Calculate the tax disadvantage to organizing a US business today as a corporation, as compared to a
partnership, under the following conditions. Assume that all earnings will be paid out as cash
dividends. Operating income (operati
You have $1,500 to invest today at 7% interest compounded annually.
a. How much will you have accumulated in the account at the end of the following number of
1. Three years
PV x (1.07) ^3
$1,500 x (1.07) (1.07) (1.07)
West Coast Manufacturing (WCMC) is executing an initial public offering with the following
characteristics. The Company will sell 10 million shares at an offer price of $25 per share, the underwriter
will charge a 7% underwriting
You purchase 1,000 shares of Spears Grinders Inc. stock for $45 per share. A year later, the stock pays a
dividend of $1.25 per share and it sells for $49.
a. Calculate your total dollar return.
b. Calculate your total percentage r
Suppose that a thirty-year U.S. Treasury bond offers a 4% coupon rate, paid semiannually. The market
price of the bond is $1,000, equal to its par value.
What is the payback period for this bond?
With such a long payback perio
The initial proceeds per bond, the size of the issue, the initial maturity of the bond, and the years
remaining to maturity are shown in the following table for a number of bonds. In each case the bond has
a $1,000 par value, and
A best-selling author decides to cash in on her latest novel by selling the rights to the books royalties
for the next six years to an investor. Royalty payments arrive once per year, starting one year from
now. In the first year,
Par value is the face value of a bond that the borrower pays back on the
FI 360 Financial Management
August 20, 2016
Week 1 Homework Assignment
First we must apply the taxes at the corporate level.
$500,000.00(.65)= $325,000.00 (this is the amount available for the investors)
Then we must t
FI 360 Financial Management
August 26, 2016
Week 2 Homework Assignment
FV N =PV (1+ R) N
A-1) 3 YEARS
FN 3=PV X 1.07
FN 3=1500 X 1.22504
FN 3 = $1,837.57
A-2) 6 YEARS
FN 6=PV X 1.07 6
FN 6=1500 X 1.50073
FN 6 = 2251.10
Week 1 Discussion
Q1-3. What are the advantages and disadvantages of the different legal forms of business organization?
The advantage of a Sole Proprietorship is the simplicity and ease of operation due to the fact that you do
not have to deal with partn
Brief Exercise 7-1
Your answer is correct.
Match each situation with the fraud triangle factor (opportunity, financial pressure, or rationalization)
that best describes it.
(a) An employees monthly credit card payments are nearly 75% of their
Chapter 06 Assignment
Brief Exercise 6-1
Your answer is correct.
Tiffee Company identifies the following items for possible inclusion in the physical inventory.
Indicate whether each item should be included or excluded from the inventory taki
Could there be some light at the end of the tunnel for Facebook stock? Over the past three
months Facebook stock has taken a beating. The share prices have gone from $38 IPO
share price to less than $18 IPO share price. IPO, also known as initial public o
1. How would taxes impact your choice of a lump sum payment or an annuity? (Note
that tax laws change frequently enough to make tax planning in the future difficult.)
2. What are other real world examples of where present value calculations would be
Best Buy is known for selling electronics such as televisions, game consoles, computers, cell phones, and
more. They also sell a wide variety of music and games, vehicle music and navigation components,
cameras and much more, too much to mention. There is
1. One of the tasks for financial managers when identifying projects that increase firm value is to identify
those projects where (Points : 1)
benefits are at least equal to the projects costs.
taking the project will increase the book value of the firms
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Final FI360 Exam Study Guide
1. Maximizing profit as the managers goal has several flaws, including:
a. Earnings figures focus on past performance rather than current or future performance
b. The timing of the profits may be ignored
c. Focusing on earning
1. Which form of invested capital is subject to most of the firms business and financial risk? (Points : 2)
2. Which of the following is not a true capital-rai
1. Of the following bonds, which one has the highest degree of interest rate risk? (Points : 1)
20 year 8% bond
5 year 8% bond
10 year 8% bond
Not enough information.
2. Bonds issued by US states or local governments are call
A bond is defined as a debt security where the authorized issuer owes the holders a debt. The issuer is
obligated to pay the investor interest and to repay the principal at a later date depending on the terms.
Most bonds take ten to thirty years to hit ma
Securities Act of 1933 and its amendments are the most important federal laws governing the sale of
new securities. The Securities Act of 1933 requires issuers to fully disclose all relevant information about
the company selling securities to the possible
When projects have high rates of return, such as projects with a positive net present value,
the shareholders required returns are surpassed and the stock prices rise. Having positive
net present value projects helps firms to achieve their value-creation
On September 11th 2012 the founder and Chief Executive Officer Mark Zuckerberg of Facebook spoke
publicly for the first time since May when Facebook first offered the sale of stock to the public. Mark
Zuckerberg revealed that the Facebook Company has chan
Problem 5-4A (Part Level Submission)
Lambert Department Store is located in midtown Metropolis. During the past several years, net
income has been declining because suburban shopping centers have been attracting business
away from city areas. At the end o