Problem 3-9 Current and Quick Ratios

The Nelson Company has $1,755,000 in current assets and $650,000 in current liabilities. Its initial inventory level is $325,000, and it will raise funds as additional notes payable and use them to increase inventory.

1. How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 2.1? Round your answer to the nearest cent.
2. What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds? Round your answer to two decimal places.

Problem 3-10 Times-Interest-Earned Ratio

The Morris Corporation has $300,000 of debt outstanding, and it pays an interest rate of 10% annually. Morris's annual sales are $1.5 million, its average tax rate is 35%, and its net profit margin on sales is 4%. If the company does not maintain a TIE ratio of at least 6 to 1, its bank will refuse to renew the loan and bankruptcy will result. What is Morris's TIE ratio? Round intermediate calculations to two decimal places. Round your answer to two decimal places.

Problem 4-10 Present and Future Values of Single Cash Flows for Different Interest Rates

Use both the TVM equations and a financial calculator to find the following values. Round your answers to the nearest cent. (Hint: Using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in parts b and d, and in many other situations, to see how changes in input variables affect the output variable.)

1. An initial $700 compounded for 10 years at 3.2 percent. $
2. An initial $700 compounded for 10 years at 6.4 percent. $
3. The present value of $700 due in 10 years at a 3.2 percent discount rate. $
4. The present value of $700 due in 10 years at a 6.4 percent discount rate. $

Problem 4-14 Uneven Cash Flow Stream

1. Find the present values of the following cash flow streams. The appropriate interest rate is 6%. Round your answers to the nearest cent. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note that, when working with the calculator's cash flow register, you must enter CF₀ = 0. Note also that it is quite easy to work the problem with Excel, using procedures described in the Chapter 4 Tool Kit.)

   Year	Cash Stream A	Cash Stream B
   1	$100	$300
   2	400	400
   3	400	400
   4	400	400
   5	300	100

   Stream A $ Stream B $
2. What is the value of each cash flow stream at a 0% interest rate? Round your answers to the nearest cent. Stream A $ Stream B $

Problem 4-25 Repaying a Loan

While Mary Corens was a student at the University of Tennessee, she borrowed $12,000 in student loans at an annual interest rate of 10.60%. If Mary repays $1,500 per year, how long (rounded up to the nearest year) will it take her to repay the loan?

year(s)

Problem 4-26 Reaching a Financial Goal

You need to accumulate $10,000. To do so, you plan to make deposits of $1,200 per year - with the first payment being made a year from today - into a bank account that pays 8.58% annual interest. Your last deposit will be less than $1,200 if less is needed to round out to $10,000. How many years will it take you to reach your $10,000 goal? Round your answer up to the nearest whole number. year(s)

How large will the last deposit be? Round your answer to the nearest cent. $