Question
Company had net profit margin of 0.35 on sales of $5 000 000 during 2020. In addition, the firm's total assets were $4 500 000,
Company had net profit margin of 0.35 on sales of $5 000 000 during 2020. In addition, the firm's total assets were $4 500 000, and its debt ratio is 0.45.
Required:
a.What was companys' return on equity(ROE)in 2020?
b.What was return on assets (ROA)of the company in 2020?
c.Calculate earnings per share (EPS)and price earnings ratio (PE)of the company if it has total shares outstanding of 50,000 with a market price of $85 per share?
QUESTION : Long time ago Lisa had put an amount of $50,000 into an investment in the securities market. Now she has $150,000 in her investment account.
Required:
a)If the average rate of return Lisa earned for the investment is 7.6%per year, how many years she has maintained the investment so far?
b)If the Lisa would have wished to obtain the target of $150,000 within 10 years only, how much money should she put into the initial investment given the same rate of return is applied?
c)Assume that Lisa would like to put the amount of $150,000 into another investment and aims for a new saving target of $500,000 to buy a new house in 12 years. How much is the rate of return should Lisa aim for to get her $500,000 after 12 year?
d)Lisa has another option for her plan to buy a new house: Using $150,000 as a deposit and get a mortgage from a bank to buy the new house. ANZ bank offered Lisa the lending interest rate of 4.85% per year, compounding semi-annually. Commonwealth Bank offered her the lending rate of 4.83% per year, compounding monthly. By calculating EAR, identify which bank should Lisa choose?
e)Lisa decided to borrow 350 000 from Commonwealth Bank to buy her new home. The bank offers Lisa the lending rate of 4.83%per year (compounding monthly) and she is expected to make an equal mortgage payment each month for 30 years. Calculate monthly payment Lisa need to make for the mortgage?
f)Lisa would like to buy some furniture for the new home. Good Home Furniture offered her the maximum payment credit for the furniture she can buy of $50 a week for one year. The annual interest rate of that commercial loan is 8.5%, assuming compounding weekly. How much furniture can Lisa afford to purchase using the credit offered by the store?
Step by Step Solution
3.53 Rating (150 Votes )
There are 3 Steps involved in it
Step: 1
a To calculate the return on equity ROE you need to know the equity of the company The equity can be calculated by subtracting the total debt from the total assets Equity Total Assets Total Debt Equit...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started