Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please solve these questions 1. The following information for Ford Company for the year 2014 has been assembled: (6 marks) Market value at December 31,

image text in transcribed

please solve these questions

1. The following information for Ford Company for the year 2014 has been assembled: (6 marks) Market value at December 31, 2019. 3600,000 Total liabilities $100,000 Debt ratio 40% Return on sales 10%. Asset turnover 2.0 You are required to compute the following information: a. Total assets b. Sales c. Net income d. Price-earnings ratio II. In early-2019. Delta Airlines had total assets worth $24.8 billion, debt of 312.6 billion and cash of 35.5 billion. Delta also had annual revenues of 338.9 billion. However, United Airline had total assets of $28.8 billion, debt of $2.7 billion, cash of $2.9 billion, and annual revenues of $18.6 billion. (5 marks) a. Compare the leverage ratio for Delta Airlines and United Airlines. b. The company with the higher leverage ratio will be less profitable and therefore this will have a negative impact on that company's share price. Do you agree with this statement? Give reasons. Visa Inc. asked your company for a 5-year loan of $50,000. The repayment of the loan will be as follows: Visa Inc. will pay $5,000 at the end of Year 1, $10,000 at the end of Year 2, and $15,000 at the end of Year 3, and fixed unspecified cash flow (assume x) at the end of each of the following years (Year 4 and Year 5). Assuming 3% as an appropriate rate of return on low risk but an illiquid 5-year loan. Find out the cash flow that this investment must provide at the end of each of the final 2 years (year 4 and year 5), that is, find out the x? (6 marks) IV. Your insurance company offered you an annuity that pays you 3100 at the end of each year. The life of the annuity is 10 years. Assume that market interest rate you can earn on similar risky investments is 3% a. What should be the present value of this annuity? (z marks) b. If you are given the first payment immediately starting today, what should be the worth of this annuity? (Z marks) You plan to borrow $35,000 at a 7.5% annual interest rate. The terms require you to amortize the loan with 7 equal end-of-year payments. How much interest would you be paying in Year 4? (4 marks) v. Best of luck

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance Introduction To Institutions Investments And Management

Authors: Ronald W. Melicher, Edgar A. Norton

12th Edition

0471675792, 9780471675792

More Books

Students also viewed these Finance questions

Question

Explain the various methods of job evaluation

Answered: 1 week ago

Question

Differentiate Personnel Management and Human Resource Management

Answered: 1 week ago

Question

Describe the functions of Human resource management

Answered: 1 week ago