FIN 3403: Bonds
1.
Your daughter is three years old. You anticipate that she will start college at UCF in 15 years.
Also, you expect that annual college and living expenses will be $12,500. To pay for everything,
you will need $50,000 15 years from now. Y
Risk and Return
1. a)
Given the following economic forecast data, calculate the standard deviations for the following
two stocks.
Return on Stock
Economic
Condition
Boom
Normal
Recession
b)
Probability
30%
50%
20%
Orlando Utility
18%
10%
3%
Orlando Techno
Time Value of Money - single sums
1.
Find the future value of the following:
a)
$100,000 for 10 years at 12% compounded annually.
b)
$100,000 for 10 years at 12% compounded quarterly.
c)
$100,000 for 10 years at 12% compounded monthly.
d)
$100,000 for 10
1.
Gizmo Corporation expects rapidly increasing demand for gizmos, and is considering
expansion of its production facility. The project would require the firm to purchase new
equipment and upgrade old software. The cost of the new equipment is $1,250,000.
EBIT or NOI
(1,250,000)
No tax liability.
Operating losses can be carried back 2 years, and carried forward up to 20 years, to save on
taxes in better years.
Problem 3
Sales
22,000,000
Cost of Goods Sold
(8,100,000)
Operating Expenses
(3,400,000)
Depreci
Chapter 1:
Income Statements and Corporate Taxes
1.
Last year, Oviedo Products Corporation had sales of $1 million. The firms cost of
goods sold amounted to 31% of sales and cash operating expenses were $240,000.
Oviedo Products has $420,000 in equipment
Financial Statement Analysis
Are our decisions maximizing shareholder wealth?
We will want to answer questions about the firms
Liquidity
Operating Profitability
Financing Decisions
Return on Equity
Value Creation
We will want to answer questions ab
TVM Solutions
More Fun Applications
Problem #1
First City Bank simple interest
$10,000 x .04 = $400 interest per year.
Interest is paid only on the original amount deposited, so over 10 years the interest earned
is $400 per year times 10 years = $4,000.
A