1. {4 PTS) The United ed States is synonymous with fast food and soft drinks. As early as the 1930's, soft drinks became a status symbol in Europe. Sales of Coca-cola in Germany were 243,000 cases in 1934, and 4,500,000 in 1939. Assume the same rate of growth and calculate the number of cases that might have been sold in 1955 had there been no political or military conflicts. SHOW THE CORRECT AND COMPLETE TIMELINES, FORMULA, ARITHMETIC SOLUTION AND GRID METHOD. SHOW 4 DECIMAL PLACES IN YOUR CALCULATIONS. Time line: Formula: Calculations: Grid: n PV PMT FV Page 3 of 92. {4PTS) After much searching, you have found your 'forever' house in the outskirts of Washington, D.C. Priced at a cool million, the seller has insisted that serious buyers have to have 10% of the purchase price as a cash-in-hand down payment. You have shopped around for mortgages, and have found one that charges a 2.75% nominal rate for 30 years. What will be your monthly mortgage payment? How much interest and how much of the principle will you be paying off in the first month? SHOW THE CORRECT AND COMPLETE TIMELINE, AND GRID METHOD. IN YOUR FINAL ANSWER, ROUND TO THE NEAREST DOLLAR Time line: Grid: n PV PMT FV Page 4 of 93. {4 PTS) Your corporation just won a lawsuit, and was awarded $10 million. The judge has asked your attorneys whether they would accept six equal yearly payments, beginning at the end of the year. Your corporation's opportunity cost of capital is 6 percent. What would be the difference in the value of the settlement if your attorneys could convince the judge to have the payments commence immediately? SHOW THE TIMELINES AND SOLVE USING THE GRID METHOD.. SHOW 4 DECIMAL PLACES IN YOUR CALCULATIONS AND IN YOUR FINAL ANSWER. Grid: n PV PMT FV Page 5 of 94. {4 PTS} Assume that Charleston Southern University requests an endowment sufficient to cover its expenses for new Seminary College faculty and a technology grant. Costs next year will be $5 million, and then the annual costs will grow by 2.000 % in perpetuity afterwards. Assume the institute can earn a 5% return on the endowment. How large must the endowment be to cover the costs and its growth? SHOW THE FORMULA AND ARITHMETIC SOLUTION. SHOW 4 DECIMAL PLACES IN YOUR CALCULATIONS AND ROUND YOUR FINAL ANSWER TO THE NEAREST DOLLAR. alice 25%. Formula: OW MET 100 TO SOLVE Calculations: Page 6 of 95. {4 PTS) The owner of a spare parts distributor in Goose Creek has estimated the following cash flows over the next five years. 2021 2022 2023 2024 2025 250,000 37,500 480,000 300,000 550,000 A European carmaker sees this business as strategic to its expansion in the Lowcountry, and wants to purchase the business. The carmaker's cost of capital is 4.25%. What is the most that it should offer? SHOW A CORRECT TIMELINE. USE ONLY THE UNEVEN CASH FLOW METHOD TO SOLVE. Page 7 of 9BONUS PROBLEM {10 PTS) You are planning to retire in 20 years. At that time you plan to sell your house and buy a small yacht and travel the intercoastal waterway. You estimate that the yacht will cost $750,000 and that you will spend $25,500 per year on maintenance and harbor fees. Based on your family's health history, you are hoping to live 25 years past retirement. You estimate that you will need 5,000 per month to live off during your retirement. You are currently earning 10% on your portfolio of savings and stock market investments. Find: a) the lump sum amount you would need to set aside today to be able to purchase the yacht and provide funds for the maintenance and harbor fees. b) how much you would have to set aside monthly to be able to realize your retirement income goal. SHOW THE CORRECT AND COMPLETE TIMELINES, GRID METHOD. SHOW 4 DECIMAL PLACES IN YOUR CALCULATIONS. IN YOUR FINAL ANSWER, ROUND DOLLAR AMOUNTS TO THE NEAREST DOLLAR. Time lines: Page 8 of 9
