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Midterm Exam, Spring 2016NameQuestion12345678910LateTotalScore000000000000Question 1Score0Abe is contemplating a college fund for his two children and would like to accumulate $100,00 in this fund In the upcoming 14years. Abe would open the account today with a deposit of $4,000. He is looking at a fund that uses an interest rate of 1.5%nominal annual rate with monthly compounding.aHow much would Abe have to deposit annually?bHow much would Abe have to deposit Quarterly?cHow much would Abe have to deposit Monthly?SolutionQuestion 2Score0Annabelle is retiring this year and has a $400,000 retirement fund that she has accumulated.aWhat nominal rate of interest from a fund that compounds monthly would Anabelle need if she withdraws $2,000 atthe end of each month for 20 years? Assume that all funds would be depleted at the end of the 20 years.bWhat nominal rate of interest from a fund that compounds monthly would Anabelle need if she withdraws $2,000 atthe end of each month for 20 years, spends $10,000 on a European vacations immediately after retiring, and has$25,000 in the account at the end of 20 years for emergency purposes.SolutionQuestion 3Score0Latoya’s makes payments on a student loans of $500 on the first day of each of month that has a balance today of $24,000 and has aneffective annual rate of 4%.aWhat would be the balance on the loan at the end of three years?bWhat would be the balance on the loan at the end of three years if she also paid $2,500 on the loan today.SolutionQuestion 4Score0Honest John’s Car Dealership advertises "no credit will be refused" plan as follows. You pay $1,000 up front and $100 at theend of each week until the loan is paid off.aHow many weeks would it take to pay for a $30,000 car if Honest John earns 5.00% EAR?bIf Honest John will accept the car at 15% of its original price as the last payment, how many weeks of payments wouldbe needed to pay for the car? (assuming that the car is in good condition)SolutionQuestion 5Score0Pat Davis runs a summer camp for kids with the average expenses in in each month as shown below. The camp uses a savingsaccount for all funds that pays interest of 1.00% nominal annual rate with monthly compounding.Pat is getting older and wants to fund the camp in perpetuity by investing in a fund that earns 6% NAR compoundedmonthly. A single amount is to paid out of the fund each year to cover the year’s expenses. How much would have to be inthe fund?MonthJanFebMarAprMayJunJulAugSepOctNovDecSolutionExpenses$5,000$5,000$5,000$10,000$10,000$25,000$40,000$35,000$10,000$5,000$5,000$5,000Question 6Score0Warren Gates is planning an investment in a start-up company that is working on a medication based on nanotechnology breakthroughs. This medication would be used indeveloping countries to eradicate a disease. Is estimated that it will take 7 years at $5 million annually to do the research to develop this medicine and make it ready fordistribution including all governmental approvals. Additionally once the medicine is approved, it will cost $1 million annually to produce and administer the medicine and this isplanned to be used for 10 years (years 8-17).How much in today’s money should Warren Gates put into this fund today to totally cover this project assuming that the fund will earn an effective annual rate of 12%.Solutiond be used inready foredicine and this isof 12%.Question 7Score0Nellie purchased $1,000,000 of bonds issued by a foreign country ten years ago. The coupon on the bond was 7.5%paid semi-annually. The foreign country has made all bond payments for 10 years. The country now has dire financialproblems and a hedge fund has offered to buy back the bonds for 50% of the face value. Ignore any fees and taxesconcerning the bonds.aWhat effective annual rate would Nellie have earned if the Bonds sold for their face value today at the end of tenyears (assume that the last coupon was received)?bWhat effective annual rate would Nellie have earned if 50% of the bond’s face value was paid to Nellie today atthe end of ten years (assume that the last coupon was received)?SolutionQuestion 8Score0Third Consulting Group, LLC organized and presents seminars for business executives that feature a nationally known speaker. The attendancefee is $1,000 per attendee. The costs that they incur for a seminar are listed below.aIf 100 executives attend, what is their profit?bWhat is the break even quantity?cIf the seminar fee, fixed cost and the variable cost per unit stay the same as last year, what will the attendance have to be to increaseprofits to $100,000?dIf attendees are limited to 100, and fixed cost and variable cost per unit stay the same, what price would have to charged to increase theprofits to $100,000?Registration FeeFacility rentalFood per attendeeAmenities per attendeeSpeaker costsSolutions$1,000$25,000$200$250$25,000Question 9Score0The Ceynar Group, Inc. has collected the following data for their partnership.a Prepare a formal income statement that contains the relevant subtotals.a formal cash flow statement that contains the relevant subtotals. Assume that no taxesb Prepare on the property sale.are dueData BlockCash On Hand BOYsales quantityPriceMaterial cost per unit soldLabor cost per unit soldProduction Overhead %Executive & Staff SalariesFacility MaintenanceMarketingMachine SaleMachine PurchaseDepreciationInterest Paid on loansLoan principal paymentTax rateDividends per shareOutstanding sharesInventoryAccounts ReceivableAccounts PayableSolution$498,246BOY Beginning Of Year96,000EOY End Of year$70.00$7.50$4.7524%of the sum of labor and material costs$2,200,000 Includes benefits$800,000$900,000$54,000$87,000$325,000$145,000$400,00012.5%$1030,000BOYEOY$714,000$648,000$1,048,000 $1,076,000$1,872,000 $1,904,000Question 10Considering the readings and content from the first five weeks of TMAN 625, discuss how and where to personally invest for one’s financial future. There is not one correct solution. Thegrade evaluation will be based on the logic and knowledge included in the solution. Limit you answer to 500 words or less. Your answer can be posted below or in a separate MS Worddocument.Score0