Tutor profile: Jordan P.
Subject: Basic Math
Please state the four properties of addition.
Commutative, associative, additive and distributive.
Subject: Corporate Finance
Suppose you are saving money to purchase a home which costs $200,000. You have $60,000 saved today that can be invested to help you reach your goal of purchasing this home. Let's assume you can earn 7.0% on your investments annually. These investments compound monthly. Will you be able to purchase the home in 10 years? What about in 20 years?
In this example, we have a one cash flow future value problem. In this example, we must utilize this formula to calculate future value over both a 10 and 20 year period to determine if you will have enough money to purchase the home. We can calculate FV within MS Excel by utilizing the FV function. In this instance, after the 10 year period, the future value of the invested funds would be $120,579. Over a 20 year period, the future value of the invested funds would be $242,324. Therefore, you would not be able to purchase the home in 10 years but it would be possible after 20 years.
ABC Corporation has just begun business as a Corporation and issued 100 shares for $5.00 per share. Within the first quarter of business, the Corporation earned $10,000 in operating revenues and had total operating expenses of $7,500. What is the margin of ABC Corporation for the first quarter? What is the ending total Equity of the Corporation?
Given that the revenues are $10,000 and operating expenses are $7,500, the margin can be calculated by taking the difference in revenues and expenses and subsequently dividing by total revenues. In this example, net income is $2,500 and margin is 25% (2,500/10,000). To calculate total equity, we must include Retained Earnings and Common Stock. Since the Company is in its first year of inception, the $2,500 above represents accumulated Retained Earnings. Common stock is equal to $500 (100 shares x $5.00). Therefore, total equity is $3,000.
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