Budgeting and finance

Question 1 (15 points)

Bond Value: 15,000

Bond Matures in: 10 years

Coupon: 6%

Interest Rate: 2%

What is the Value of the Bond? Please show calculation.

Question 2 (15 points)                                   

Early Horizons Day Care Center has fixed costs of $300,000 per year and variable costs of $10 per child per day.  If it charges $25 a child per day, what will be its break-even point expressed in dollars of revenue?

Question 3 (15 points)

The Instant Paper Clip Office Supply Company sells and delivers office supplies to companies, schools, and agencies within a 50-mile radius of its warehouse. The office supply business is competitive, and the ability to deliver orders promptly is a big factor in getting new customers and maintaining old ones. (Offices typically order not when they run low on supplies, but when they completely run out. As a result, they need their orders immediately.) The manager of the company wants to be certain that enough drivers and vehicles are available to deliver orders promptly and that they have adequate inventory in stock. Therefore, the manager wants to be able to forecast the demand for deliveries during the next month. From the records of previous orders, management has accumulated the following data

1. Compute the monthly demand forecast for April through November using a 3-month moving average.
2. Compute the monthly demand forecast for June through November using a 5-month moving average.

Question 4 (15 points)

Which of the following statements is FALSE about the monetary tools of the Federal Reserve?

1. They include changing the discount rate.
2. They include changing tariffs on imported goods.
3. They include buying treasury securities.
4. They include changing the reserve ratio.

Question 5 (40 points)

Anthony Downs presents the liberal argument about government budgeting, while James Buchanan presents the conservative argument about government budgeting.  Since a Democrat candidate won the most recent presidential election, you will critique Anthony Downs.  Do you agree or disagree with his overall point?  Why?