BUSN 380 help Making Decisions/uophelp.com BUSN 380 help Making Decisions/uophelp.com | Page 91

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.
a. What is his gross profit?
b. What is his net profit/loss?
c. 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.
A- How much money can Barry and Mary gift to their children in 2008
without any gift tax liability?
B- How much money can Barry and Mary gift to their grandchildren?
C- What is the total