Your first job pays your $45,000 first year, $48,000 second year and $49,000 third year. Then you switch to another job and make $53,000 in the first year. Your pay increases by 4% for the next six years (10 years total). (15 PTS)

What is your salary in the 10th year? (5PTS)

The Government tells you that the inflation is on average 2.3%. What is the Present Value (PV) of the salary you make in the 10th year? (5 PTS)

What is the PV if the inflation is 5% - (5PTS)

Financial Statements

ABC CORPORATION

Balance Sheet

Year Ended December 31 (in $ millions)

Assets	2006	2005		Liabilities & Stockowners Equity	2006	2005
Current Assets				Current Liabilities
Cash	22.2	19.5		Accounts Payable	29.2	24.5
Accounts Receivables	18.5	13.2		Notes Payable / Short-Term Debt	4.5	3.2
Inventories	14.2	14.3		Current Maturities of Long-Term Debt	13.3	12.3
Other Current Assets	2.0	1.0		Other Current Liabilities	3.0	4.0
Total Current Assets	56.9	48.0		Total Current Liabilities	50.0	45.0
Long Term Assets				Long-Term Liabilities
Land	22.2	20.7		Long-Term Debt	98.9	56.3
Buildings	36.5	30.5		Capital Lease Obligations	---	---
Equipment	39.7	33.2		Total Debt	98.9	56.3
Less Accumulated Depreciation	(18.7)	(17.5)		Deferred Taxes	7.6	7.4
Net Property, Plant, and Equipment	79.7	66.9		Other Long-Term Liabilities	----	----
Goodwill	22.0	---		Total Long Term Liabilities	106.5	63.7
Other Long-Term Assets	21.0	14.0		Total Liabilities	156.5	108.7
Total Long Term Assets	122.7	80.9		Stockholders Equity	23.1	20.2
Total Assets	179.6	128.9		Total Liabilities and Stockholders Equity	179.6	128.9

ABC Corporation

Income Statement

Year Ended December 31 ($ in millions)

	2006	2005
Total Sales	188.8	176.1
Cost of Sales	(153.4)	(147.3)
Gross Profit	35.4	28.8
Selling, General and Administration Expenses	(13.5)	(13.0)
Research and Development	(9.2)	(7.6)
Depreciation and Amortization	(2.2)	(1.1)
Operating Income	10.5	7.1
Other Income	----	----
Earnings Before Interest and Tax (EBIT)	10.5	7.1
Interest Income (or Expense)	(7.7)	(4.6)
Pretax Income	2.8	2.5
Taxes	(0.7)	(0.6)
Net Income	2.1	1.9
Earnings per share	$0.556	$0.528
Diluted Earnings Per Share	$0.526	$0.500

ABC Corporation has 3.8 million shares outstanding and shares are trading for $15

Calculate the following for 2005. (30PTS, Two Points Each)

Quick Ratio

Current Ratio

Market to Book Ratio

Debt to Equity Ratio

Enterprise Value

EPS

Operating Margin

Net Profit Margin

Return on Equity

P/E Ratio

Inventory Turnover

Days of Sales Outstanding

ROA

ROE

Did the tax rate increase from 2005 to 2006? If so, by how much?

Go to finance.yahoo.com and lookup BABA (Alibaba Group Holding Ltd). What are the following numbers? (5 PTS)

Share Price (2.5PTS)

Total Cash Per Share (under Key Statistics) (2.5PTS)

Analyze the following table to answer the questions

	Product 1
Inventory	100
Project Sales for Oct, 2014	1,000
Actual Sales for Oct, 2014	800
Project Sales for Nov, 2014	1,200

Minimum inventory is set at 15%.

How many units of Product 1 should be manufactured? (10 PTS)

James makes $120,000 a year ($10,000 a month). He pays 25% in taxes and his living expenses are $6,000 a month. He wants to invest the remaining for 30 years at 5%. How much will his portfolio be after 30 years? NOTE that he contributes every month into his portfolio. (10 PTS)

Susanne invests $9,000 now and again towards the end of year 3. She gets a following return for 6 years.

Year	0	1	2	3	4	5	6
Cash Flow		2,000	3,000	4,000	4,000	5,000	5,000

Assume Discount rate is 7%, answer the following (15 PTS)

What is the Net Present Value of these cash flows? Should Susanne make invest in this opportunity? -(5 PTS)

What is the future value of Net Cash Flow (end of year 6) - (5 PTS)

If Susanne had another opportunity where her NPV would be $2000. What is her opportunity cost? - (5 PTS)

Edward signs a 30 year mortgage at 3.5% compounded monthly. The price of his house is $200,000. He makes a down payment of 40,000. Answer the following: (15 PTS)

What will be his monthly payments? (5 PTS)

After 5 years, he makes a one-time payment of $50,000 (against the remaining principle). How many months will he have remaining on his mortgage? To avoid any confusion, he will have exactly 25 years remaining before he makes the $50,000 in payment. (5 PTS)

Edwards decides that instead of reducing the NPER after making the $50,000, he requests the bank to keep the NPER to 25 years and reduce his monthly payment instead. What will be his monthly payment going forward? (5 PTS)