MID1B - 1. Paulo Maldini has received the following three...

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Unformatted text preview: 1. Paulo Maldini has received the following three job offer, which one should he choose if his opportunity cost (discount rate) is 12%. I (20 points) AC Milan ' $ 500,000 signing bonus. 700,000 for the first two years and then $400,000 for the next three years. Bayeren FC . $ 1,000,000 Signing bonus. $750,000 for the first year and $350,000 for the next three years. Cardoba FC . 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 nex: 4 years (Le. years 2 through 5). fliMILPrN 2. Assume that you buy ahouse at $250,000. You already have saved 20% out of this as down < payment. The res}; you finance using a 30 year mortgage (rate 4.25%). (20 points) 3. Draw the timeline for the mortgage . 0 , , t 3 Q o . I 2 F Y1 M We we €950,949!) C - _ _.... 50,9«9-15 03 M} m b. What is your monthiy payment (write the formula and Show numerical substitutions)? r c. Write the Amortization schedule Ignontys three d 0111'. H M Mme Tami WW 9" k elm/Ci 3 % [Calm—7&3 277-517 70138 Gig 3‘3 (gar/’70. 4 mayo-#3 74gth 705-}? @398? 16183961”? t V \ 2*- t W . at»th we - WV 'd. What is the total interest you will pay over the life of the mortgage? ‘ m w! e. What is the EAR for your mort age? a E' 7 ; , -+ 1M? w m )L , 1+ 0092514. w f R 2W “x x: 1 e gmfl 49-33 E?” 4K ° if 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 3mm diagram and also indicate where you would see the upwardend domwaxd sloping yield curves. (6 points) _ Sm Pica; 6139 P b) Write the Fisher Equation (and indicate what the alphabets in the equation stand for). l + E :l l -l/ Q-l— (2130mm) c) Provide the following current numbers I (2 points) i) Prime Rate ‘g 3 fi 2— ‘3 ii) Rate of Unemployment 4. Assume the following for Rambha Corp. 2002 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 Current Liabilities 170,000 Net Fixed Assets 1,350,000 Common Equity + Surplus ‘ 3,500,000 Dividends 0 ' All the following Questions gertain to 2002. 3) Draw the Income Statement for Rambha Inc. 2001 75,000 45,000 '1 ,275 ,000 3,400,000 0 (20 points) c) What is the increase in Net Workiflg Capital? f) What are the Cash Flows to Stockholders? ,_ \)‘I W .— Ne'}, NW (The company does not pay any dividends) .. M40 ' t. 313—0-wa '3qu o (M g) What are the cash flows to Creditors? ' , M Rm 3 M S M]? 5" . +0 5. A) What is the Present Value of $5,000 that you are expecting to receive after 45 days? Assume the discount rate to be 124596 compounded daily. (5 points) 5. B) You will be receiving $3000 in 5 months. If the appropn'ate discount rate is 4.5% 9 compounded. continuously, what is the PV of your cash flow? (5 points) - "’ _ b D 1’: - Wk 10 5. C) What is the EV of $200 three mohths from new, if the rate of compoundng is 5.5% (compounded daily) (5 points) Mme) = (355973?) W15 I 20/0 F'VnsPY fi-H 5. 1)) A11 eise same, if the discount rate decreases what wouhi be the effect on the PV of an annuity? (2 points) CW ctr MVC 5. E) A11 else same, if the cash flows are finther out into the future, what Would be the effect on the PV of the cash flows? 7 (2 points) 3) ame C 5. F) All else, same if the rate of discount increases, what would he 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) 33wa 11 6. Assume that your contribution into a pension pan wiil be $6,000 at the end of the first year. If you expect that the contributions will increase at an annual rate of 4% and you will be receiving 10% from your investments in the pension plan, how much will you have at the time of your retirement 30 years from now? (10 points) 0 l l: QM’O L—> fiefli it p— —— 60% M 0-10-4909 '— F‘t # _ wk ‘ .- Cg "‘ Milo/6%? 12. ...
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MID1B - 1. Paulo Maldini has received the following three...

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