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  • FIN 103 Long Test 1 Reviewer

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    1. XYZ Corporation needs to take out a short-term loan of Php50,000 to satisfy its current ratio loan covenant requirement of 0.9, given its current assets and liabilities. 2. Buying the Php7,000,000 painting now and reselling it in four years for Php12,000,000 would yield an expected annual rate of return of around 15%. 3. Given an average annual return of 10% on other investment strategies, the maximum someone should be willing to pay for the investment product paying Php20,000 annually for 5 years and Php500,000 at the end is around Php150,000.

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    FIN LT Reviewer

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    1. XYZ Corporation needs to take out a short-term loan of Php50,000 to satisfy its current ratio loan covenant requirement of 0.9, given its current assets and liabilities. 2. Buying the Php7,000,000 painting now and reselling it in four years for Php12,000,000 would yield an expected annual rate of return of around 15%. 3. Given an average annual return of 10% on other investment strategies, the maximum someone should be willing to pay for the investment product paying Php20,000 annually for 5 years and Php500,000 at the end is around Php150,000.

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    © All Rights Reserved
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    3 views1 page

    FIN 103 Long Test 1 Reviewer

    Uploaded by

    madlabs19
    1. XYZ Corporation needs to take out a short-term loan of Php50,000 to satisfy its current ratio loan covenant requirement of 0.9, given its current assets and liabilities. 2. Buying the Php7,000,000 painting now and reselling it in four years for Php12,000,000 would yield an expected annual rate of return of around 15%. 3. Given an average annual return of 10% on other investment strategies, the maximum someone should be willing to pay for the investment product paying Php20,000 annually for 5 years and Php500,000 at the end is around Php150,000.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    FIN 103 Long Test 1 Reviewer

    1. XYZ Corporations quick ratio cannot go down 0.9 due to a loan


    covenant. Currently, its current assets are at Php1,050,000
    (including Php200,000 inventory) and its current liabilities total
    Php1,000,000. How much in short-term loans should it take out
    to satisfy the current ratio requirement?
    2. An Amorsolo is currently valued at Php7,000,000. Art analysts
    believe that in four years time, the painting would be worth
    Php12,000,000. If I decide to buy it with the intent of reselling it
    in four years time, what is my expected rate of return?
    3. An investment product pays off Php20,000 each yearend for 5
    years, and an additional Php500,000 at the end of 5 years. If you
    can earn on average 10% with your investment strategies, what
    price should you be willing to pay for this investment?
    4. I open an investment account with Php1,000,000, and I deposit
    Php50,000 a month every month for 10 years. If interest rates
    are 2% compounded monthly, how much money will be in the
    account after 10 years?
    5. I deposit Php150,000 in an account that earns 3% interest
    compounded quarterly. How much money will I have after 10
    years?
    6. An investment product is being sold to you. It promises to pay
    Php1,000,000 after 5 years. If you can earn 5% per year on your
    investments, how much should you be willing to pay for this
    product?

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