Posted: September 16th, 2017

Three Finance Problems

Income Statement
Sales

2014
2013
77000 70000

Operating costs excluding
depreciation
Depreciation and amortization

65520 59500
2660
2520

Eranings before interest and taxes
Less interest
Taxable Income
Taxes (35%)

8820
840
7980
2793

7980
700
7280
2548

Net income available to
shareholders

5187

4732

Common Dividends

?
?

1400
3332

Balance Sheet
Assets
Cash
Short-term investments
Accounts receivables
Inventories

2014

2013

3850
770
19250
11550

3500
700
17500
10500

Total current
Assets
Net plant and equipment
Total assets

35420 32200
26950 24500
62370 56700

Liabilities and Equity
Accounts payable
Accruals
Notes payable
Total current liablities
Long-term debt
Total liabilities

7700
3850
2688
14238
7700
21938

Common stock (paid-in
capital)

30184 30800

Retained earnings
Total common equity

10647 7000
40831 37800

Total liablities and equity

7000
3500
1400
11900
7000
18900

62769 56700

Questions
Given the following income statement and balance sheet for WoodStock company. How much total
dividends were paid in fiscal year 2014 and how much were the retained earnings for the year 2014?

Question 2
You can invest your money in CD 1 that pays 14% rate if return per year compounded
semiannually or you can invest it in CD 2 that pays 14% rate of return per year
compounded weekly. You have $50,000 to invest for 5 years. At the end of 5 years,
how much more money will have if you invest your money in CD 2 instead of CD 1?

An investor has two bonds (Bond A & Bond B) in her portfolio. Each bond matures in 8 years, has a face
value of $1,000, has a yield to maturity of 7.5%. Bond A pays an annual coupon of 5%, Bond B pays an
annual coupon of 10% (rates are always quoted annually regardless of the coupon frequency). Both bonds
pay their coupons semiannually. Assuming that the yield to maturity of each bond stays the same over its
entire life, what will be price of each bond at the end of each year of its life. In other words, complete this
table.

Click here to have a similar A+ quality paper done for you by one of our writers within the set deadline at a discounted