ASSIGNMENT 1- 60 MARKS

1. 1. What are the four main areas of finance? Give a brief explanation of each. 10 Marks

1. 2. Use the information below for the Michigan Auto Corporation (MAC) to answer the following questions.

Balance Sheet Accounts of Michigan Auto Corporation (MAC) Corporation

Account	Balance 12/31/2017
Accumulated depreciation	$7,650
Accounts payable	$6,875
Accounts receivable	$8,000
Cash	$3,750
Common stock	$15,625
Inventory	$11,250
Long-Term debt	$17,750
Plant, property, and equipment	$37,000
Retained earnings	$12,100

1. a) Refer to the Balance Sheet Accounts of MAC Corporation. Calculate the value of total assets for the year-end. 5 Marks

1. b) Refer to the Balance Sheet Accounts of MAC Corporation. What is the value of net working capital at the year-end? 5 Marks

1. c) Refer to the Balance Sheet Accounts of MAC Corporation. Calculate the value of current assets for the year-end. 5 Marks

1. d) Refer to the Balance Sheet Accounts of MAC Corporation. What is the value of equity for the year-end? 5 Marks

1. 3. Roseanne wants to borrow $40,000 for a period of 5 years.

The lenders offer her a choice of three payment structures:

1. a) Pay all of the interest (10% per year) and principal in one lump sum at the end of 5 years; 8 Marks
2. b) Pay interest at the rate of 10% per year for 4 years and then a final payment of interest and principal at the end of the 5th year; 8 Marks
3. c) Pay five equal payments at the end of each year inclusive of interest and part of the principal. 8 Marks
4. d) Under which of the three options will Roseanne pay the least interest and why? Calculate the total amount of the payments and the amount of interest paid under each alternative.

6 Marks