P3-26
ROA
Johnson:
Industry
2013
12.45%
11.07%
2014
12.64%
10.01%
2015
11.47%
8.82%
ROE
Johnson:
Industry
2013
21.79%
18.49%
2014
22.13%
16.92%
2015
21.21%
14.46%
b) Over the three years Johnson and the industry have both decreased in their numbers. This
P5-13
a) fv= $500 i=7% n=3 pv=
$408.15
b) He should pay no more than $408.15
c) If he pays less thatn $408.15 then his rate of return will be more than 7%
P5-14
fv= $100 i=8% n=6 pv=
$63.02
P5-19
Case
Ordinary A.
A. Due
A
$36,216.41
$39,113.72
B
4,057.59
P6-15
a)
fv= $1,000 n= 16
i= 10%
pmt= $120
pv= $1,156.47
b)
There could have been a change in risk since the issue or a shift in the supply and demand
c)
fv= $1,000 n= 16
i= 12%
pmt= $120
pv= $1,000
Because the required return and coupon rate are the same
P5-22
A)
$885,185.11
B)
$328,988.05
C)
In 10 years he made less than half had he started at age 25.
D)
$973,703.62 25 years old
$361,886.85 35 years old
He made about a third if he delayed 10 years.
P5-29 One time pmt= n= 5 i=7% pv=$24,000
Future value=
P4-16
Sales revenue
Less: COGS (.45)
Gross profits
Less: operating exp. (.25)
Operating profits
Less: Interest exp. (.032)
Net profits pre tax
Less: taxes (25%)
Net profits post tax
Pro Forma Income Statement
Pessimistic
Most Likely
$ 900,000
$ 1,125,000
P3-17
a) You're invetory is low compared to the industry average. Therefore Bluegrass might
consider ordering less or to discontinue ordering products that dont have high sales.
b) You need to have a come to Jesus meeting with your collections team becaus
E1-2 Yes because the second project sees a higher overall increase in earnings though the company will
have to wait longer.
E1-3 They are both correct. The treasurer looks at how much cash there is whereas the controller
focuses more so on if the firm is
P5-2
Case
A
B
C
D
P5-4
Case
A
B
C
D
E
F
P5-10
Case
A
B
C
D
P5-11
Case
A
B
C
D
E
Interest
Periods
12%
2
6%
3
9%
2
3%
4
FV
1.25
1.19
1.19
1.13
Cash
Interest Periods
$200
5%
20
4,500
8%
7
10,000
9%
10
25,000
10%
12
37,000
11%
5
40,000
12%
9
Rate
2%
10%
5%
13