Project #54073 - finance for meschach

Solving Present Value and Future Value Problems

It’s important to understand the fundamentals of finance. This entails understanding the time value of money. The value of a typical corporate bond is the present value of an annuity plus the present value of a lump sum. Thus, if you don’t understand how to calculate the present value of a lump sum or the present value of an annuity, it’s highly unlikely you’ll be able to determine the value of a typical corporate bond. Thus, in this Case Assignment, you will work through a variety of time value of money problems. 

Answer these problems and show your work: 

    1. Calculate the present value of the following lump sums:
      1. $100,000 to be received five years from now with a 5% annual interest rate
      2. $200,000 to be received 10 years from now with a 10% annual interest rate 
    2. Calculate the future value of the following lump sums:
      1. $100,000 if invested for five years at a 5% annual interest rate
      2. $200,000 if invested for 10 years at a 10% annual interest rate
    3. Calculate the present value of these ordinary annuities:
      1. $100,000 to be received each year for five years with a 5% annual interest rate
      2. $200,000 to be received each year for 10 years with a 10% annual interest rate
    4. Calculate the future value of these ordinary annuities:
      1. $100,000 if invested each year for five years at a 5% annual interest rate
      2. $200,000 if invested each year for 10 years at a 10% annual interest rate
    5. Calculate the present value of these perpetuities:
      1. $100,000 to be received each year forever with a 5% annual interest rate
      2. $200,000 to be received each year forever with a 10% annual interest rate 

 

Select a publicly traded U.S. company that has paid a dividend for at least the last three years, and conduct a financial ratio analysis. You will be using this company for other assignments in this course; thus, please spend adequate time locating a company. Please consider reviewing http://finance.yahoo.com to locate a company.  The company must have data available for you to conduct a financial ratio analysis.  It’s important to select a company in an industry that has industry ratio numbers.  You cannot select a privately held company.  

Calculate all the following ratios for the company for the past three years and compare them to the appropriate industry benchmarks: 

Liquidity ratios:

Current

Quick 


Asset Management ratios:

Inventory turnover

Total assets turnover

Fixed assets turnover

Days sales outstanding


Debt Management ratios:

EBITDA coverage

Times-interest-earned

Total debt to total assets

 

Profitability ratios:

Return on common equity

Return on total assets

Basic earning power

Profit margin on sales

 

Market Value ratios:

Market/book

Price/earnings

Price/cash flow

Complete the following in a Word document covering 3-4 pages:

Create a table that contains the ratios for the various years. Then analyze the information.  Look at the trends in the ratios and comment on how they compare to the industry benchmarks.  Which ratios are strong?  Which ratios need improvement?  If you were a stock investor, would you buy the company’s common stock?  Why or why not?  If you were a bond investor, would you buy the company’s bonds?  Why or why not? 

Subject Business
Due By (Pacific Time) 01/24/2015 12:00 am
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