Author Question: You plan to purchase a new car with a retail price of 26,499 after your trade-in and astute ... (Read 51 times)

eruditmonkey@yahoo.com

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You plan to purchase a new car with a retail price of 26,499 after your trade-in and astute negotiations with the dealership sales manager. You have agreed to make 5 ANNUAL payments with an annual interest rate of 3.90.
 
  How large are your equal annual end-of-the-year payments for your new car?
  A) 5299.80
  B) 5,462.21
  C) 5,841.89
  D) 5,935.68

Question 2

Complete the following balance sheet using the information given. Round account balances to the nearest
  dollar.
 
  Balance Sheet Income Statement
  Cash Sales (All Credit) 20,000
  Accounts receivable Cost of goods sold 10,000
  Inventory Operating expenses 6,000
  Net fixed assets Interest expense 100
  Total assets Taxes 1,365
  Net income 2,535
  Accounts payable
  Short-term notes payable 1,425 Ratios:
  Long-term debt Profit Margin = 12.675
  Common stock 5,000 Return on Equity = 15
  Retained earnings Quick Ratio = 1.2
  Total Liabilities and equity Return on Total Assets = 10
  Fixed Asset Turnover = 1.6
  Current Ratio = 2
  Days Sales Outstanding = 45


kaillie

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Answer to Question 1

D
Explanation: D) Via Calculator: N = 5, I = 3.90, PV = 26,499, Solve for PMT = 5,935.68.

Answer to Question 2

1. Solve for common equity using ROE: Common Equity = 16,900
2. Retained Earnings = Common Equity  Common Stock = 11,900
3. Solve for total assets using ROA: Total Assets = 25,350
4. Total Liabilities & Equity = Total Assets = 25,350
5. Solve for net fixed assets using fixed asset turnover: NFA = 12,500
6. Current Assets = Total Assets  Net Fixed Assets = 12,850
7. Solve for current liabilities using the current ratio: Current Liabilities = 6,425
8. Accounts Payable = Current Liabilities  Short-term Notes Payable = 5,000
9. Plug Long-term Debt: 2,025
10. Use the quick ratio to find inventory: Inventory = 5,140
11. Use the days sales outstanding ratio to find accounts receivable: AR = 2,466
12. Plug the cash figure: Cash = 5,244



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