1. What
is the future value of a five-year
ordinary annuity with annual payments of $200, evaluated at a 15 percent
interest rate?
2.
What is the present value of a $100
lump sum to be received in five years if the opportunity cost rate is 10
percent?
3.
What is the future value of a $100
lump sum invested for five years in an account paying 10 percent interest?
4.
You buy a six-year, 8 percent savings certificate for $1,000. If interest is
compounded annually, what will be
its value at maturity?
5.
You buy a six-year, 8 percent savings certificate for $10,000. If interest is
compounded semiannually, what will
be its value at maturity? Explain the effect that cause the ending balance to
either increase or decrease
6. Discuss the impact on the present
value (PV) of a future lump sum as
either the discount rate or the number of compounding periods per year
increases.
7. An investment opportunity
promises a stated interest rate of 6 percent, with semiannual compounding.
Compute the effective annual rate, and indicate whether or not the EAR is less
or greater
8. You have
been selected by the Board of Directors of Triangle Pediatrics as the CEO of
this multi-clinics organizations. Upon review of the financials you realized
the clinic has $ 300,000.00 in a checking collecting zero interest. You have
multiple investment alternatives that pay interest as indicated in a. through
e. below. Which alternative will yield
the most money at the end of two year?
a. 10 percent
interest, compounded annually
b. 9.9 percent
interest, compounded semiannually
c. 9.9 percent
interest, compounded monthly
d. 9.5 percent
interest, compounded quarterly
e. 9 percent
interest, compounded daily
9.
You received a pre-approved credit card from Magourty Bank, LLC. The bank
quoted APR is 18%. Monthly payments are required. What is the actual interest
rate you are paying on such a credit card per month? What is the EAR (effective
annual rate)
10.
You are the new CEO of Triangle Pediatrics and two weeks after you started in
your new position the Chief Financial Officer and Associate PV of Finance left
for greener pasture. The parent of one of the clinic’ patient who owed $10,000
and the account is 180 days past due approaches you and requests a 5 year-5 payments
plan. She agreed to pay 14% APR. Prepare an amortization plan for her. Indicate
the annual payment amount. How much would she pay in total interest?
11.
George Washington Hospital new Chief Executive Officer wants to increase
efficiency of GWH data processing operations. She decides to acquire a computer
system that would reduce the hospital collection by five days among other
benefits. The computer system cost
$2,700,000 and spent $241,175 to renovate a building to accommodate the new
equipment. The useful life of
the computer system is estimated to be eight years and the computer residual
value is $100,000.00. Using straight line depreciation method. Calculate GWH
yearly depreciation on that equipment. What would be the book value after year
5?
12. Refer to problem 11. GWH
sold the computer for $130,000 after 8 years. The hospital corporate tax is 25%
What was GWH capital gains? What is its tax liability on that sale?
13. As the CEO of GWH, you
hired a new Business Analyst and you ask him to do a feasibility analysis
for two possible projects. Project A is
a neighborhood clinic which will provide access to medical care to the
neighboring population. Project B- would increase the organization marketability. Project A would result in a negative NPV
while Project B would result in a positive NPV. Your colleagues including the
CFO support project B and you reject B for project A. Discuss in details your
rational for supporting project A.
14. Assuming 15% non-
productive hours. Compute number of Paid-hours for last quarter. Assuming the
average wage is $20.00 per hour. How much was paid for the quarter? Ignore
fringe benefits (15 points) Fill in the blanks
Day |
S |
M |
T |
W |
Th |
F |
Sat |
Shifts |
Prod
FTEs |
Paid
FTEs |
Number Hours |
Day |
4 |
5 |
5 |
5 |
5 |
5 |
5 |
? |
? |
? |
? |
Eve |
2 |
2 |
2 |
2 |
2 |
2 |
2 |
? |
? |
? |
? |
Night |
2 |
2 |
2 |
2 |
2 |
2 |
1 |
? |
? |
? |
? |
|
|
|
|
|
|
|
Total |
? |
? |
? |
? |
|
|
|
|
|
|
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