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

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

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