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Unformatted text preview: 1. Paulo Maidini has received the following three job offer, which one should he choose if his
opportunity cost (discount rate) is 9%. (20 points) AC Milan
$ 500,000 signing bonus. 700,000 for the ﬁrst two years and then $400,000 for the next thIee years. Bayeren FC
$ 1,000,000 signing bonus. $750,000 for the ﬁrst year and $3 50,000 for the next three years. Cardoba PC
A signing bonus of $700,000. $500,000 as the ﬁrst year’s compensation and this" declines at a rate of 3% each year over the next 4 years (Le. years 2 through 5). Page left blank for continuing problem} .
Ea 0 ‘ ,2 3 ‘ 4, 2. Assume that you buy a house at $250,000. You already have saved 20% cut of this as down
payment. The rest you ﬁnance using a 30 year mortgage (rate 4.25%) (20 poiﬂts) a. Draw the timeline for the mortgage d0 '6
b. What is your monthly payment (write the formula and Show numerical substitutions)? \ 3. 3.) Draw the Business Cycle. Clearly mark the leading, coincident, and lagging indicators.
Also, clearly mark the Bull and Bear markets and economic eXpansions and contractions in your diagram and also indicate Where you. would see the upward and downward sloping yield curves.
' (6 points) ﬂock
f’zn‘ sex a a0? 1)) Write the GDP Equation (and indicate What tlae alphabets in the equation stand for)“
r (2 points) y’— + Nd”
am 2.. WW“ mm + 6m; __ 4‘s (2) Provide the following current numbers (2 points) i) Discount Rate 0 2 ° . i a M g I 3 I i
ii) Duraticm of Unemployment f Li 4. Assume the following for RambhaCorp, (20 points) 2002 2001 Sales 6,000,000 ' COGS 2,000,000
Operating Expenses 1,700,000
Depreciation 300,000
Interest Expense 200,000
Tax Rate 30 %
Current Assets 150,000 75,000
Current Liabih'ties 170,000 45,000
Net Fixed Assets 1,350,000 1,275,000
Common Equity + Surplus 3,500,000 3,400,000
Dividends 0 0' All the following Questions Qertain to 2002. 3) Draw the income Statement for Rambha inc. 9
VMM b) What are the Operating Cash F lows for Rambha? 5. C) What is the FV of $200 three months from now, if the rate of compounding is 5.5% (compounded daily) 7 (5 pet; s) I
O 31‘:— :_ (35963,); :6”be
F—I_’—+ \ 7}
1M Flat» Wat 5. D) All else same, if the discount rate increases what would be the effect on the PV of
an annuity? _ (2 points) 3) earmS’C W 5. E) All else same, if the cash ﬂows are further out into the future, what would be the
eﬁect on the PV of the cash ﬂows? (2 points) ,‘ 5. F) All else, same if the rate of dismount decreasesa what would be the effect on the PV
of a single cash ﬂow to be received in the future (the time of receiving the cash ﬂow stays same). (1 point) 3340/? as 5,; . “we 11 6. Assume that your contribution into a pension pan will be $6,000 at the end of the ﬁrst
year. If you expect that the contributions will increase at an annual rate of 2% and you
will be receiving 8% from your investments in the pension pian, how much will you have
at the time of your retirement 30 years from now? (10 points) 12 ...
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 Winter '07
 Yatin
 Finance

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