Financial lab

1. I wound like each ANSWER TO BE WRITTEN BELOW EACH QUESTION WITH THE CALULATION SHOWN SO I CAN KNOW HOW THE ANSWER CAME ABOUT AND STUDY THE OUTCOME FOR FUTURE QUESTIONS.

1. (Future value) To what amount will $5000 invested for 10 years at 11 % compounded annual accumulate to $ (Round to the nearest cent)

2. (Future value)If you deposit $2,900 today into an account earning an annual rate of return of 11%, what would your account be worth in 40 years (assuming no further deposits)? In 45 years?

If you deposit $2,900 today into an account earning an annual rate of return of 11%, what would your account be worth in 40 years?

$______( R( (Round to the nearest cent)

3. (Solving for a)How many years will it take to grow to $1,064.33 if it’s invested at 10% compounded annually?

The number of years it will take for $480 to grow to $1.064.33 at 10 %compounded annually is

Years (Round to one decimal place)

4. (Solving for i) At what annual interest rate, compounded annually, wound $500 have to be invested for it to grow to $1990.45 in 15 year?

The annual interest rate, compounded annually, at which $500 must be invested for it to grow to $1990.45 in 15 years, is % %

% (Round to two decimal please)

5. (Solving for n) Jack asked Jill to marry him and she has accepted under one condition. Jack must buy her a new $340,000 Rolls-Royce Phantom. Jack currently has $80,290 that he may invest. He has found a mutual fund with an expected annual return of 4 % in which he will place the money. How long will it take Jack to win Jill’s hand in marriage? Ignore taxes and inflation.

The numbers of years it will take for Jack to win Jill’s hand in marriage is years

(Round to one decimal place)

6. (Solving for i) You lend a friend $10,000 for which your friend will repay you $59,874 at the end of 9 years. What interest rate are you charging your “friend”? % (Round to the nearest whole %)

7. (Present value comparison) You are offered $110,000 today or $400,000 in 13 years assuming that you can earn 14% on your money. Which should you choose?

If you are offered $400,000 in 13 years and you can earn 14% on your money what is the present value of $400,000? $

(Round to the nearest cent)

8. (Present value of an ordinary annuity) What is the present value $3,500 per year for 8 years discounted back to the present at 9% is $

(Round to the nearest cent)

9. (Saving for retirement-future value of an annuity) Selma and Patty Bouvier are twins and both at the Springfield DMV. Selma and Patty Bouvier decide to save for retirement, which is 35years away. They’ll both receive an annual return of 7% on their investment over the next 35 years. Selma invests $2,500 per year at the end of each year only for the first 10 years of the 35-yearperiod-for a total of $25,000 saved. Patty doesn’t start saving for 10 years and then save $2,500 per year at the end of each year for the remaining 25 years –for a total of $62,500 saved.

How much will each of them have when they retire?

How much will Selma have when she retires? $

(Round to the nearest cent)

10. (Break-even analysis) the Marvel Mfg. Company is considering whether or not to construct a new robotic production facility. The cost of this new facility is $588,000 and it is expected to have a six-year life with annual depreciation expense of $98,000 and no salvage value. Annual sales from the new facility are expected to be 2,010 units with a price of $930 per unit. Variable production costs are $650 per unit, and fixed cash expenses are $78,000 per year.

a. Find the accounting and the cash break-even units of production.

b. Will the plant make a profit based on its current expected level of operations?

c. Will the plant contribute cash flow to the firm at the expected level of operation?

The accounting break-even units of production is units (Round to the nearest whole number)

11. (Break–even analysis) Farrington Enterprises runs a number of sporting good s businesses and is currently analyzing a new T-shirt printing business. Specifically, the company is evaluating the feasibility of this business based on its estimates of unit sales, the price per unit, variable cost per unit and fixed costs. The company’s initial estimates of annual sales and other critical variables are shown here:

DATA TABLE:

Unit sales: 5,000

Price per unit: $12,000

Variable cost per unit: $8,000

Fixed cash expense per unit: $10,000

Depreciation expense: $5,000

a. Calculate the accounting and cash break-even annual sales volume in units.

b. Bill Farrington is the grandson of the founder of the company and is currently enrolled in his junior year at the local state university. After reviewing the accounting break-even calculation done in part A.

Bill wondered if the depreciation expense should be included in the calculation. Bill had just completed his first finance class and was well aware that depreciation is not an actual out –of- pocket expense but an allocation of the cost of the printing equipment used in the business over its useful life. What do you think?

What do the cash and accounting break-even points tell you?

The accounting break-even units of production is unuu units.

(Round to the nearest integer)