(a)
Case summary: Person CM who got graduated with a degree in food science and is employed with consumer food company and earning 70,000 annually with $58,000 take-home pay. Person CM pays monthly rent of $1,100. The person CM has loan of $38,000 for which she pays $385 monthly. She has current debt of $8000 on which monthly pay is $240 and has assets of $14,000.
Character in the case: Person CM
Adequate information:The person CM has loan of $38,000 for which she pays $385 monthly. She has current debt of $8000 on which monthly pay is $240 and has assets of $14,000. Monthly rent is $1,100. Annual income 70,000 and net income is $58,000. To determine: Debt payment to disposable income ratio.
(b)
Case summary: Person CM who got graduated with a degree in food science and is employed with consumer food company and earning 70,000 annually with $58,000 take-home pay. Person CM pays monthly rent of $1,100. The person CM has loan of $38,000 for which she pays $385 monthly. She has current debt of $8000 on which monthly pay is $240 and has assets of $14,000.
Character in the case: Person CM
Adequate information:The person CM has loan of $38,000 for which she pays $385 monthly. She has current debt of $8000 on which monthly pay is $240 and has assets of $14,000. Monthly rent is $1,100. Annual income 70,000 and net income is $58,000. To determine: Debt to total income ratio.
(c)
Case summary: Person CM who got graduated with a degree in food science and is employed with consumer food company and earning 70,000 annually with $58,000 take-home pay. Person CM pays monthly rent of $1,100. The person CM has loan of $38,000 for which she pays $385 monthly. She has current debt of $8000 on which monthly pay is $240 and has assets of $14,000.
Character in the case: Person CM
Adequate information:The person CM has loan of $38,000 for which she pays $385 monthly. She has current debt of $8000 on which monthly pay is $240 and has assets of $14,000. Monthly rent is $1,100. Annual income 70,000 and net income is $58,000. To discuss: the Person CM’s debt situation along with her debt usage during college times.
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Chapter 6 Solutions
PERSONAL FINANCE (LL)
- Crenshaw, Incorporated, is considering the purchase of a $367,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market value of the computer will be $67,000 in five years. The computer will replace five office employees whose combined annual salaries are $112,000. The machine will also immediately lower the firm's required net working capital by $87,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 22 percent. The appropriate discount rate is 15 percent. Calculate the NPV of this project. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. NPV Answer is complete but not entirely correct. S 103,141.80arrow_forwardYour firm is contemplating the purchase of a new $610,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $66,000 at the end of that time. You will save $240,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $81,000 (this is a one-time reduction). If the tax rate is 21 percent, what is the IRR for this project? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. IRR %arrow_forwardQUESTION 1 Examine the information provided below and answer the following question. (10 MARKS) The hockey stick model of start-up financing, illustrated by the diagram below, has received a lot of attention in the entrepreneurial finance literature (Cumming & Johan, 2013; Kaplan & Strömberg, 2014; Gompers & Lerner, 2020). The model is often used to describe the typical funding and growth trajectory of many startups. The model emphasizes three main stages, each of which reflects a different phase of growth, risk, and funding expectations. Entrepreneur, 3 F's Debt(banks & microfinance) Research Business angels/Angel Venture funds/Venture capitalists Merger, Acquisition Grants investors PO Public market Growth (revenue) Break even point Pide 1st round Expansion 2nd round 3rd round Research commercial idea Pre-seed Initial concept Seed Early Expansion Financial stage Late IPO Inception and prototype Figure 1. The hockey stick model of start-up financing (Lasrado & Lugmayr, 2013) REQUIRED:…arrow_forward
- critically discuss the hockey stick model of a start-up financing. In your response, explain the model and discibe its three main stages, highlighting the key characteristics of each stage in terms of growth, risk, and funding expectations.arrow_forwardSolve this problem please .arrow_forwardSolve this finance question.arrow_forward
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT