1. (5 points) ACA Computer Systems’s balance sheet lists net fixed asset as $32 million. The fixed assets could currently be sold for $28 million. ACA’s current balance sheet shows current liabilities of $12 million and net working capital of $8 million. If all the current accounts were liquidated today, the company would receive $6 million cash after paying $12 million in liabilities. What is the book value of ACA’s assets today? What is the market value of these assets?

1. (5 points) ACA Computer Systems’s balance sheet lists net fixed asset as $32 million. The fixed assets could currently be sold for $28 million. ACA’s current balance sheet shows current liabilities of $12 million and net working capital of $8 million. If all the current accounts were liquidated today, the company would receive $6 million cash after paying $12 million in liabilities. What is the book value of ACA’s assets today? What is the market value of these assets?
2. (2 points) Last year a firm had an ROA of 8% and a dividend payout ratio of 40%. What is the internal growth rate?
3. (2 points) Last year a firm had an ROE of 11% and a dividend payout ratio of 80%. What is the sustainable growth rate?
4. (3 points) What is the future value in 4 years of $1,000 deposited today, earning a 5% interest rate annually?
5. (2 points) What is the present value of a $1,000 payment received in two years with a discount rate of 6%?
6. (2 points) Approximately, how many years does it take to double a $5,000 investment when interest rates are 6% per year?
7. (3 points) A stock investor deposited $300 five years ago in a non dividend paying stock. Today the account is valued at $529. What annual rate of return has this investor earned?
8. (4 points) A friend wants to retire in 35 years when he is 60. At age 25, he can invest $100/month that earns 6% each year. But he is thinking of waiting ten years, and then investing $200/month to catch up, earning the same 6% per year. He feels that by investing twice as much for 25 years instead of 35 years he will have more. What is the future value of each of these options at age 60, and under which scenario would he accumulate more money?
9. (2 points) Compute the present value of a onetime payment of $1,000 paid in four years using the following discount rates: 4% in year 1, 5% in year 2, 4% in year 3, and 2.5% in year 4.
10. (4 points) You invested $200 in the stock market one year ago. Today, the investment is valued at $170.
What return did you earn?
What return must you earn next year for your investment to reach the original $500?
11. (2 points) Fred’s Furniture is advertising a deal, in which you buy a living room set for $3,526 (including tax) with two years before you need to pay (no interest is incurred if you pay by the end of the two years). How much would you need to deposit each month in a savings account earning 2.0% APR, compounded monthly, to be able to pay the $3,526 bill in two years?
12. (5 points) You purchase a house for $250,000 by getting a mortgage for $200,000 and paying a $50,000 down payment (20%). If you get a 15-year mortgage with a 3.5% interest rate, what would the loan balance be in 5 years?
13. (2 points) If the present value of an ordinary, 20 year annuity is $5,000 and interest rates are 4%, what is the present value of the same annuity due?
14. (3 points) A credit card is offered with monthly payments and a 21.99% APR. What is the loan’s effective annual rate (EAR)?
15. (4 points) Calculate the price of a 8%, $1,000 coupon bond with 15 years left to maturity and a market interest rate of 5%. (Assume interest payments are semiannual.) Is this a discount or premium bond?
16. (2 points) On August 27, 2013, the Dow Jones Industrial Average closed at $14,776.13, which was down from $14,946.46 the day before. What was the return (in percent) of the stock market that day?
17. (3 points) Financial analysts forecast MNO Inc.’s growth for the future to be 5%. MNO’s recent annual dividend was $4.00. What is the value of MNO stock when the required return is 8%?