FIN
571 Week 2 Individual Homework
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Week 2 Homework & Solutions
Week 2 Individual Homework Submit
Through Gradebook In Excel
1-
Your daughter would like to attend college in 5 years. You have
determined that if you have $60,000 when she begins college you will be
able to pay for her 4 year degree. You have opportunity to invest at
12%. How much must you put away in equal annual payments in order to
achieve your goal of $60,000 in 5 years?
2-
Assuming you have opportunity to invest at 15 percent, which would you prefer,
$12,000 today or $27,000 in 5 years?
3-
Beginning in 6 years you will receive $12,000 a year for 4 years from a
trust. You plan to retire in 15 years. How much will you have at
that time from the income of this trust if you have opportunity to invest at
8%?
4-
Assuming your interest is compounded monthly, how much will $5,000 grow to in 5
years at an interest rate of 10%?
5-
You just received an inheritance of $60,000. You need to have $40,000 in
5 years for your daughters tuition. You have opportunity to invest at
12%. You feel an urgent need to spend your cash on a nice car. How
much can you spend on your car today and still be able to fund the $40,000
tuition in 5 years?
•
Calculating Interest Rate. Find the annual interest rate for
the following:
Present
Value Years
Future Value
$400
11
$684
$183
4
$249
$300
7
$300
•
Present Values. What is the total present value of
the following cash-flow stream if the interest rate
is
5 percent?
Year Cash Flow
1
$200
2
$400
3
$300
8-
Analyze Ratios For Pharmaceuticals. Rank all companies in order of
financial health based on their respective ratios. Utilize only the ratios
that are underlined and bolded in your ranking.
|
|
|
|
AMGN
|
PFE
|
MRK
|
ABT
|
LLY
|
MYL
|
IVX
|
|
Price
|
High
|
$/S
|
72.37
|
36.92
|
63.5
|
47.15
|
73.89
|
12.91
|
24.69
|
|
Low
|
$/S
|
48.09
|
27.9
|
40.57
|
33.75
|
53.7
|
7.45
|
10.5
|
|
|
P/E
|
High
|
|
42.82
|
167.83
|
21.75
|
26.94
|
31.18
|
19.86
|
49.38
|
|
Low
|
|
28.46
|
126.82
|
13.89
|
19.29
|
22.66
|
11.46
|
21
|
|
|
Liquidity
Ratios
|
Current Ratio
|
|
3.3
|
1.26
|
1.2
|
1.35
|
1.58
|
4.62
|
2.05
|
|
Quick Ratio
|
|
2.98
|
1.01
|
0.94
|
0.99
|
1.22
|
3.73
|
1.2
|
|
|
Cash/Currrent
Assets
|
|
0.69
|
0.4
|
0.36
|
0.13
|
0.42
|
0.56
|
0.16
|
|
|
Cash/Current
Liabilities
|
|
2.28
|
0.51
|
0.44
|
0.17
|
0.67
|
2.58
|
0.32
|
|
|
Cash
Flow/Current Liabilities
|
|
1.31
|
0.34
|
0.83
|
0.53
|
0.56
|
1.18
|
0.36
|
|
|
Cash
Flow/Interest
|
|
93.52
|
38.18
|
|
27.56
|
50.97
|
|
4.03
|
|
|
Cash
Flow/Assets
|
|
0.11
|
0.07
|
0.19
|
0.15
|
0.14
|
0.18
|
0.07
|
|
|
Profitability
Measures
|
Gross
Profit Margin
|
%
|
41.1
|
28.7
|
38.2
|
17.4
|
27.8
|
32.4
|
13.8
|
|
Net Profit Margin
|
%
|
27
|
8.7
|
29.3
|
14
|
20.4
|
21.5
|
7
|
|
|
EBIT
Margin
|
%
|
38.4
|
12.8
|
40.3
|
19.7
|
26.4
|
33.6
|
13.3
|
|
|
Return
on Assets
|
%
|
16.8
|
5.5
|
14.6
|
15.1
|
11.8
|
18.1
|
6.3
|
|
|
Return on Equity
|
%
|
11.7
|
6
|
42.3
|
21.1
|
26.2
|
18.8
|
10.3
|
|
|
EBIT to
Assets
|
%
|
12.2
|
4.9
|
22.3
|
14.5
|
15.3
|
24.4
|
7.9
|
|
|
Effective
Tax Rate
|
%
|
28.8
|
29.1
|
27.2
|
26.3
|
21.5
|
36.1
|
31.5
|
|
|
Leverage
Ratios
|
Financial
Leverage
|
|
3.9
|
5.9
|
2
|
5.9
|
2.2
|
1.4
|
15
|
|
Assets/Equity
|
%
|
135.01
|
178.62
|
260.57
|
204.37
|
222
|
120.66
|
246.58
|
|
|
Debt/Assets
|
|
0.26
|
0.37
|
0.52
|
0.42
|
0.47
|
0.17
|
0.57
|
|
|
Debt/Equity
|
|
0.35
|
0.65
|
1.35
|
0.85
|
1.05
|
0.21
|
1.39
|
|
|
Long-Term
Debt/Assets
|
|
0.12
|
0.05
|
0.13
|
0.13
|
0.22
|
0.01
|
0.36
|
|
|
Long-Term Debt/Equity
|
|
0.16
|
0.09
|
0.33
|
0.26
|
0.48
|
0.01
|
0.89
|
|
|
Coverage
Ratios
|
Times
Interest Earned
|
|
71.73
|
18.76
|
|
18.84
|
41.98
|
|
2.27
|
|
Turnover
Ratios
|
A/R Turnover
|
|
8.29
|
4.93
|
5.59
|
5.94
|
5.39
|
6.77
|
5.37
|
|
Asset
Turnover
|
|
0.32
|
0.39
|
0.55
|
0.74
|
0.58
|
0.73
|
0.6
|
|
|
Capital
Turnover
|
|
0.43
|
0.69
|
1.44
|
1.51
|
1.29
|
0.88
|
1.48
|
|
|
Plant
Turnover
|
|
2.2
|
2.47
|
1.59
|
3.13
|
1.92
|
7.12
|
2.82
|
|
|
Inventory Turnover
|
|
4.16
|
2.91
|
2.93
|
4.09
|
2.56
|
2.88
|
2.66
|
|
|
Efficiency
Measures
|
Collection
Period
|
Days
|
43.4
|
73
|
64.4
|
60.6
|
66.7
|
53.2
|
67
|
|
Inventory
Stockpile
|
Days
|
86.5
|
123.9
|
122.7
|
88
|
140.6
|
125.1
|
135.2
|
|
|
Asset
Utilization
|
Income/Assets
|
|
0.09
|
0.03
|
0.16
|
0.1
|
0.12
|
0.16
|
0.04
|
|
Income/Plant
|
|
0.59
|
0.22
|
0.47
|
0.44
|
0.39
|
1.53
|
0.2
|
|
|
Income/Employee
|
$K
|
175.16
|
32.3
|
104.27
|
38.13
|
55.55
|
111.16
|
11.36
|
|
|
Sales/Employee
|
$K
|
647.75
|
370.39
|
355.79
|
272.58
|
272.94
|
518.04
|
162.9
|
|
|
Plant/Assets
|
|
0.15
|
0.16
|
0.35
|
0.24
|
0.3
|
0.1
|
0.21
|
|
|
Depreciation/Sales
|
|
0.08
|
0.09
|
0.06
|
0.06
|
0.04
|
0.03
|
0.95
|
|
|
Depreciation/Assets
|
|
0.03
|
0.03
|
0.03
|
0.05
|
0.03
|
0.02
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RANKING
|
|
|
|
|
|
|
|
|
•
Number
of Periods.How long will it take for $400 to grow to $1,000 at the interest
rate specified?
•
4
percent
•
8
percent
•
16
percent
Answers To Week 2 Problems
1-
$9,444.36
2-
FV= $24,136 PV= $13,424
3-
$85,807
4-
$8226.54
5-
PV=$22,697.07 Amount Available = $60,000 – 22,697.07 = $37,302.93
•
r
= 5%
r
= 8%
r
= 0%
•
P.V.
= $812.44
8-
Solution not given.
•
In
these problems, you can either solve the equation provided directly, or you can
use your financial calculator setting PV = (-)400, FV = 1000, PMT = 0, i as
specified by the problem. Then compute n on the calculator.
•
t
= 23.36 periods
•
t
= 11.91 periods
•
t
= 6.17 periods
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