# Financial exercises

Financial exercises

Week Three Financial Exercises Part 1 – 4 points Using the table below, describe the types of budgets. In your description, include: • The objective of the budget • How the budget assists an organization in managing its financial activities • What types of data need to be included in that specific budget Type of Budget Cash Flow Operating Sales Financial Description Week Three Financial Exercises Part 2 – 3 points Complete the following problems using the following ratios: Sales level at which operating income is zero o If sales above breakeven, then profit o If sales below breakeven, then loss o Fixed expenses = total contribution margin Total sales = total expenses Break Even Point: Unit Sold = Fixed expenses + Operating Income / Contribution Margin per unit Break Even Point: Sales \$ = Fixed expenses + Operating Income / Contribution Margin Ratio (1) Calculate the break even number of units if the fixed expenses are \$7,000 and the contribution margin is \$14 per unit. Answer: (2) Calculate the break even sales dollars if the fixed expenses are \$7,000 and the contribution ratio is 40%. Answer: (3) Calculate the break even number of units with a target profit of \$120,000 if the fixed expenses are \$15,000 and the contribution margin is \$60 per unit. Answer: Week Three Financial Exercises Part 3 – 3 points Complete the following problems: (1) (2) How much will you have saved after 6 years by contributing \$1,200 at the end of each year if you expect to earn 11% on the investment? Answer: A business owner plans to deposit his annual profits in an investment account earning a 9% annual return. If the owner starts with their first deposit today for \$22,000 and expects to make the same profit for the next 7 years, how much will be saved for retirement at that point? Answer: (3) An investor plans to invest \$500 a year and expects to get a 10.5% return. If the investor makes these contributions at the end of the next 20 years, what is the present value of this investment today? Answer: …
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