BUSN 380 DEVRY WEEK 7 PROBLEM SET 7

BUSN 380 DEVRY WEEK 7 PROBLEM SET 7
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BUSN 380 DeVry Week 7 Problem Set 7
BUSN380
BUSN 380 DeVry Week 7 Problem Set 7
Problem Set 7
1. Calculating Net Asset Value. Given the information below, calculate the net asset value for the Boston
Equity mutual fund.
Total assets $225,000,000
Total liabilities 5,000,000
Total number of shares 4,400,000
2. Calculating the Rate of Return of Investment Using Financial Leverage. Suppose Shaan invested just
$10,000 of his own money and had a $90,000 mortgage with an interest rate of 8.5 percent. If after three
years he sold the property for $120,000.
1. What is his gross profit?
2. What is his net profit/loss?
3. What is the rate of return on investment?
3. Shelly’s assets include money in the checking and savings accounts, investments in stocks and mutual
funds, personal property, such as furniture, appliances, an automobile, coin collection and jewelry. Shelly
calculates that her total assets are $108,800. Her current unpaid bills, including an auto loan, credit card
balances, and taxes total $16,300. Calculate Shelly’s net worth.
4. Barry and his wife Mary have accumulated over $4 million during their 45 years of marriage. They have
three children and five grandchildren.
How much money can Barry and Mary gift to their children in 2008 without any gift tax liability?
How much money can Barry and Mary gift to their grandchildren?
What is the total amount of estate removed from Barry and Mary’s estate?

5. Dave bought a rental property for $200,000 cash. One year later, he sold it for $240,000.
What was the return on his $200,000 investment?
Suppose Dave invested only $20,000 of his own money and borrowed $180,000 (interest free
from his rich father). What was his return on investment?