# Managerial finance – problem set from the attached, each answer

Part 1: Essay

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

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?

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.

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?

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?

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?

Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

## Calculate the price of your order

Total price:
\$0.00

How it works?

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

## Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.