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How much would you have in the account at retirement

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Question: 1) Last year, BFA Corporation had net sales of $3,600,000 and cost of goods sold of $2,000,000. Its depreciation charge was $600,000 and selling, general, and administrative (SG&A) expense was $800,000. If the interest charge was $30,000 and the tax rate is 35 percent, what was the operating cash flow? Ignore any carry back or carry forward of loss for tax purposes.

2) The real rate is 2.8 percent and the nominal rate is 5.5 percent. What is the expected inflation premium? Please use the exact (multiplicative) formulation.

3) Your favorite cup of coffee costs $4.50. You buy one cup every day. Starting tomorrow, you stop buying coffee for the next 40 years until you retire. Instead, every day you deposit the money saved by not buying coffee into an account that pays 9 percent annual interest rate compounded daily. How much would you have in the account at retirement. Assume all years have 365 days.

Reference no: EM132756986

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