What is the future value of $2,549.87 deposited for 6 years

Assignment Help Financial Accounting

Reference no: EM133434297

Problem 1

Sam Lawson is a vice president at a large communications firm. His compensation includes a salary of $390,000, a bonus of $195,000, and a stock option package that allows him to purchase 29,000 shares of the company's stock at $42 per share. He can exercise the option anytime within a three-year period that starts on the first of next month. The stock is now selling at $63 per share. If the current price holds until the first of the month, and Sam exercises his option, how much will he make this year?

Problems 2

Henderson Industries Inc.'s stock is currently selling at $22.60 per share. Sharon Jacobs, the CEO, has options to buy 270,000 shares at $25.00 per share that expire at the end of this year. Sharon feels that if the traditional accounting method is used, implementing the deferred payment sales program will push the stock's price about halfway toward the level it was at two years ago which was about $44.00.

If Sharon Jacobs is also a founder of the company and has retained 8 million shares of its stock, how much of a difference will the auditors' decision make in her personal wealth outside of the stock option? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to one decimal place.

Problem 3

Nu-Mode Fashions Inc. manufactures quality women's wear and needs to borrow money to get through a brief cash shortage. Unfortunately, sales are down, and lenders consider the firm risky. The CFO has asked you to estimate the interest rate Nu-Mode should expect to pay on a one-year loan. She's told you to assume a 3.2% default risk premium, even though the loan is relatively short, and to assume the liquidity and maturity risk premiums are each ½%. Inflation is expected to be 4.1% over the next 12 months. Economists believe the pure interest rate is currently about 3½%. Round your answer to one decimal place.

Problem 4

What is the future value of $2,549.87 deposited for 6 years at an interest rate of 7%? Round the answer to the nearest cent.

Problem 5

How much will $168 grow into if it is invested at 12% for 32 years? Round the answer to the nearest cent.

Problem 6

If you deposit $208.63 in an account that pays 6% and leave it there for 14 years, how much will you have in the account? Round FVF values in intermediate calculations to four decimal places. Round the answer to the nearest cent.

Problem 7

How much is a guaranteed promise of $15,300 to be received in 13 years worth today if interest is 14%? Round the answer to the nearest cent.

Problem 8

At what interest rate will $600 grow into $2,932.27 in 14 years? Round the answer to the nearest whole percentage. Do not round your intermediate calculations

Problem 9

How much will $500 per year deposited at 11% be worth in 6 years? Round the answer to the nearest cent. Round FVFA value in intermediate calculations to four decimal places.

Problem 10

What interest rates are implied by the following lending arrangements?

You borrow $490 and repay $543.90 in one year. Round the answer to the nearest whole percentage. Do not round your intermediate calculations.
You lend $1,860 and are repaid $1,935.14 in two years. Round the answer to the nearest whole percentage. Do not round your intermediate calculations.
You lend $730 and are repaid $1,084.74 in five years with quarterly compounding. Round the answer to the nearest whole percentage. Do not round your intermediate calculations. (Note: Be sure to give your answer as the annual nominal rate.)
You borrow $12,000 and repay $20,509.67 in three years under monthly compounding. Round the answer to the nearest whole percentage. Do not round your intermediate calculations. (Note: Be sure to give your answer as the annual nominal rate.)

Problem 11

Branson Inc. has sold product to the Brandywine Company, a major customer, for $32,000. As a courtesy to Brandywine, Branson has agreed to take a note due in two years for half of the amount due.

What is the effective price of the transaction to Branson if the interest rate is:
1. 6%. Round the answer to the nearest whole dollar. Round PVF values in intermediate calculations to four decimal places. Do not round other intermediate calculations.
  $ fill in the blank 1
2. 8%. Round the answer to the nearest whole dollar. Round PVF values in intermediate calculations to four decimal places. Do not round other intermediate calculations.
  $ fill in the blank 2
3. 10%. Round the answer to the nearest whole dollar. Round PVF values in intermediate calculations to four decimal places. Do not round other intermediate calculations.
  $ fill in the blank 3
4. 12%. Round the answer to the nearest whole dollar. Round PVF values in intermediate calculations to four decimal places. Do not round other intermediate calculations.
  $ fill in the blank 4
Under what conditions might the effective price be even less as viewed by Brandywine?
If Brandywine's rate is higher or lower than Branson's, it will perceive a greater discount.

Reference no: EM133434297

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