HCS/385: Wk 3 Individual: Week Three Financial Exercises

Week Three Financial Exercises 
Part 1
          
Using the table below, describe the types of budgets. In your description, include:
• The objective of the budget
• How the budget assists an organization in managing its financial activities
• What types of data need to be included in that specific budget
Type of BudgetDescription
Cash Flow  
Operating  
Sales  
Static  
Financial  

 

 Week Three Financial Exercises  
 Part 2 
            
 Complete the following problems using the following ratios:        
            
 Sales level at which operating income is zero         
 o    If sales above breakeven, then profit         
 o    If sales below breakeven, then loss         
 o    Fixed expenses = total contribution margin        
 Total sales = total expenses          
            
 Break Even Point:  Unit Sold = Fixed expenses + Operating Income / Contribution Margin per unit    
 Break Even Point:  Sales $ = Fixed expenses + Operating Income / Contribution Margin Ratio     
            
            
(1)Calculate the break even number of units if the fixed expenses are $7,000 and the contribution margin is $14 per unit.   
 Answer: 
  
  
  
            
            
(2)Calculate the break even sales dollars if the fixed expenses are $7,000 and the contribution ratio is 40%.    
 Answer: 
  
  
  
            
            
(3)Calculate the break even number of units with a target profit of $120,000 if the fixed expenses are $15,000 and the contribution margin is $60 per unit.          
 Answer: 
  
  
  
            

 

 Week Three Financial Exercises 
 Part 3
           
 Complete the following problems:         
           
(1)How much will you have saved after 6 years by contributing $1,200 at the end of each year if you expect to earn 11% on the investment?
 Answer:
 
 
 
           
           
(2)A business owner plans to deposit his annual profits in an investment account earning a 9% annual return.  If the owner starts with their first deposit today for $22,000 and expects to make the same profit for the next 7 years, how much will be saved for retirement at that point?
 Answer:
 
 
 
           
           
(3)An investor plans to invest $500 a year and expects to get a 10.5% return.  If the investor makes these contributions at the end of the next 20 years, what is the present value of this investment today?
 Answer:
 
 
 
           
           
(4)What is the present value (PV) of a 12-year lease arrangement with an interest rate of 7.5 percent that requires annual payments of $4,250 per year with the first payment being due now?
 Answer:
 
 
 
           
           
(5)A recent college graduate hopes to have $200,000 saved in their retirement account 25 years from now by contributing $150 per month in a 401(k) plan.  The goal is to earn 10% annually on the monthly contribution.  Will they have the $200,000 at the end of the 25 years?
 Answer:
 
 
 
           
           
Field of study: 
Date Due: 
Thursday, August 29, 2019

Answer

Week Three Financial Exercises

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