fin-mod-midterm f10 city campus

8/8/2019 Fin-Mod-Midterm F10 City Campus

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Financial Modeling Midterm Examination

Main Campus

2nd. December 2010

Students Name:

Seat Number:

Please put your name and seat number above and SAVE this file with YOUR name.

Solve all the questions in the file saved with your name. This file with your name is your a


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swer sheet.


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SUSTAINABLE DIVIDENDS--TemplateSales growth See Note

Current assets/Sales 15%

Current liabilities/Sales 8%

Net fixed assets/Sales 77%

Costs of goods sold/Sales 50%

Depreciation rate 10%Interest rate on debt 10.00%

Interest paid on cash & marketable securities 8.00%

Tax rate 40%

Year 0 1 2

Income statement

Sales 1,000

Costs of goods sold (500)

Interest payments on debt (32)

Interest earned on cash & marketable securities 6Depreciation (100)

Profit before tax 374

Taxes (150)

Profit after tax 225

Dividends (90)

Retained earnings 135

Balance sheet

Cash and marketable securities 80 80 80

Current assets 150

Fixed assets

At cost 1,070

Depreciation (300)

Net fixed assets 770

Total assets 1,000

Current liabilities 80

Debt 320 320 320

Stock 450 450 450

Accumulated retained earnings 150

Total liabilities and equity 1,000


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The firm whose financials are illustrated in this spread sheet, wishes to

maintain cash balance of 80 over the next five years. It also desires neither

to issue additional stock nor to make any changes in its current level of debt.

As a result dividends are the plug in the balance sheet. Model this situation

up to valuation of this firm.

(20 Marks)Note: Students with Odd seat numbers are going to take a Sales Growth

rate of 8 % and students with even seat numbers are going to take it as

3 4 5

80 80 80

320 320 320

450 450 450


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12%.


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You have just turned 35, and you intend to start saving for your retirement. Once you retir

like to have an income of $100,000 per year (for odd seat numbers ) or $90,000 per year (

Calculate how much you would have to save between now and age 65in order to finance y

assumptions:

* All savings draw compound interest of 10 percent per year.

* You make the first payment at the end of this year and the last payment on the the day* you make the first withdrawl one year after you turn 65 and retire and the last payment

(10 Marks)


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e in 30 years (when you turn 65), you would

for even seat numbers) for the next 20 years

our retirement income. Make the following

ou turn 65 and retire. (30 payments)on the day you turn 85 (20 payments)

fin-mod-midterm f10 city campus

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