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TIME VALUE OF MONEY (PV & FV)
TIME VALUE OF MONEY (PV & FV)
TIME VALUE OF MONEY (PV & FV)
- At 6 percent compounded annually, how long will it take $750 to double?
- At what rate will $1,000 double in 9 years?
- At what rate must $400 be compounded annually for it to grow to $535.28 in 5 years?
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- If you put $800 in a savings account that yields 4% compounded semi-annually, how much money will you have in the account in four years?
- If you put $1000 in a savings account that yields 12% compounded quarterly, how much money will you have in the account in 5 years?
- If you put $500 in an investment that returns 12 percent compounded monthly what would you have after 1 year?
- How much would $1,000 in an account paying 18 percent interest compounded semi-annually accumulate to in 15 years?
- What is the present value of $10,000 to be received 8 years from today? Assume a discount rate of 6% compounded annually.
- If you want to have $800 in 6 years, how much money must you put in a savings account today? Assume that the savings account pays 6% and it is compounded semi-annually.
- To what amount will the following investments accumulate?
- $5,000 invested for 10 years at 10 percent compounded annually
- $8,000 invested for 7 years at 8 percent compounded annually
- How many years will the following take?
- $500 to grow to $1,039.50 if invested at 5 percent compounded annually
- $35 to grow to $53.87 if invested at 9 percent compounded annually
- At what annual rate would the following have to be invested?
- $500 to grow to $1,948.00 in 12 years
- $300 to grow to $422.10 in 7 years
- What is the present value of the following future amounts?
- $800 to be received 10 years from now discounted back to the present at 10 percent
- $300 to be received 5 years from now discounted back to the present at 5 percent
- Stanford Simmons, who recently sold his Porsche, placed $10,000 in a savings account paying annual compound interest of 6 percent.
- Calculate the amount of money that will have accrued if he leaves the money in the bank for 1, 5, and 15 years.
- You are offered $1,000 today, $10,000 in 12 years, or $25,000 in 25 years. Assuming that you can earn 9 percent on your money, which should you choose?
Roberts Manufacturing Balance Sheet
December 31, 2007
(Dollars in Thousands)
Cash $ 200 Accounts payable $ 205
Receivables 245 Notes payable 425
Inventory 625 Other current liabilities 115
Total current assets $1,070 Total current liabilities $ 745
Net fixed assets 1,200 Long‑term debt 420
Common equity 1,105
Total assets $2,270 Total liabilities and equity $2,270
Roberts Manufacturing
Income Statement for Year Ended December 31, 2007
(Dollars in Thousands)
Sales $2,400
Cost of goods sold:
Materials $1,000
Labor 600
Heat, light, and power 89
Indirect labor 65
Depreciation 80 1,834
Gross profit $ 566
Selling expenses 175
General and administrative expenses 216
Earnings before interest and taxes (EBIT) $ 175
Less interest expense 35
Earnings before taxes (EBT) $ 140
Less taxes (40%) 56
Net income (NI) $ 84
- Calculate the liquidity ratios, that is, the current ratio and the quick ratio.
- Calculate the asset management ratios, that is, the inventory turnover ratio, fixed assets turnover, total assets turnover, and days sales outstanding.
- Calculate the debt management ratios, that is, the debt and times‑interest‑earned ratios.
- Calculate the profitability ratios, that is, the net profit margin on sales, return on total assets, and return on common equity.
- Calculate the market value ratios, that is, the price/earnings ratio and the market/book value ratio. Roberts had an average of 10,000 shares outstanding during 2006, and the stock price on December 31, 2006, was $40.00.
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