College of Administrative

and Financial Sciences

Assignment 1

Principles of Finance (FIN101)

Deadline for students: (2/10/2022@ 23:59)

Course Name: Principles of Finance

Student’s Name:

Course Code: FIN101

Student’s ID Number:

Semester: 1st

CRN:

Academic Year: 1444/1445 H, Second Semester

For Instructor’s Use only

Instructor’s Name:

Students’ Grade:

Level of Marks:

Instructions – PLEASE READ THEM CAREFULLY

❖ This assignment is an individual assignment.

❖ The Assignment must be submitted only in WORD format via the allocated

folder.

❖ Assignments submitted through email will not be accepted.

❖ Students are advised to make their work clear and well presented. This also

includes filling in your information on the cover page.

❖ Students must mention question numbers clearly in their answers.

❖ Late submitted assignments will NOT be entertained.

❖ Avoid plagiarism; the work should be in your own words; copying from students

or other resources without proper referencing will result in ZERO marks. No

exceptions.

❖ All answered must be typed using Times New Roman (size 12, double-spaced)

font. No pictures containing text will be accepted and will be considered

plagiarism).

Submissions without this cover page will NOT be accepted.

Assignment Questions:

(Marks: 15)

1. A company had cash and marketable securities worth $200,000 accounts payables

worth $51,000, inventory of $1,501,500, accounts receivables of $5,288,128, shortterm notes payable worth $220,000, other current liabilities of 100,000, and other

current assets of $121,800. Calculate the company net working capital and describe

how managers manage the firm working capital. (2 Marks)

2. Your parents have given you $1,500 a year before your graduation so that you can

take a trip when you graduate. You wisely decide to invest the money in a bank CD

that pays 7% interest. You know that the trip costs $1600 right now and that

inflation for the year is predicted to be 3%. Will you have enough money in a year to

purchase the trip? Show your calculations. (2 Marks)

3. If the following financial information related to XYZ Company. Total Revenues last

year $970, depreciation expenses $50, costs of goods sold $450, and interest

expenses $55. At the end of the year, current assets were $121 and current liabilities

were $107. The company has an average tax rate of 35%. Calculate the net income

for XYZ Company by setting up an income statement. (2 Marks)

4. Calculate the common-size balance sheet from the following information for the

company: (2 Marks)

Cash

Acct/Rec

Inventories

Total Current assets

Net fixed assets

Total assets

50,000

60,000

200,500

310,500

132,000

442,500

Accts/Pay

Accrued expenses

Short-term N/P

Current liabilities

Long-term debt

Total liabilities

Owner’s equity

Total liabilities and

owners’ equity

25,800

30,000

9,700

65,500

150,000

215,500

227,000

442,500

5. Ten years ago, Amanda Cortez invested $20,000 in an account paying an annual

interest rate of 5%. What is the value of the investment today? What is the interest

on interest earned on this investment? (2 Marks)

6. You have just won a lottery that promises an annual payment of $120000 beginning

immediately. You will receive a total of 15 payments. If you can invest the cash flow

in an investment that is paying 8% annually, what is the present value of this

annuity? (2 Marks)

7. XXX company has forecast a rate of return of 20% if the economy booms (30%

probability); a rate of return of 19% if the economy in in a growth phase (40%

probability); a rate of return of 2.50% if the economy in in decline (20% probability);

and a rate of return of -10% if the economy in a depression (10% probability). What

is the company standard deviation of returns? (3 Marks)

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and Financial Sciences

Assignment 1

Principles of Finance (FIN101)

Deadline for students: (2/10/2022@ 23:59)

Course Name: Principles of Finance

Student’s Name:

Course Code: FIN101

Student’s ID Number:

Semester: 1st

CRN:

Academic Year: 1444/1445 H, Second Semester

For Instructor’s Use only

Instructor’s Name:

Students’ Grade:

Level of Marks:

Instructions – PLEASE READ THEM CAREFULLY

❖ This assignment is an individual assignment.

❖ The Assignment must be submitted only in WORD format via the allocated

folder.

❖ Assignments submitted through email will not be accepted.

❖ Students are advised to make their work clear and well presented. This also

includes filling in your information on the cover page.

❖ Students must mention question numbers clearly in their answers.

❖ Late submitted assignments will NOT be entertained.

❖ Avoid plagiarism; the work should be in your own words; copying from students

or other resources without proper referencing will result in ZERO marks. No

exceptions.

❖ All answered must be typed using Times New Roman (size 12, double-spaced)

font. No pictures containing text will be accepted and will be considered

plagiarism).

Submissions without this cover page will NOT be accepted.

Assignment Questions:

(Marks: 15)

1. A company had cash and marketable securities worth $200,000 accounts payables

worth $51,000, inventory of $1,501,500, accounts receivables of $5,288,128, shortterm notes payable worth $220,000, other current liabilities of 100,000, and other

current assets of $121,800. Calculate the company net working capital and describe

how managers manage the firm working capital. (2 Marks)

2. Your parents have given you $1,500 a year before your graduation so that you can

take a trip when you graduate. You wisely decide to invest the money in a bank CD

that pays 7% interest. You know that the trip costs $1600 right now and that

inflation for the year is predicted to be 3%. Will you have enough money in a year to

purchase the trip? Show your calculations. (2 Marks)

3. If the following financial information related to XYZ Company. Total Revenues last

year $970, depreciation expenses $50, costs of goods sold $450, and interest

expenses $55. At the end of the year, current assets were $121 and current liabilities

were $107. The company has an average tax rate of 35%. Calculate the net income

for XYZ Company by setting up an income statement. (2 Marks)

4. Calculate the common-size balance sheet from the following information for the

company: (2 Marks)

Cash

Acct/Rec

Inventories

Total Current assets

Net fixed assets

Total assets

50,000

60,000

200,500

310,500

132,000

442,500

Accts/Pay

Accrued expenses

Short-term N/P

Current liabilities

Long-term debt

Total liabilities

Owner’s equity

Total liabilities and

owners’ equity

25,800

30,000

9,700

65,500

150,000

215,500

227,000

442,500

5. Ten years ago, Amanda Cortez invested $20,000 in an account paying an annual

interest rate of 5%. What is the value of the investment today? What is the interest

on interest earned on this investment? (2 Marks)

6. You have just won a lottery that promises an annual payment of $120000 beginning

immediately. You will receive a total of 15 payments. If you can invest the cash flow

in an investment that is paying 8% annually, what is the present value of this

annuity? (2 Marks)

7. XXX company has forecast a rate of return of 20% if the economy booms (30%

probability); a rate of return of 19% if the economy in in a growth phase (40%

probability); a rate of return of 2.50% if the economy in in decline (20% probability);

and a rate of return of -10% if the economy in a depression (10% probability). What

is the company standard deviation of returns? (3 Marks)

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