What were the primary causes of this financial crisis

Reference no: EM133199848 , Length: Word count: 4 Pages

Assignment Part 1: Essay

Describe the financial crisis of 2007- 2009. What were the primary causes of this financial crisis?

Assignment Part 2:

1. Ira Schwab opens up a Schwab IRA and places $2,000 in his retirement account at the beginning of each year for 10 years. He believes the account will earn 5 percent interest per year, compounded quarterly. How much will he have in his retirement account in 10 years?

2. The city of Glendale borrows $48 million by issuing municipal bonds to help build the Arizona Cardinals football stadium. It plans to set up a sinking fund that will repay the loan at the end of 10 years. Assume a 4 percent interest rate per year. What should the city place into the fund at the end of each year to have $48 million in the account to pay back their bondholders?

Assignment Part 3: Matthew is considering several possible compensation alternatives for services he has provided as a consultant:

Option A: Matthew could receive $8,000 today.

Option B: Matthew could receive $2,500 at the end of each of the next four years.

Option C: Matthew could receive $12,000 five years from now.

Required:

1. Calculate the present value for each option assuming that Matthew can earn 7 percent on any investment funds.

2. Which option results in the greatest financial benefit to Matthew?

3. If Matthew earns 10 percent, will that change your answer to # 2 above? Please explain.

Assignment Part 4: Tom and Mary James just had a baby. They heard that the cost of providing a college education for this baby will be $100,000 in 18 years. Tom normally receives a Christmas bonus of $4,000 every year in the paycheck prior to Christmas. He read that a good stock mutual fund should pay him an average of 10 percent per year. Tom and Mary want to make sure their son has $100,000 for college. Consider each of the following questions.

a. How much does Tom have to invest in this mutual fund at the end of each year to have $100,000 in 18 years?

b. Tom's father said he would provide for his grandson's education. He puts $10,000 in a government bond that pays 3 percent interest. His dad said this should be enough. Do you agree?

c. If Mary has a savings account worth $50,000, how much must she withdraw from savings and set aside in this mutual fund to have the $100,000 for her son's education in 18 years?

Assignment Part 5: Essay

Some suggest that a firm should seek to maximize the welfare of all its stakeholders, such as employees, customers and the community in which it operates. How would this objective conflict with the one of maximizing shareholder value? Do you believe such an objective is feasible?

Assignment Part 6: Joe Downey is currently 65 years of age. He is currently drawing $20,000 a year out of his IRA. He expects to live to 100 and wants to know what he needs now to insure himself that he will be able to draw the $20,000 at the beginning of each year for the next 35 years. He believes the account will earn 6 percent compounded annually for the next 35 years. How much money does he need in his account today?

Watch YouTube video:

Time Value of Money (concept explained)
Discounted Cash Flow Model
Net Present Value (NPV)

Reference no: EM133199848

Questions Cloud

Strong human rights complaint : Determine whether the worker would have a strong human rights complaint and what if any defense the employer could argue.

Describe capital budgeting calculations - Net Present Value : Please write at least three well composed paragraphs that describe the following capital budgeting calculations: Pay-back, Net Present Value (NPV)

Discuss about saying that the customer is king : Discuss - top companies such as IBM and Tesco say that the customer is king, will customer choice continue to be unrestrained in A) 2020 and B) 2050?

Define and punish piracies and felonies : Define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations - Is that proper under our Constitution or should

What were the primary causes of this financial crisis : Northwest Louisiana Technical Community College - Describe the financial crisis of 2007- 2009. What were the primary causes of this financial crisis?

Small window cleaning business plan : Xpro Window Cleaning is a small, residential window cleaning business that will be based out of Jacksonville, Florida. The company will provide window clea

Describe three main categories of market entry strategies : Discuss at least three challenges that a company may face in the early period of expansion. Describe the three main categories of market entry strategies.

Develop a research question : Think of some challenges you have faced in your current or previous employment. Summarize the problem, develop a research question

Explain the elements of negligence : Pioneer Academy Identify and explain the elements of negligence and What is "stare decisis" and why is it so important to the American legal system?

User Account

All Pages