Eligibility for a subsidized Stafford loan is based on current financial need. However, both subsidized and unsubsidized Stafford loans are repaid out of future income. Given this, is there a possible objection to having two types?

You open an account by investing $\$ 250$ with a financial institution that advertises an APR of $5.25 \%$, with continuous compounding. How much would your account balance be one year after your initial investment?

The following data (in thousands) were taken from recent financial statements of Starbucks Corporation:

$$\begin{array}{lrr} & \text { Year 2 } & \text { Year 1 } \\ \hline \text { Current assets } & \$ 4,352,700 & \$ 4,168,700 \\ \text { Current liabilities } & 3,653,500 & 3,038,700 \end{array}$$

a. Compute the working capital and the current ratio for Year 2 and Year 1. Round to two decimal places.

b. What conclusions concerning the company's ability to meet its financial obligations can you draw?

The College of Central North (a small private not-for-profit entity) has the following events and transactions.

a. On January 1, Year 1, the board of trustees votes to restrict $1.9 million of previously unrestricted investments to construct a new football stadium at some future point in time.
b. On April 1, Year 1, Dr. Johnson, a graduate of the college, gives the school$4 million in investments that must be held forever. All subsequent cash income is to be used to help pay for construction of the football stadium. After that, the money must be used for maintenance of the stadium.
c. On December 31, Year 1, the investments in (b) generate $500,000 in cash interest revenue. In addition, the investments went up in value by$44,000.
d. On January 1, Year 2, the school builds the new football stadium with the restricted $2.4 million. Cash is paid. The stadium has an expected life of 20 years and no anticipated residual value.
e. On January 2, Year 2, Dr. Johnson buys a seat for the current year on the 50-yard line of the stadium for cash of$30,000. The seat’s fair value for that year is $12,000.
f. On January 3, Year 2, Dr. Johnson provides free medical services to the school. These services have a fair value of$14,000. A specialized skill was needed and the school would have bought the services if not donated.
g. On January 4, Year 2, Dr. Johnson donates a small painting by Picasso to be displayed in the school library. It is appraised as having a value of $30,000. The donors had made no stipulations about the financial reporting in connection with their gifts.

For each of the following independent situations, determine whether the statement is true or false. Briefly discuss the reason for your answer.

(1) On January 1, Year 1, net assets without donor restrictions reported by the school will be reduced.
(2) As of December 31, Year 1, net assets with donor restrictions will have increased by$500,000 during the year because of purpose restrictions stipulated by donors.
(3) On December 31, Year 1, the amount of net assets that must be permanently held according to donor specifications went up by $44,000.
(4) On January 1, Year 2, net assets without donor restrictions increased by$500,000.
(5) Based on the information provided, depreciation expense will not be recorded in connection with the football stadium in Year 2.
(6) Based on the information provided, depreciation expense will not be recorded in connection with the football stadium in Year 3.
(7) For financial reporting purposes, net assets without donor restrictions increased by $30,000 on January 2, Year 2.
(8) For financial reporting purposes, contributed revenue increased by$18,000 on January 2, Year 2.
(9) On January 3, Year 2, net assets without donor restrictions went up and down at the same time.
(10) On January 3, Year 2, net assets without donor restrictions might be reported as going up and down at the same time.
(11) On January 3, Year 2, net assets without donor restrictions will go down and might go up.
(12) On January 4, Year 2, contributed revenue of $30,000 must be reported.
(13) On January 4, Year 2, contributed revenue of$30,000 must not be reported.

Amazon.com, Inc.’s financial statements are shown in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. Instructions for accessing and using the complete annual reports of Amazon and Wal-Mart, including the notes to the fi nancial statements, are also provided in Appendices D and E, respectively.

Instructions
Based on the information contained in these financial statements, determine the following for each company.

1. Total assets at December 31, 2013, for Amazon and for Wal-Mart at January 31, 2014.
2. Receivables (net) at December 31, 2013, for Amazon and for Wal-Mart at January 31, 2014.
3. Net sales (product only) for year ended in 2013 (2014 for Wal-Mart).
4. Net income for the year ended in 2013 (2014 for Wal-Mart).

Refer to the financial information of Target Corporation in the previous activity to answer the following. a. Compute Target's current ratio and quick ratio for February 20 18 and January 2017. Comment on any observed trends.

A loan shark charges 2% per month on the unpaid balance of a loan. A student’s loan was for $640. He was unable to pay for 6 months. What was his loan balance at the end of 6 months?

The company you work for is considering going public. Your current position is in the external financial reporting group. The manager you work for wants you to review some public company quarterly reports, Form 10-Qs, to see what type of information is disclosed. The manager does not want you to perform technical research to determine what the exact reporting requirements are for the Form 10-Q but to understand generally what information other companies seem to be supplying in their Form 10-Qs.

Required

Using the EDGAR database, locate the most recent Form 10-Qs for the two companies you selected. (Hint: The URL for the SEC's home page is http://www.sec.gov/. The SEC provides a company search engine for its EDGAR database.) In addition, for one of these companies, locate the Form 10-Q for the same period in the prior year. Prepare a one-to two-page summary for the following:

(1) Write a brief summary of the contents of one company's recent Form 10-Q. Discuss how the Form 10-Q information compares with the information you know is included in a Form 10-K, which is the annual report to the SEC.

(2) Review the same company's Form 10-Q from the previous year and discuss the similarities and differences you notice in the Form 10-Qs for different time periods.

(3) Review the other company's Form 10-Q from the current year and discuss the similarities and differences you notice in the Form 10-Qs for the two companies.

A financial manager predicts that if a person leaves $\$1000$ in his mutual fund, the value of the money after $t$ years will be

$$V ( t ) = 1000 \left( 1.08 ^ { t } \right)$$

Find and interpret the inverse of $V(t)$ .

The 2012 General Social Survey asked respondents about their confidence in banks and financial institutions as well as their confidence in major corporations. Each question allowed three responses: "a great deal, only some, or hardly any." The table below summarizes the responses.

Find the probability of the described events.

A respondent has a great deal of confidence in major corporations given that he or she has only some confidence in banks and financial institutions.

Using the discussion earlier, answer the questions below:

(a) What financial arrangements did the Colts make as part of their preparations for heading west?

(b) Do you think they were too naive and trusting? Explain.

The Bank of New York Company was established by Alexander Hamilton in 1784 and was a major commercial bank until its merger with the Mellon Financial Corporation in 2007. Their year-end financial reports for the final five years of independent operation provide the following values for their liquid assets (Source: The Financial Times).

$$\begin{array}{lc} \text { Year } & \text{ Liquid Assets (\$\$M) } \\ \mathbf{2 0 0 2} & 18,546 \\ \mathbf{2 0 0 3} & 22,364 \\ \mathbf{2 0 0 4} & 22,413 \\ \mathbf{2 0 0 5} & 19,881 \\ \mathbf{2 0 0 6} & 26,670 \end{array}$$

a) Employ a 3-year moving average to predict what liquid assets would have been in 2007.

Simpson Corp. is an entertainment firm that derives approximately 30% of its income from the Casino Knights Division, which manages gambling facilities. As auditor for Simpson Corp., you have recently overheard the following discussion between the controller and financial vice president.

Instructions

a. On the basis of the foregoing discussion, answer the following questions. Who is correct about handling the sale? What would be the correct income statement presentation for the sale of the Casino Knights Division?

b. How should the walkout by the employees be reported?

c. What do you think about the vice president's observation on materiality?

d. What are the earnings per share implications of these topics?

After investing $1000 at an annual interest rate of 7$B, where B=f(t). What are the units of dB/dt? What is the financial interpretation of dB/dt?