# The income statement for the Lowell Factory, Inc.

Question:QUESTION 1The income statement for the Lowell Factory, Inc. for the last year had: Sales = $200,000; Cost of Goods Sold = $84,000; Selling, General and Administrative Expense = $18,000; Depreciation = $14,600; and interest expense = 6,477. The company raised $5,923 in new equity and reduced its long-term debt by $18,000. Its tax rate is 30 percent and the retention ratio is 0.5, what was the cash flow to stockholders?$27,000$21,000$20,000$15,000$16,000$25,000QUESTION 2You are planning to retire in 15 years with $1,000,000. You can earn 11% compounded monthly. How much do you need to invest today? (Note: Answers are rounded.)$157,820$143,770$211,260$182,560$193,500$166,7806 points QUESTION 3You just won the lottery! You wish to put enough money away so that you can withdraw $6,000 per month for 40 years. You can earn 9% rate on any funds you deposit. How much will you have to deposit now to meet your goal? (Note: Compounding matches the withdrawal frequency.)$745,691$714,970$765,313$777,845$785,850$773,4946 points QUESTION 4You deposit $3,000 at the end of each quarter into an account that pays 11% interest compounded monthly. How much will be in the account after 5 years?$91,415$78,794$71,177$85,978$97,298$74,8616 points QUESTION 5Use the following information for Alpha-Beta, Inc. (ABI) for this question. Sales$100,000Costs$55,000Depreciation$6,000Dividend paid$11,000Retained Earnings Added$14,000Total Assets$85,000Equity$45,000Selling, General and Administrative costs$0Tax Rate35% How much was the interest charge for ABI?2,0775382,4621,6924,7691,3086 points QUESTION 6You purchased a car for $31,500 with no down payment. You plan to pay it off with monthly payments of $850 in 4 years. What is the effective annual rate of interest on the loan?12.27%13.20%8.81%11.37%10.50%14.16%6 points QUESTION 7An investment offers to pay you $21,000 per quarter for the next 10 years (The payments start one quarter after you purchase the investment). If you require 12% rate of return, how much should you pay for this investment? (Note: Compounding matches payment frequency. Answers are rounded.)$536,260$485,410$529,720$501,840$494,870$515,4606 points QUESTION 8The pure rate of interest is 5 percent. Investors require an inflation premium is 2.5 percent and a risk premium of 3 percent to invest in the stock of a company. What is the real rate?6.09%7.63%8.66%6.60%8.15%7.12%6 points QUESTION 9(This is a challenging question. Please allocate time wisely.) Cipro Milda is planning a college fund for her child. When the child joins college in 15 years, the tuition payment for the first semester is expected to be $21,000. Thereafter, tuition payments will be due every six months for the following semester. These payments are expected to increase at an annual inflation rate of 3 percent. The child will graduate in eight semesters, so she will have to make a total of eight tuition payments. If she can earn 8 percent annual rate compounded monthly, how much will she have to deposit monthly in the college fund so that the balance in the fund is zero when the last tuition payment is made? She plans to continue making these deposits until the last tuition bill is paid.$331.62$423.70$270.49$283.92$348.35$403.046 points QUESTION 10The income statement for the Lowell Store, Inc. for the last year had: Sales = $200,000; Cost of Goods Sold = $84,000; Selling, General and Administrative Expense = $18,000; Depreciation = $14,600; and interest expense = 6,477. The company raised $5,000 in new equity and reduced its long-term debt by $16,000. Its tax rate is 35 percent and the retention ratio is 0.6, what was the cash flow from assets?$44,477$38,477$37,477$47,477$45,477$50,4776 points QUESTION 11Use the following information for Alpha-Beta, Inc. (ABI) for this question. Sales$100,000Costs$55,000Depreciation$6,000Dividend paid$7,250Retained Earnings Added$17,000Total Assets$85,000Equity$45,000Selling, General and Administrative costs$0Tax Rate35% If ABI sales grow at the internal growth rate during the following year, what will be the Total Debt Ratio at the end of the year?39.3%37.1%38.1%39.0%37.6%38.6%6 points QUESTION 12Use the following information for Alpha-Beta, Inc. (ABI) for this question. Sales$100,000Costs$55,000Depreciation$6,000Dividend paid$6,000Retained Earnings Added$16,250Total Assets$85,000Equity$45,000Selling, General and Administrative costs$0Tax Rate35% If the profit margin, total asset turnover, and dividend payout ratios for ABI remain unchanged, what is the internal growth rate it can achieve during the following year?19.72%23.64%20.57%25.00%21.86%26.87%6 points QUESTION 13You plan to retire with $800,000 in 20 years. How much should you deposit each month into an account that pays 8.5% annual rate compounded monthly? (Note: Compounding frequency is the same as the deposit frequency. Answers are rounded.)$2,056$1,198$1,124$1,709$1,276$1,0806 points QUESTION 14The pure rate of interest is 5 percent. Investors require an inflation premium is 2.5 percent and a risk premium of 3 percent to invest in the stock of a company. What is the risk-free rate?7.62%5.58%7.11%6.60%6.09%8.14%6 points QUESTION 15In 1958, your grandfather bought a painting for $100,000. In 2006, you sold it for $5.8 million. What annual return on investment did you earn on your grandfather’s purchase?9.62%9.99%7.31%8.83%6.32%8.67%6 points QUESTION 16Southwick Company has total assets of $40,000. It has a profit margin of 7 percent on sales of $100,000. If the equity multiplier is 1.8, what is its ROE?35.6%24.0%27.6%20.6%17.5%31.5%6 points QUESTION 17How many years will it take for $1,000 to grow to $2,000 at a rate of 18 percent compounded monthly?4.845.836.487.285.573.88