation?

A.

36.57 years

B.

50 years

C.

37.57 years

Jordan Artificial Foods has total assets of $789,400, long-term debt of $198,375, total equity of $364,182, net fixed assets of $512,100, and costs of goods sold of $121,500. The profit margin is 2.7 percent. What is the current ratio?

A.

1.22

B.

1.40

C.

0.95

Your uncle paid $7,800 for 150 shares in a new company 12 years ago. Every year the price of this company’s shares has appreciated by 14 percent. What is the current value of those 150 shares?

A.

$37,579.66

B.

$40,023.03

C.

$39,580.92

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1)

Future value = Present value * (1 + interest rate)no of periods

$50,000 = $5000 * (1 + 6.5%)no of periods

($50,000 / $5000) = (1 + 6.5%)no of periods

10 = (1 + 6.5%)no of periods

Applying Log on both sides

Log(10) = Log(1 + 6.5%)no of periods

Log(10) = no of periods * Log(1 + 6.5%)

no of periods = Log(1 + 6.5%) / Log(10)

no of periods = 36.5636 years

2)

Current Assets = Total Assets - Net Fixed assets

Current Assets = $789,400 - $512,100

Current Assets = $276,900

Current Liabilities = Total Assets - Long-term debt - Total Equity

Current Liabilities = $789,400 - $198,375 - $364,182

Current Liabilities = $226,843

Current Ratio = Current Assets / Current Liabilities

Current Ratio = $276,900 / $226,843

Current Ratio = 1.22

3)

Current value of those 150 shares = Value of shares 12 years ago * (1 + rate of return)no of periods

Current value of those 150 shares = $7800 * (1 + 14%)12

Current value of those 150 shares = $37,579.66

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