# what am I missed?

Part

Marks Available

Marks Obtained

I

33

II

35

III

32

Total

100

Part I: Financial Calculator Exercises (33 marks)

The table on the next page contains practice examples as well as the questions for Assignment 1: Part I. (For a detailed description of each column in this table, see How do I Read the Table? below.)

1. Work through each example in Column B on your financial calculator.

3. Look to the right side of the yellow column-divider and work through the corresponding assignment question (Column E).

· Note: Each numbered practice example corresponds to the same numbered assignment question (e.g., practice example 1: Chain calculations  to the power of with the calculation of (8 x 2)2 corresponds to the assignment Question 1 that asks you to calculate (1+0.25)8).

· If you can do the practice example, you should be able to do the corresponding assignment question.

4. Pay careful attention when reading questions that include multiple sets of brackets (e.g., assignment question 6). These can be confusing, so work through them carefully.

5. To record your solutions, put your answer in Column F, on the same row as the assignment question. See example for Question 1: (1+0.25)8).

6. Dont be alarmed by the number of questions! You will likely be able to complete the work more quickly than you think.

7. There are 33 questions in Part I. Each question is worth 1% of the total marks for Assignment 1.

How Do I Read the Table?

Start from the far left-hand column and read across each row. Well refer to Example #10 in our descriptions below.

· Column A: number of the task (e.g., 10)

· Column B: title of the task (e.g., Calculating basic loan interest). Below this title is the description and data for the practice example. (In Example 10; N = 20 years, monthly payments (P/Y=12); Interest rate comp. monthly (C/Y=12); …)
As in Example 10, many of the practice examples and assignment questions take up several rows.

· Column C: check answer to the practice example. (In Example 10: 7.172951345.)

· Column D: numbering of the assignment questions (e.g., 18).

· Column E: description and data for the tasks in the assignment question. (In Question 10: Find annual interest rate; N = 30 years, quarterly payments; Interest rate compounded quarterly; )

· Column F: write down your answer in this column. (See example provided for Question 1.)

Part I: Financial Calculator Exercises (33 marks)

A

B

C

D

E

F

Examples

Q

Answer the questions in this column

in this column

PRELIMINARIES

SCIENTIFIC FUNCTIONS

1

Chain calculations – to the power of

256

1

(1+0.25)8

5.960464478

(8 x 2)2

2

Calculating natural logs

2.99573227

2

ln(100)

Ln(20)

3

To the power of

50.1187234

3

202.5

10 1.7

4

e to the power of

20.0855369

4

e(-0.08)

e 3

5

Reciprocals

0.02503779

5

(1/1.08) + (1/1.082)

(1/63) + (1/72)

6

Combinations, to the power of

-2024.98438

6

-1000000+[200000(1-0.34)(1-(1/(1.08)10))/0.08]

8-2 – 34 x 52

7

Combinations, to the power of

6.44741959

7

{[(1+(0.08/2))2](1/4)} – 1

(123)1/4

8

Combinations, roots

0.0551362

8

square root[(0.6x(0.08-0.1)2)+(0.4x(0.12-0.1)2)]

square root[(0.3x(0.15-0.07)2)+(0.7x(0.11-0.07)2)]

FINANCIAL FUNCTIONS

9

Memory calculations

4613.83829

9

Sum of following 4 parts

Sum of the following 3 parts:

1000(1.05)/1.08

500 x (1 + 0.1)2

1000(1.05^2)/1.08^2

700 x (1 + 0.1)2 x (1 + 0.12)3

1000(1.05^3)/1.08^3

900 x (1 + 0.1)2 x (1 + 0.12)3 x (1 + 0.13)5

(1000(1.05^3)(1.03)/(0.08-0.03))/(1.08^3)

10

Calculating basic loan interest

7.17295135

10

Find annual interest rate

N = 20 years, monthly payments (P/Y=12)

N = 30 years, quarterly payments

Interest rate compounded monthly (C/Y=12)

Interest rate compounded quarterly

PV = 56000

PV = 1,200,000

PMT = -440

PMT = -90,000

FV = 0

FV = 0

Compute annual interest rate

Compute annual interest rate

11

Calculating basic loan payments

-1255.85583

11

Find payment

N = 20 years, quarterly payments (P/Y=4)

N = 30 years, monthly payments

Interest rate = 6.5% compounded quarterly (C/Y=4)

Interest rate = 8%, compounded monthly

PV = 56000

PV = 1,200,000

FV = 0

FV = 0

Compute PMT

Compute PMT

12

Calculating future value

7922.19308

12

Find Future Value

N = 3 years, monthly payments (P/Y=12)

N = 30 years, monthly payments

Interest rate = 6.5%, compounded quarterly (C/Y=4)

Interest rate = 8%, compounded semi-annually

PV = 0

PV = 0

PMT = -200

PMT = -900

Compute FV

Compute FV

13

Calculating present value

3768.89483

13

Find Present Value

N = 20 year, annual payments (P/Y=1)

N = 30 year, monthly payments

Interest rate = 5%, compounded annually (C/Y=1)

Interest rate = 8%, compounded monthly

PMT = 0

PMT = 0

FV = -10000

FV = -1,000,000

Compute PV

Compute PV

14

Ordinary annuity

-16245.6979

14

Find payment

N = 1.5 years, monthly payments (P/Y=12)

N = 30 years, semiannual payments

Interest rate = 3.6%, compounded monthly (C/Y=12)

Interest rate = 8%, compounded semiannually

PV = 0

PV = 0

FV = 300000

FV = -1,000,000

Compute PMT

Compute PMT

15

Annuity due

7.07980118

15

Find interest rate in Annuity Due

N = 2 years, monthly payments, at beginning of month (P/Y=12)

N = 5 years, monthly payments, BGN

Interest rate compounded monthly (P/Y=12)

Interest rate compounded monthly

PV = 2995

PV = 20,000

PMT = -145

PMT = -350

FV = 299.5

FV = -5000

Compute I/Y

Compute annual interest rate

16

Calculating PV (Annuity due)

16

Find present value in Annuity Due

N = 34 months, monthly payments (P/Y=12)

6279.95199

N = 5 years, monthly payments

Interest rate = 18%, compounded monthly (C/Y=12)

Interest rate = 8%, compounded monthly

PMT = -200

PMT = -1000x(8%/12)

FV = -1500

FV = -1000

Compute PV

Compute PV

17

Calculating PV (ordinary annuity)

146558.921

17

Find present value in Ordinary annuity

N = 25 years, monthly payments, at end of month (P/Y=12)

N = 30 years, monthly payments

Interest rate = 5.5%, compounded monthly (C/Y=12)

Interest rate = 8%, compounded monthly

PMT = -900

PMT = -850

FV = 0

FV = 0

Compute PV

Compute PV

Examples 18-27 use the same data

Questions 18-27 use the same data

18

Calculating mortgage payments and

-616.559743

18

Mortgage – Find payment

generating an amortization schedule

N = 20 years, monthly payments, starts at end of January

N = 20 years, monthly payments, starts at end of August (P/Y=12)

Interest rate = 7%, compounded monthly

Interest rate = 5.45%, compounded monthly (C/Y=12)

PV = 350,000

PV = 90000

FV = 0

FV = 0

Compute payment PMT

Compute PMT

Amortization schedule – first five months (August – December)

P1 = 1

P1 = 1, P2 = 5

P2 = 12

19

Balance at end of December

88951.4703

19

Balance at end of December in first year

20

Total Principal Repayment first 5 months

-1048.5297

20

Total Principal Repayment at end of first year

21

Total Interest payments in first 5 months

-2034.26901

21

Total Interest payments at end of first year

Amortization schedule – second year

P1 = 6

P1 = 61

P2 = 17

P2 = 72

22

Balance at end of December in 2nd year

86335.9156

22

Balance at end of December in 6th year

23

Total Principal Repayment in 2nd year

-2615.55474

23

Total Principal Repayment in 6th year

24

Total Interest payments in 2nd year

-4783.16217

24

Total Interest payments in 6th year

Amortization schedule – third year

25

Balance at end of December in 3rd year

83574.1979

25

Balance at end of December in 11th year

26

Total Principal Repayment in 3rd year

-2761.71766

26

Total Principal Repayment in 11th year

27

Total Interest payments in 3rd year

-4636.99926

27

Total Interest payments in 11th year

Examples 28-31 use the same data

Questions 28 – 31 use the same data

28

Calculating payments, interest, and loan

-3844.56742

28

Find Mortgage payment

balance after a specified payment

N = 30 years, monthly payment, Annuity Due

N = 30 years, monthly payment (P/Y=12)

Interest rate = 5.25%, compounded monthly

Interest rate = 8.5%, compounded monthly (C/Y=12)

PV = 200000

PV = 500000

FV = 0

FV = 0

Compute PMT

Compute PMT

Amortization schedule – first to 48th payment

Amortization schedule after 10 years – Same data as Q28

P1 = 1

P1 = 1

P2 = 48

P2 = 120

29

Balance after 48th payment

482755.407

29

Balance after 10 years of payments

30

Total Principal Repayment after 48 payments

-17244.5926

30

Total Principal Repayment after 10 years of payments

31

Total Interest payments after 48 payments

-167294.644

31

Total interest payments after 10 years of payments

32

Calculating IRR

17.50055766

32

Compute IRR using following data:

CF0 = -5000

CF0=-10000

CF1 = 2000

CF1=2500

CF2 = 2000

CF2=2500

CF3 = 3000

CF3=3500

CF4=3500

CF5=5000

33

Calculating NPV

223.9664667

33

Compute NPV

CF0 = -5000

Same cash flows as Q32

CF1 = 2000

Interest rate = 8%

CF2 = 2000

CF3 = 3000

Interest rate = 15%

Part II: Financial Statements Review (35 marks)

1. Build the Income Statement and Balance Sheet for CanDo Inc. based on the information given below, as of December 31, 2009.

Accounts payable

\$141,000

Accounts receivable

\$103,000

Cash and cash equivalents

\$154,000

CoGS

\$224,700

Common Stock

\$1,286,000

Depreciation

\$37,000

Dividend payout ratio

40%

Interest paid

\$43,000

Inventory

\$129,000

Long-term debt

\$1,254,000

Net Fixed Assets

\$2,530,000

Sales

\$330,000

Short-term debt

\$132,000

Tax rate

35%

Number of shares

1,000,000

Price per share

\$0.50

2. Obtain the following numbers from the income statement and balance sheet:

(i) Total Current Assets

(ii) Total Current Liabilities

(iii) Retained Earnings

(iv) Total Owners Equity

(v) Total Assets

(vi) Earnings before depreciation, interest and taxes (EBDIT)

(vii) Earnings before interest and taxes (EBIT)

(viii) Dividends

Part III: Financial Ratios Review (32 marks)

The following table presents the data for CanDo Inc. in as of December 31 2008:

Accounts payable

\$104,000

Accounts receivable

\$146,000

Cash and cash equivalents

\$108,000

CoGS

\$224,700

Common Stock

\$1,286,000

Depreciation

\$37,000

Dividend payout ratio

40%

Interest paid

\$43,000

Inventory

\$123,000

Long-term debt

\$1,254,000

Net Fixed Assets

\$2,467,000

Sales

\$330,000

Short-term debt

\$106,867

Tax rate

35%

Calculate the following financial ratios for CanDo Inc. in the fiscal year of 2009:

a. Current ratio

b. Quick ratio

c. Cash ratio

d. Net working capital ratio

e. Interval measure

f. Total debt ratio

g. Debt-equity ratio

h. Equity multiplier

i. Long-term debt ratio

j. Times interest earned

k. Cash coverage ratio

l. Inventory turnover (using average inventory from 2008 and 2009)

m. Days sales in inventory

n. Receivables turnover (using average accounts receivable from 2008 and 2009)

o. Days sales in receivables

p. Payables turnover (using average accounts payable from 2008 and 2009)

q. Days sales in payables

r. NWC turnover

s. Fixed assets turnover

t. Total asset turnover

u. Profit margin

v. Return on assets (ROA)

w. Return on equity (ROE)

x. Price-earnings (P/E) ratio

y. Market-to-book ratio

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