Home » Finance Essay Custom Essay

Finance Essay Custom Essay

Directions: Answer the following five questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. Each question is worth five points apiece for a total of 20 points for this homework assignment.
1. The Apex Company has just hired Mr. Smith, who is age 25 and is expected to retire at age 60. Mr. Smith’s current salary is $30,000 per year, but his wages are expected to increase by 5 percent annually over the next 35 years. Apex has a defined benefit pension plan in which workers receive 2 percent of their final year’s wages for each year of employment. Assume a world of certainty. Further, assume that all payments occur at year-end. What is Mr. Smith’s expected annual retirement benefit, rounded to the nearest thousands of dollars?
a. $ 35,000
b. $ 57,000
c. $ 89,000
d. $116,000
e. $132,000
2. Midwest Investment Consultants (MIC) operates several stock investment portfolios that are used by firms for investment of pension plan assets. Last year, one portfolio had a realized return of 12.6 percent and a beta coefficient of 1.15. The average T-bond rate was 7 percent and the realized rate of return on the S&P 500 was 12 percent. What was the portfolio’s alpha?
a. -0.75%
b. -0.15%
c. 0%
d. 0.15%
e. 0.75%
3. The Ritz Company has a 40-year-old employee that will retire at age 60 and live to age 75. The firm has promised a retirement income of $20,000 at the end of each year following retirement until death. The firm’s pension fund is expected to earn 7 percent annually on its assets and the firm uses 7% to discount pension benefits. What is Ritz’s annual pension contribution to the nearest dollar for this employee? (Assume certainty and end-of-year cash flows.)
a. $2,756
b. $3,642
c. $4,443
d. $4,967
e. $5,491
FIN 540 – Homework Chapter 30
Directions: Answer the following five questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. Each question is worth five points apiece for a total of 20 points for this homework assignment.
1. Which of the following statements about municipal bond financing is most correct?
a. In contrast to corporate bonds, municipal bond issues are not required to be registered with the Securities and Exchange Commission.
b. Whereas the vast majority of Treasury and corporate bonds are held by institutions, no municipal bonds are held by individual investors.
c. The primary attraction of municipal bonds to individual investors is their high before-tax yields.
d. Municipal bonds usually pay higher coupon rates than corporate bonds with similar ratings.
e. Municipal bonds are risk-free.

2. Which of the following statements about a not-for-profit firm’s ownership is most correct?
a. Not-for-profit firms are governed by a board of trustees whose members are elected by the community at large.
b. The residual earnings (profits) of not-for-profit firms can be distributed to the firm’s top managers.
c. Not-for-profit firms are exempt from federal taxes, but they must pay state and local taxes, including property taxes.
d. Upon liquidation of a not-for-profit firm, the proceeds from the sale of its assets are distributed, on a pro rata basis, to the firm’s employees.
e. None of the profits are used for private inurement.

3. Which of the following statements about a not-for-profit firm’s cost of capital estimate is most correct?
a. Since a not-for-profit firm has no shareholders, its WACC estimate does not include a cost of equity (fund capital) estimate.
b. The capital structure weights for a not-for-profit firm are set at 50/50, because such firms can raise $1 of debt financing for each dollar of retained earnings.
c. The cost of tax-exempt debt issued by not-for-profit firms is increased (“grossed up”) by 1 – T in the WACC estimate to reflect the fact that such firms do not pay taxes.
d. Equity (fund) capital has a cost that is roughly equivalent to the cost of retained earnings to similar investor-owned companies.
e. Not-for-profit firms have a zero cost of capital.

4. Which of the following statements about a not-for-profit firm’s fund capital is most correct?
a. Fund capital is equivalent to equity capital in investor-owned firms.
b. The sole source of fund capital is the excess of revenues over expenses.
c. Fund capital has a zero opportunity cost.
d. Fund capital can only come from donations.
e. Fund capital does not change over time.

5. Which of the following statements about a not-for-profit firm’s sources of capital is most correct.
a. Since not-for-profit firms are tax exempt, there is no tax advantage to debt capital.
b. Fund capital is obtained by retaining earnings–if all earnings are paid out as dividends, no fund capital is created.
c. Preferred stock is never used by not-for-profit firms.
d. Not-for-profit firms are not allowed to raise capital by borrowing.
e. Not-for-profit firms usually have high dividend payouts

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more