ESSENTIALS CORPORATE FINANCE + CNCT A.
9th Edition
ISBN: 9781259968723
Author: Ross
Publisher: MCG CUSTOM
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Question
Chapter 10, Problem 4CC
Summary Introduction
Case summary:
Company S hired Person X. Person X accepted the job because he felt that the company had a good potential growth. At the end of the first day, Person C met Person X and introduced him to the 401(k) plan. It is a retirement plan that the company offers to their employees.
The employee has to contribute money from his pre-tax income to the 401(k) plan. The company would also contribute a maximum of 5 percent of the salary to the plan. The plan has the following options for investments:
- 1. Investment in company stock.
- 2. Investment in A“S and P” 500 index fund.
- 3. Investment in A small-cap fund.
- 4. Investment in A large-company stocks fund.
- 5. Investment in A Bond fund.
- 6. Investment in A
money market fund.
Characters in the case:
- Company S: The recruiter.
- Person X: The new employee.
- Person C: The employee of Company S working in the Finance section of the company.
To discuss: The A small-cap fund.
Introduction:
Mutual fund refers to the investment in a group or portfolio of assets. The A small-cap fund is a mutual fund that consists of small-company’s stocks.
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Maude worked as a Software Developer for Microsoft for 3 internships. She was just hired full-time after graduating from Concordia in December 2022. On her first day of work on January 1, 2023, she was offered to participate in the company’s retirement plan which is a Defined Contribution Pension Plan (DCPP). After having taken a Personal Finance course, Maude enrolled immediately on her first day, as she knows the benefit of putting money away early and having it grow even though she is a long way from retirement. Whatever Maude contributes, Microsoft doubles her contributions dollar for dollar. So far the plan averages a return of 7% compounded weekly. Both Maude and her employer contribute at the beginning of each month. Maude is only 24 years old with plans to retire early at age 55. Maude can afford to contribute $300/month. How much will she have in her retirement plan at retirement?.
Maude worked as a Software Developer for Microsoft for 3 internships. She was just hired full-
time after graduating from Concordia in December 2022. On her first day of work on January
1, 2023, she was offered to participate in the company's retirement plan which is a Defined
Contribution Pension Plan (DCPP). After having taken a Personal Finance course, Maude
enrolled immediately on her first day, as she knows the benefit of putting money away early
and having it grow even though she is a long way from retirement. Whatever Maude
contributes, Microsoft doubles her contributions dollar for dollar. So far the plan averages a
return of 7% compounded weekly. Both Maude and her employer contribute at the beginning
of each month. Maude is only 24 years old with plans to retire early at age 55. Maude can
afford to contribute $300/month. How much will she have in her retirement plan at
retirement?
Select one:
O a. $1,199.315
O b. $1,370,436
O c.
$1,361,560
O d. $1,192,344
O e. $1,355,876
You were hired as the accountant of XYZ Trading, a sole proprietorship business owned by Mr. Francisco Montano. One of your responsibilities is to prepare the income tax return of Mr. Montano. Annually, Mr. Montano pays P50,000 to P100,000 income tax. He told you to help him lessen his income taxes by 10%. As his accountant, what will you do to help him?
Chapter 10 Solutions
ESSENTIALS CORPORATE FINANCE + CNCT A.
Ch. 10.1 - Prob. 10.1ACQCh. 10.1 - Why are unrealized capital gains or losses...Ch. 10.1 - What is the difference between a dollar return and...Ch. 10.2 - Prob. 10.2ACQCh. 10.2 - Prob. 10.2BCQCh. 10.2 - Prob. 10.2CCQCh. 10.2 - Prob. 10.2DCQCh. 10.2 - Prob. 10.2ECQCh. 10.2 - Prob. 10.2FCQCh. 10.3 - What do we mean by excess return and risk premium?
Ch. 10.3 - Prob. 10.3BCQCh. 10.3 - Prob. 10.3CCQCh. 10.3 - What is the first lesson from capital market...Ch. 10.4 - In words, how do we calculate a variance? A...Ch. 10.4 - Prob. 10.4BCQCh. 10.4 - Prob. 10.4CCQCh. 10.4 - What is the second lesson from capital market...Ch. 10.5 - Prob. 10.5ACQCh. 10.5 - Prob. 10.5BCQCh. 10.6 - What is an efficient market?Ch. 10.6 - Prob. 10.6BCQCh. 10 - Section 10.1Say you buy a share of stock for 50....Ch. 10 - Prob. 10.3CCh. 10 - Prob. 10.4CCh. 10 - Prob. 10.5CCh. 10 - Prob. 10.6CCh. 10 - Prob. 1CTCRCh. 10 - Prob. 2CTCRCh. 10 - Risk and Return. We have seen that over long...Ch. 10 - Market Efficiency Implications. Explain why a...Ch. 10 - Prob. 5CTCRCh. 10 - Prob. 6CTCRCh. 10 - Prob. 7CTCRCh. 10 - Prob. 8CTCRCh. 10 - Efficient Markets Hypothesis. There are several...Ch. 10 - Prob. 10CTCRCh. 10 - Prob. 1QPCh. 10 - Prob. 2QPCh. 10 - Prob. 3QPCh. 10 - Prob. 4QPCh. 10 - Nominal versus Real Returns. What was the...Ch. 10 - Bond Returns. What is the historical real return...Ch. 10 - Prob. 7QPCh. 10 - Prob. 8QPCh. 10 - Prob. 9QPCh. 10 - Calculating Real Returns and Risk Premiums. For...Ch. 10 - Prob. 11QPCh. 10 - Prob. 12QPCh. 10 - Calculating Returns. You purchased a zero-coupon...Ch. 10 - Prob. 14QPCh. 10 - Prob. 15QPCh. 10 - Calculating Real Returns. Refer to Table 10.1....Ch. 10 - Return Distributions. Refer back to Figure 10.10....Ch. 10 - Prob. 18QPCh. 10 - Prob. 19QPCh. 10 - Arithmetic and Geometric Returns. A stock has had...Ch. 10 - Prob. 21QPCh. 10 - Prob. 22QPCh. 10 - Prob. 23QPCh. 10 - Prob. 24QPCh. 10 - Prob. 25QPCh. 10 - Prob. 26QPCh. 10 - Prob. 27QPCh. 10 - Prob. 28QPCh. 10 - Prob. 1CCCh. 10 - Prob. 2CCCh. 10 - Prob. 3CCCh. 10 - Prob. 4CCCh. 10 - Prob. 5CC
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