Accounting Question

Hello,

Attached are questions for a midterm unit review and it is to just get us prepared for the midterm. I am lost and would like guidance and answers so I know when I take the midterm I will understand what to do. Thanks!

1) You are considering a security with the following possible rates of return:
Probability
0.15
0.25
0.50
0.10
Return (%)
9.5
13.6
14.9
25.3
a. Calculate the expected rate of return.
b. Calculate the standard deviation of the returns.
2) You borrow $25,000 to buy a car, and agree to make 48 monthly payments of $607.39 to
repay the loan. What annual rate of interest, which is being compounded monthly, are you being
charged?
3)Please refer to Table 4-6 for the following question.
Table 4-6
Financial Data for Springfield Power Co. as of December 31, 2010:
Inventory
Long-term debt
Interest expense
Accumulated depreciation
Cash
Net sales (all credit)
Common stock
Accounts receivable
Operating expense (incl. depr. exp. and taxes)
Notes payable-current
Cost of goods sold
Plant and equipment
Accounts payable
Marketable securities
Accrued wages
Retained earnings
$300,000
500,000
25,000
450,000
280,000
1,800,000
900,000
325,000
625,000
200,000
1,100,000
1,400,000
180,000
80,000
45,000
190,000
3) From the information presented in Table 4-6, calculate the following ratios for the Springfield
Power Co.
i. current ratio
ii. acid test ratio
iii. average collection period
iv. inventory turnover
v. gross profit margin
vi. operating profit margin
vii. net profit margin
viii. total asset turnover
4) Within the financial markets, explain what we mean by “private placements” and name the
advantages and disadvantages.