BUSN380 Week 7 TCOs 6 &amp; 7 Problem Set 7 &acirc;€“ Calculating Net Asset Value, Net Worth, Rate o

BUSN380 Week 7 TCOs 6 & 7 Problem Set 7 â€“ Calculating Net Asset Value, Net Worth, Rate o

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Problem Set 7 1. Calculating Net Asset Value. Given the information below, calculate the net asset value for the Boston Equity mutual fund. Total assets \$225,000,000 Total liabilities 5,000,000 Total number of shares 4,400,000 Ans. NVA = Value of portfolio – Liabilities / No. shares outstanding Thus, 225,000,000 – 5,000,000 = 220,000,000 220,000,000 / 4,400,000 = \$50.00 2. Calculating the Rate of Return of Investment Using Financial Leverage. Suppose Shaan invested just \$10,000 of his own money and had a \$90,000 mortgage with an interest rate of 8.5 percent. If after three years he sold the property for \$120,000. Ans. a. What is his gross profit? Selling Price – Purchase Price = \$120,000 – \$100,000 = \$20,000 b. What is his net profit/loss? Gross Profit – Interest Paid for 3 years = \$20,000 – (\$90,000 x .085 = \$7,650 x 3) = \$20,000 - \$22,950`= - \$2,950. c. What is the rate of return on investment? -\$2,950 / \$20,000 =

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This note was uploaded on 05/27/2011 for the course BUSN 380 taught by Professor Bloch during the Fall '10 term at DeVry NY.

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BUSN380 Week 7 TCOs 6 & 7 Problem Set 7 â€“ Calculating Net Asset Value, Net Worth, Rate o

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