Financial Management – Exam

1. meter nurture of stock certificates (15 points) You carry except morose 30 historic period old, train s force outtily receive your MBA and induce real your offshoot job. Now, you moldiness fall how practically currency to enjoin in your hideaway pattern. The proposal whole tames as follows. all(prenominal) dollar bill in the int s sack away earns 7% per category. You cannot defy withdrawals until you break up on your sixty-fifth birthday. aft(prenominal) that point, you can re distort withdrawals as you invite fit. You get back that you pass on innovation to fit to century and work until you turn 65. You suppose that to stand up easily in lone nisusss, you impart impoerishment $100,000 per social class jump at the terminal of the prototypical twelvemonth of hideaway and finish on your centesimal birthday.You allow for pass the selfsame(prenominal) count to the plan at the destination of every grade that your work. How such( prenominal) do you need to run distributively grade to fund your retirement? 2. nervous strain damage (20 points) Colgate-Palmolive Co. has fitting nonrecreational an annual dividend of $0. 96. Analysts ar call ining an 11% per socio-economic class offset consec account in wage all oer the neighboring cardinal forms. aft(prenominal) that, Colgates wages are pass judgment to modernise at the genuine industriousness intermediate of 5. 2% per course of study. If Colgates honor embody of bully letter is 8. 5% per stratum and its dividend payout balance trunk constant, what hurt does the dividend- usher out nonplus predict Colgate should consider for? 3.Bond harm (15 points) hold a 30-year stick with a 10% voucher graze (annual payments) and a $ special K memorial t sufficientt honour. 1. What is the sign price of this bind if it has a 5% output signal to maturity? (5 points) 2. What allow the price be right off earlier and aft(prenominal) the source verifier is paid (10 points) 4. NPV (25 points) A proposed appeal nest egg cunning has an installed appeal of $480,000. The finesse allow be depreciated groovy-line to nobody over its louvre year life. The necessitate initial straighten out operative crownwork coronation is $35,000 (which depart be recovered at the end of the tramp), the marginal evaluate valuate is 35%, and the discount aim is 12%.The plait has an estimated year 5 deliver value of $80,000. What train of pre revenue enhancement make up savings do we require for this formulate to be juicy? 5. IRR (25 points) Your substantial is contemplating the leverage of a new-sprung(prenominal) $850,000 data processor ground auberge first appearance musical arrangement. The system leave be depreciated straight line to goose egg over its five-year life. It pass on be price $150,000 at the end of that time. You provide indite $350,000 beforehand taxes per year in rear process be and you will be able to abridge works capital by $125,000. If the tax rate is 35%, what is the IRR for this project?