Paper Instructions

College of Administrative and Financial Sciences

Assignment 1

Principles of Finance (FIN101)

For Instructor’s Use only

Instructions – PLEASE READ THEM CAREFULLY

  • This assignment is an individual assignment.
  • The Assignment must be submitted only in WORD format via allocated folder on Blackboard.
  • Assignments submitted through email will not be accepted.
  • Students are advised to make their work clear and well presented. This also includes filling your information on the cover page.
  • Students must mention question number clearly in their answer.
  • 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

Q1 (1.5 marks)

Ahlam Company’s net income for the year 2000, is $3,700,214. The company had an EBITDA of $ 10,125,300, and its depreciation and amortization expense was equal to $2,543,790. The company’s average tax rate is 35 percent.

  1. What is the amount of interest expenses for the firm? (Show the details of your calculations).
  2. Prepare a common sized Income Statement if net sales equal $12,000,000.

Q2. (1 Mark)

The following are accounts balance (in thousands) for Malak Company. Calculate Net Income after-tax (show intermediate steps) t=35% for the year ended December 31, 2020.

Net property and equipment$ 2,000
Accounts receivable$3,000
Notes payable$37,000
Revenues$ 983,000
Supply expenses$ 255,000
Depreciation expenses$ 35,000
Labor expense$300,000
Interest Expenses$11,000
Stockholders’ Equity$61,500
Cash & cash equivalents$97,000
Long-term debt$3,500

Q3. Calculate the following ratios from the Balance Sheet and the Income Statement given below: (1.5 Mark)

  1. Current Ratio
  2. Debt Ratio
  3. Fixed asset turnover
  4. Total asset turnover
  5. Operating profit margin
Balance Sheet:
Cash30,000
Acct/Rec72,500
Inventories50,000
   Current assets152,500
Net fixed assets240,000
   Total assets392,500
Accts/Pay44,500
Accrued expenses31,000
Short-term N/P9,500
   Current liabilities85,000
Long-term debt110,000
Owner’s equity197,500
   Total liabilities and owners equity392,500
Income Statement:
Net sales450,000
COGS220,000
   Gross profit230,000
Operating expenses128,000
   Net operating income102,000
Interest expense18,500
   EBT83,500
Income taxes33,000
   Net income50,500

Q4. Using the values​ below, answer the questions that follow: (1mark)

Amount of annuity: $500

Interest rate: 9%

N=10 years

  1. Calculate the future value of the​ annuity, assuming that it is
    1. ​An ordinary annuity.
    1. ​An annuity due.
  • Compare your findings in parts a​(1) and a​(2). All else being​ identical, which type of annuity—ordinary or annuity due—is preferable as an​ investment? Explain why.

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