Principles of Finance
Instructions –READ THEM CAREFULLY
⦁ This assignment is an individual assignment.
⦁ The Assignment must be submitted only in WORD format via the allocated folder.
⦁ Assignments submitted through email will not be accepted.
⦁ Students are advised to make their work clear and well presented. This also includes filling in your information on the cover page.
⦁ Students must mention question numbers clearly in their answers.
⦁ Late submitted assignments will NOT be entertained.
⦁ Avoid plagiarism; the work should be in your own words; copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
⦁ All answered must be typed using Times New Roman font. No pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Assignment Questions: (Marks: 15)
⦁ A company had cash and marketable securities worth $200,000 accounts payables worth $51,000, inventory of $1,501,500, accounts receivables of $5,288,128, short-term notes payable worth $220,000, other current liabilities of 100,000, and other current assets of $121,800. Calculate the company net working capital and describe how managers manage the firm working capital.
⦁ Your parents have given you $1,500 a year before your graduation so that you can take a trip when you graduate. You wisely decide to invest the money in a bank CD that pays 7% interest. You know that the trip costs $1600 right now and that inflation for the year is predicted to be 3%. Will you have enough money in a year to purchase the trip? Show your calculations.
⦁ If the following financial information related to XYZ Company. Total Revenues last year $970, depreciation expenses $50, costs of goods sold $450, and interest expenses $55. At the end of the year, current assets were $121 and current liabilities were $107. The company has an average tax rate of 35%. Calculate the net income for XYZ Company by setting up an income statement. (2 Marks)
⦁ Calculate the common-size balance sheet from the following information for the company: (2 Marks)
Cash 50,000 Accts/Pay 25,800
Acct/Rec 60,000 Accrued expenses 30,000
Inventories 200,500 Short-term N/P 9,700
Total Current assets 310,500 Current liabilities 65,500
Net fixed assets 132,000 Long-term debt 150,000
Total assets 442,500 Total liabilities 215,500
Owner’s equity 227,000
Total liabilities and owners’ equity 442,500
⦁ Ten years ago, Amanda Cortez invested $20,000 in an account paying an annual interest rate of 5%. What is the value of the investment today? What is the interest on interest earned on this investment?
⦁ You have just won a lottery that promises an annual payment of $120000 beginning immediately. You will receive a total of 15 payments. If you can invest the cash flow in an investment that is paying 8% annually, what is the present value of this annuity?
⦁ XXX company has forecast a rate of return of 20% if the economy booms (30% probability); a rate of return of 19% if the economy in in a growth phase (40% probability); a rate of return of 2.50% if the economy in in decline (20% probability); and a rate of return of -10% if the economy in a depression (10% probability). What is the company standard deviation of returns?
