Fin 101

A company had cash and marketable securities worth $100,000 accounts payables worth $60,000 inventory
$200,000, other current liabilities of 100,000, and other current assets of $212,800. Calculate the company n
Current Assets Current Liabilities

Cash and Marketable Securities 100,000 Accounts payables 60,000
Inventory 2,501,500 Short-term notes payable 200,000
Accounts Receivables 5,500,000 Other Current Liabilities 100,000
Other Current Assets 212,800
Total Current Assets 8,314,300 Total Current Liabilities 360,000
Working Capital 7,954,300
Your parents have given you $2,500 a year before your graduation so that you can take a trip when you gra
You know that the trip costs $2,600 right now and that inflation for the year is predicted to be 3%. Will you
Marks)
Investment 2,500
Rate 8%
Trip Cost 2,600
Inflation 3%
Investment Value = Amount x (1+r)^n

= 2,700
Cost of Trip after One year = 2,678
Yes, there will be enough money in a year to purchase the trip.
If the following financial information related to XYZ Company. Total Revenues last year $870, depreciation ex
year, current assets were $100 and current liabilities were $105. The company has an average tax rate of 30%.
Marks)
XYZ Company
Income Statement
For The Year Ended 20XX
Revenues $870
Less: Cost of Goods Sold (350)
Gross Profit $520
Less: Depreciation Expense (40)
Income before interest and Tax $480
Less: Interest Expense (50)
Income Before Tax $430
Less: Income Tax Expense (129)
Net Income $301
Calculate the common-size balance sheet from the following information for the company: (2 Marks)
Cash 50,000 Accts/Pay 20,800

Acct/Rec 55,000 Accrued expenses 40,000
Inventories 300,500 Short-term N/P 9,700
Total Current assets 405,500 Current liabilities 70,500
Net fixed assets 102,000 Long-term debt 70,000
Total assets 507,500 Total liabilities 140,500
Owner's equity 367,000
Total liabilities equity 507,500
Ten years ago, Amanda Cortez invested $20,000 in an account paying an annual interest rate of 5%. What is th
investment? (2 Marks)
Present Value of Investment = Amount x (1+i) ^ n

= 20,000 x (1+5%) ^ 10
= 32,577.89
Interest Earned = Principal Amount x rate x Time

= 20,000 x 5% x 10
= 10,000
Interest on Interest earned = PV of Value - Initial Investment - Interest Earned

= 32,577.89 - 20,000-10,000
= 2,577.89
You have just won a lottery that promises an annual payment of $130,000 beginning immediately. You will rec
paying 7% annually, what is the present value of this annuity? (2 Marks).
Present Value (Annuity due) =Payment per year + Payment per year*(1-((1+R) ^-(n-1)))/R
= 130000 + 130000 *((1-((1+7%)^-(12-1)))/7%)
= 130,000 + 130,000 * 7.498674337
= 1,104,827.66
£1,104,827.66
rth $60,000 inventory of $2,501,500, accounts receivables of $5,500,000 short-term notes payable worth
culate the company net working capital and describe how managers manage the firm working capital.
ke a trip when you graduate. You wisely decide to invest the money in a bank CD that pays 8% interest.
ted to be 3%. Will you have enough money in a year to purchase the trip? Show your calculations. (2
$870, depreciation expenses $40, costs of goods sold $350, and interest expenses $50. At the end of the
erage tax rate of 30%. Calculate the net income for XYZ Company by setting up an income statement. (2
ny: (2 Marks)
ABC Company
Common Size Balance Sheet
Assets Amount Percentage Liabilities and Equity Amount
Cash $50,000 9.85% Account Payable $20,800
Account Receivable 55,000 10.84% Accrued expenses 40,000
Inventories 300,500 59.21% Short-term Note Payable 9,700
Total Current Assets $405,500 79.90% Current Liabilities $70,500
Net Fixed Assets 102,000 20.10% Long-term debt 70,000
Total liabilities 140,500
Owner's equity 367,000
Total Assets $507,500 100.00% Total Liabilities and Equity $507,500
rate of 5%. What is the value of the investment today? What is the interest on interest earned on this
mediately. You will receive a total of 12 payments. If you can invest the cash flow in an investment that is
Percentage
4.10%
7.88%
1.91%
13.89%
13.79%
27.68%
72.32%
100.00%

Fin 101

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Fin 101

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A company had cash and marketable securities worth $100,000 accounts payables worth $60,000 inventory

Current Assets Current Liabilities

Working Capital 7,954,300

Investment Value = Amount x (1+r)^n

Cost of Trip after One year = 2,678

Yes, there will be enough money in a year to purchase the trip.

Cash 50,000 Accts/Pay 20,800

Present Value of Investment = Amount x (1+i) ^ n

Interest Earned = Principal Amount x rate x Time

Interest on Interest earned = PV of Value - Initial Investment - Interest Earned

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