QRB week 4 again
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HCS385Week3FinancialExerciseWorksheet.xlsxWeek 3 - Part 1
| Week Three Financial Exercises | |
| Part 1 | |
| Using the table below, describe the types of budgets. In your description, include: • The objective of the budget • How the budget assists an organization in managing its financial activities • What types of data need to be included in that specific budget | |
| Type of Budget | Description |
| Cash Flow | |
| Operating | |
| Sales | |
| Static | |
| Financial | |
Week 3 - Part 2
| Week Three Financial Exercises | |
| Part 2 | |
| Complete the following problems using the following ratios: | |
| Sales level at which operating income is zero | |
| o If sales above breakeven, then profit | |
| o If sales below breakeven, then loss | |
| o Fixed expenses = total contribution margin | |
| Total sales = total expenses | |
| Break Even Point: Unit Sold = Fixed expenses + Operating Income / Contribution Margin per unit | |
| Break Even Point: Sales $ = Fixed expenses + Operating Income / Contribution Margin Ratio | |
| (1) | Calculate the break even number of units if the fixed expenses are $7,000 and the contribution margin is $14 per unit. |
| Answer: 500 | |
| (2) | Calculate the break even sales dollars if the fixed expenses are $7,000 and the contribution ratio is 40%. |
| Answer: 2,800 | |
| (3) | Calculate the break even number of units with a target profit of $120,000 if the fixed expenses are $15,000 and the contribution margin is $60 per unit. |
| Answer: 250 | |
Week 3 - Part 3
| Week Three Financial Exercises | |
| Part 3 | |
| Complete the following problems: | |
| (1) | How much will you have saved after 6 years by contributing $1,200 at the end of each year if you expect to earn 11% on the investment? |
| Answer: $5,076.65 | |
| (2) | A business owner plans to deposit his annual profits in an investment account earning a 9% annual return. If the owner starts with their first deposit today for $22,000 and expects to make the same profit for the next 7 years, how much will be saved for retirement at that point? |
| Answer: $242,626.42 | |
| (3) | An investor plans to invest $500 a year and expects to get a 10.5% return. If the investor makes these contributions at the end of the next 20 years, what is the present value of this investment today? |
| Answer: $4,115.45 | |
| (4) | What is the present value (PV) of a 12-year lease arrangement with an interest rate of 7.5 percent that requires annual payments of $4,250 per year with the first payment being due now? |
| Answer: $10,122.56 | |
| (5) | A recent college graduate hopes to have $200,000 saved in their retirement account 25 years from now by contributing $150 per month in a 401(k) plan. The goal is to earn 10% annually on the monthly contribution. Will they have the $200,000 at the end of the 25 years? |
| Answer: He will need to invest that for amount for 25.750 years to get $200,100.92. | |
