Mastering WGU D396 – Evidence-Based Practice for Health and Human Services

Mastering WGU D396 – Evidence-Based Practice for Health and Human Services

Introduction

WGU D396 – Evidence-Based Practice for Health and Human Services focuses on applying research to improve health and human services outcomes. Searching for “WGU D396 tips,” “how to pass WGU D396,” or “WGU D396 Reddit”? This guide provides resources, strategies, and student insights to succeed.

Course Description

D396 covers evidence-based practice (EBP) principles, including research evaluation, intervention design, and outcome measurement. Students learn to integrate research into practice, preparing for roles in healthcare or human services. See the WGU Healthcare Management Program Guide.

Useful Resources & Tips

Student-recommended resources:

  • WGU Materials: Use EBP guides and project templates.
  • Reddit (r/WGU): Find D396 tips in healthcare threads. Visit r/WGU.
  • AHRQ: Explore evidence-based practice resources.
  • YouTube: Watch Healthcare Triage for EBP tutorials.
  • Studocu: Reference D396 project samples.
  • WGU Cohorts: Join for peer and instructor support.

Mode of Assessment

D396 is a Performance Assessment (PA) requiring a project designing an evidence-based intervention with a report on implementation and evaluation. No Objective Assessment (OA).

Common Challenges

Reported issues:

  • Evaluating research for practical application.
  • Designing feasible interventions.
  • Meeting rubric requirements for reports.
  • Managing time for research and project development.

How to Pass Easily

Strategies for D396:

  1. Study the Rubric: Align project with PA requirements.
  2. Review EBP: Use AHRQ for evidence-based practice insights.
  3. Use Templates: Reference WGU or Studocu samples.
  4. Watch Tutorials: Learn from Healthcare Triage videos.
  5. Seek Feedback: Submit drafts to instructors early.

Conclusion

WGU D396 – Evidence-Based Practice for Health and Human Services builds critical skills for improving outcomes. With resources and focus, you’ll pass confidently. See WGU course guides for more.

Frequently Asked Questions

Is WGU D396 hard?

D396 is manageable with EBP review and rubric focus.

How long does WGU D396 take?

Typically 3–5 weeks, depending on healthcare experience.

Is WGU D396 an OA or PA?

It’s a Performance Assessment (PA) with a project.

What are the key topics on the exam?

Evidence-based practice, intervention design, and outcome evaluation.

What’s the best way to study for WGU D396?

Use WGU materials, explore AHRQ, follow the rubric, and join cohorts.

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Question 1

Alpha Products plans to finance its capital budget for next year by selling $50 million of 11 percent coupon rate bonds, with each bond having a maturity value (M) of $1,000 and a 20-year maturity. Flotation costs (F) will be 5% of the maturity value of each bond. The balance of its $125 million capital budget will be financed with retained earnings (so that retained earnings will be at least $75 million next year). Next year Alpha expects dividends will increase at a 7 percent rate to $1.40 per share (so that D1 = $1.40), and the CFO expects dividends and earnings to continue growing at the 7 percent rate for the foreseeable future. The current market value of Alpha's stock is $30. The firm has a marginal tax rate of 40 percent. Given its flotation cost on newly issued debt what is the cost of debt for Alpha Products (rd)? What is the cost of retained earnings equity capital for Alpha Products (rs)? Finally, what is its weighted average cost of capital for the coming year? Cost of Newly Issued Debt (rd) = ____________________. Cost of Retained Earnings Equity Capital (rs) = ____________________. Weighted Average Cost of Capital (WACC) = ____________________. ???

Question 2

Please complete the following 7 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button. Chapter 4 Exercise 7 7. Overhead application: Working backward The Towson Manufacturing Corporation applies overhead on the basis of machine hours. The following divisional information is presented for your review: Division A Division B Actual machine hours 22,500 ? Estimated machine hours 20,000 ? Overhead application rate $4.50 $5.00 Actual overhead $110,000 ? Estimated overhead ? $90,000 Applied overhead ? $86,000 Over- (under-) applied overhead ? $6,500 FIND THE UNKNOWNS FOR EACH OF THE DIVISIONS. Chapter 4 Problem 2 2. Computations using a job order system General Corporation employs a job order cost system. On May 1 the following balances were extracted from the general ledger; Work in process $ 35,200 Finished goods 86,900 Cost of goods sold 128,700 Work in Process consisted of two jobs, no. 101 ($20,400) and no. 103 ($14,800). During May, direct materials requisitioned from the storeroom amounted to $96,500, and direct labor incurred totaled $114,500. These figures are subdivided as follows: Direct Materials Direct Labor Job No. Amount Job No. Amount 101 $5,000 101 $7,800 115 19,500 103 20,800 116 36,200 115 42,000 Other 35,800 116 18,000 $96,500 Other 25,900 $114,500 Job no. 115 was the only job in process at the end of the month. Job no. 101 and three "other" jobs were sold during May at a profit of 20% of cost. The "other" jobs contained material and labor charges of $21,000 and $17,400, respectively. General applies overhead daily at the rate of 150% of direct labor cost as labor summaries are posted to job orders. The firm's fiscal year ends on May 31. Instructions: a. Compute the total overhead applied to production during May. b. Compute the cost of the ending work in process inventory. c. Compute the cost of jobs completed during May. d. Compute the cost of goods sold for the year ended May 31. Chapter 5 Exercise 1 1. High-low method The following cost data pertain to 20X6 operations of Heritage Products: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Shipping costs $58,200 $58,620 $60,125 $59,400 Orders shipped 120 140 175 150 The company uses the high-low method to analyze costs. a. Determine the variable cost per order shipped. b. Determine the fixed shipping costs per quarter. c. If present cost behavior patterns continue, determine total shipping costs for 20X7 if activity amounts to 570 orders. Chapter 5 Exercise 3 3. Break-even and other CVP relationships Cedars Hospital has average revenue of $180 per patient day. Variable costs are $45 per patient day; fixed costs total $4,320,000 per year. a. How many patient days does the hospital need to break even? b. What level of revenue is needed to earn a target income of $540,000? c. If variable costs drop to $36 per patient day, what increase in fixed costs can be tolerated without changing the break-even point as determined in part (a)? Chapter 5 Problem 6 6. Direct and absorption costing The information that follows pertains to Consumer Products for the year ended December 31, 20X6. Inventory, 1/1/X6 24,000 units Units manufactured 80,000 Units sold 82,000 Inventory, 12/31/X6 ? units Manufacturing costs: Direct materials $3 per unit Direct labor $5 per unit Variable factory overhead $9 per unit Fixed factory overhead $280,000 Selling & administrative expenses: Variable $2 per unit Fixed $136,000 The unit selling price is $26. Assume that costs have been stable in recent years. Instructions: a. Compute the number of units in the ending inventory. b. Calculate the cost of a unit assuming use of: 1. Direct costing. 2. Absorption costing. c. Prepare an income statement for the year ended December 31, 20X6, by using direct costing. d. Prepare an income statement for the year ended December 31, 20X6, by using absorption costing.

Question 3

APPENDIX B: CAPITAL BUDGETING GROUP PRESENTATION ACMC Inc. is a multinational conglomerate corporation providing a wide range of goods and services to its customers. As part of its budgeting process for the next year, it has three mutually exclusive projects under consideration, and it might decide which project should receive the investment funds for this year. Project B: This project requires an initial investment of $20,000,000 in equipment which will require additional expense of $1,000,000 to install in the current facility. Consistent with other projects, the equipment will be depreciated using the MACRS Investment Class schedule. Once installed, the firm will need to increase inventory by $6,000,000. The project will last 6 years, but at the end of that period, the equipment will have no salvage value. During the operational period of this project, the product produced will sell for $6.50 per unit. The costs related to this product will be $4.00 per unit in variable cost and the fixed costs each year will be $1,000,000. Management has estimated that the sales volume for this project will be 3,500,000 in year 1, 4,000,000 in year 2, 4,250,000 in year 3, 4,500,000 in year 4, 4,300,000 in year 5, and 4,200,000 in year 6. Since the project has been brought under consideration through the normal channels, a discount rate equal to the WACC should be used in the project valuation. 2. Determine the target percentages for the optimal capital structure, and then compute the WACC. (Carry weights to four decimal places. For example: 0.2973 or 29.73%) 4. Identify the sensitivity of the projects related to a 10% reduction in price and a 10% reduction in sales volume. I need the answers in excel please :)

Question 4

The 2008 balance sheet of The Washington Post Company shows average shareholders' equity of $3,171,176 thousand, net operating profit after tax of $79,895 thousand, net income of $65,722 thousand, and average net operating assets of $3,279,742 thousand. The company's return on net operating assets (RNOA) for the year is: Answer A. 2.5% B. 2.4% C. 2.1% D. 2.0% E. There is not enough information to calculate the ratio When considering the results of an Altman Z-Score analysis a score of 4.20 would suggest? Answer A. The company is healthy and there is a low bankruptcy potential in the short-term B. The company is healthy and there is a low bankruptcy potential in both the short and long-term C. The company is exposed to some risk of bankruptcy D. The company is in financial distress and there is a high probability of bankruptcy in the short term future Generally Accepted Accounting Principles (GAAP) are created by: (select all that apply) Answer A. The Securities and Exchange Commission B. The Generally Accepted Accounting Principles Task Force C. The Sarbanes Oxley Act D. The Financial Accounting Standards Board E. The Emerging Issues Task Force During the month of March 2010, Weaver World, a tax-preparation service, had the following transactions. ? Billed $74,000 in revenues on credit ? Received $41,000 from customers' accounts receivable ? Incurred expenses of $33,500 but only paid $19,425 cash for these expenses ? Prepaid $5,555 for computer services to be used next month What was the company's net cash flow from operations for the month? Answer A. $16,020 B. $10,465 C. $74,000 D. None of the above Selected balance sheet income statement data follow for Harley Davidson, Inc for the year ended December 31, 2008 (in thousands). What is the company's times interest earned ratio? Income before provision for income taxes Interest expense Statutory tax rate Provision for income taxes Net income $1,033,977 $4,542 36.6% $379,259 $654,718 Answer A. 1.004 B. 144.1 C. 228.6 D. 360.0 E. None of the above Covenants represent: Answer A. The maximum that a creditor will allow a customer to owe at any point in time B. Promises the company makes to the creditor C. Terms and conditions set forth in a lending agreement to reduce the probability of nonpayment D. The property that a company pledges to guarantee repayment A letter of credit: Answer A. Provides a guarantee of payment from the buyer, reducing the credit risk to the seller B. Ensures a company that funds will be available when needed C. Is analogous to a credit card that companies can draw on as needed D. Is a representation that a company has a high credit rating Which of the following items would not be found on a balance sheet? (Select all that apply) Answer A. Nonowner financing B. Sales C. Stockholders' Equity D. Property, plant and equipment E. Cost of Goods Sold The current ratio is a measure of: Answer A. Solvency B. Leverage C. Short-term debt paying ability D. Bankruptcy position An accrual of wages expense would have what effect on the balance sheet? Answer A. Decrease liabilities and increase equity B. Increase assets and increase liabilities C. Increase liabilities and decrease equity D. Decrease assets and decrease liabilities E. None of the above RainStorm Industries manufactures weather equipment. Selected financial data for RainStorm is presented below; use the information to answer the question that follows: Current Assets As of Dec. 31, 2008 Dec. 31, 2007 Cash and cash equivalents $276,843 $255,088 Marketable Securities $166,106 $187,064 Accounts Receivable (net) 258,387 289,100 Inventories 424,493 391,135 Prepaid Expenses 55,369 25,509 Other current assets 83,053 85,029 Total Current Assets $1,264,252 $1,232,925 Plant Property and Equipment 1,384,217 625,421 Long-Term Investment 568,000 425,000 Total Assets 3,216,469 2,283,346 Current Liabilities Short-term borrowings $156,376 $95,419 Current portion of long-term debt 155,000 168,000 Accounts payable 254,111 286,257 Accrued liabilities 273,658 166,983 Income taxes payable 97,735 178,911 Total Current Liabilities $936,879 $895,571 Long-Term Debt 450,000 325,000 Deferred Income Taxes 215,017 262,403 Total Liabilities $1,601,896 $1,482,973 Common Stock $425,250 $125,000 Additional Paid-in Capital 356,450 279,951 Retained Earnings 832,874 395421 Total Stockholders' Equity 1,614,573 800,372 Total Liabilities and Stockholders' Equity $3,216,469 $2,283,346 Selected Income Statement Data - for the year ending December 31, 2008: Net Sales $4,585,340 Cost of Goods Sold (2,942,353) Selling Expenses (884,685) Operating Income 758,302 Interest Expense (35,240) Earnings before Income Taxes 723,062 Income Tax Expense (285,609) Net Income 437,453 Selected Statement of Cash Flow Data - for the year ending December 31, 2008: Cash Flows from Operations $1,156,084 Capital Expenditures $845,862 RainStorm's liabilities to equity ratio in 2007 was: Answer A. 1.12 B. 1.05 C. 1.68 D. 1.85 The ratio of net income to equity is also known as: Answer A. Total net equity ratio B. Profit margin C. Return on equity D. Net income ratio E. None of the above RainStorm Industries manufactures weather equipment. Selected financial data for RainStorm is presented below; use the information to answer the question that follows: Current Assets As of Dec. 31, 2008 Dec. 31, 2007 Cash and cash equivalents $276,843 $255,088 Marketable Securities $166,106 $187,064 Accounts Receivable (net) 258,387 289,100 Inventories 424,493 391,135 Prepaid Expenses 55,369 25,509 Other current assets 83,053 85,029 Total Current Assets $1,264,252 $1,232,925 Plant Property and Equipment 1,384,217 625,421 Long-Term Investment 568,000 425,000 Total Assets 3,216,469 2,283,346 Current Liabilities Short-term borrowings $156,376 $95,419 Current portion of long-term debt 155,000 168,000 Accounts payable 254,111 286,257 Accrued liabilities 273,658 166,983 Income taxes payable 97,735 178,911 Total Current Liabilities $936,879 $895,571 Long-Term Debt 450,000 325,000 Deferred Income Taxes 215,017 262,403 Total Liabilities $1,601,896 $1,482,973 Common Stock $425,250 $125,000 Additional Paid-in Capital 356,450 279,951 Retained Earnings 832,874 395421 Total Stockholders' Equity 1,614,573 800,372 Total Liabilities and Stockholders' Equity $3,216,469 $2,283,346 Selected Income Statement Data - for the year ending December 31, 2008: Net Sales $4,585,340 Cost of Goods Sold (2,942,353) Selling Expenses (884,685) Operating Income 758,302 Interest Expense (35,240) Earnings before Income Taxes 723,062 Income Tax Expense (285,609) Net Income 437,453 Selected Statement of Cash Flow Data - for the year ending December 31, 2008: Cash Flows from Operations $1,156,084 Capital Expenditures $845,862 RainStorm's quick ratio in 2008 was: Answer A. 1.35 B. 1.00 C. 0.89 D. 0.75 The overarching purpose of credit risk analysis is to: Answer A. Quantify potential credit losses B. Determine a company's optimal capital structure C. Identify credit opportunities D. Provide information to banks about credit losses The audit report is addressed to: Answer A. The board of directors and the shareholders B. The shareholders C. The audit committee D. The Securities and Exchange Commission (SEC) E. The board of director A company's net cash flow will equal its net income ? Answer A. Only when the company has no investing cash flow for the period B. Occasionally C. Only when the company has no investing or financing cash flow for the period D. Rarely E. Almost always During fiscal 2008, Black & Decker Corporation reported Net income of $293.6 million and paid dividends of $101.8 million. Which of the following describes how these transactions would affect Black and Decker's equity accounts? (in millions) Answer A. Increase contributed capital by $293.6 and decrease earned capital by $101.8 B. Decrease contributed capital by $101.8 and increase earned capital by $293.6 C. Increase contributed capital by $191.8 D. Increase earned capital by $191.8 E. None of the above RainStorm Industries manufactures weather equipment. Selected financial data for RainStorm is presented below; use the information to answer the question that follows: Current Assets As of Dec. 31, 2008 Dec. 31, 2007 Cash and cash equivalents $276,843 $255,088 Marketable Securities $166,106 $187,064 Accounts Receivable (net) 258,387 289,100 Inventories 424,493 391,135 Prepaid Expenses 55,369 25,509 Other current assets 83,053 85,029 Total Current Assets $1,264,252 $1,232,925 Plant Property and Equipment 1,384,217 625,421 Long-Term Investment 568,000 425,000 Total Assets 3,216,469 2,283,346 Current Liabilities Short-term borrowings $156,376 $95,419 Current portion of long-term debt 155,000 168,000 Accounts payable 254,111 286,257 Accrued liabilities 273,658 166,983 Income taxes payable 97,735 178,911 Total Current Liabilities $936,879 $895,571 Long-Term Debt 450,000 325,000 Deferred Income Taxes 215,017 262,403 Total Liabilities $1,601,896 $1,482,973 Common Stock $425,250 $125,000 Additional Paid-in Capital 356,450 279,951 Retained Earnings 832,874 395421 Total Stockholders' Equity 1,614,573 800,372 Total Liabilities and Stockholders' Equity $3,216,469 $2,283,346 Selected Income Statement Data - for the year ending December 31, 2008: Net Sales $4,585,340 Cost of Goods Sold (2,942,353) Selling Expenses (884,685) Operating Income 758,302 Interest Expense (35,240) Earnings before Income Taxes 723,062 Income Tax Expense (285,609) Net Income 437,453 Selected Statement of Cash Flow Data - for the year ending December 31, 2008: Cash Flows from Operations $1,156,084 Capital Expenditures $845,862 RainStorm's current ratio in 2008 was: Answer A. 1.35 B. 1.00 C. 2.02 D. 1.50 A list of assets, liabilities and equity can be found on which of the following? Answer A. Statement of Assets and Liabilities B. Income Statement C. Balance Sheet D. Statement of Cash Flows E. Statement of Stockholders' Equity Which of the following statements are correct (select all that apply): Answer A. A balance sheet reports on investing and financing activities. B. An income statement reports on financing activities. C. The statement of equity reports on changes in the accounts that make up equity. D. The statement of cash flows reports on cash flows from operating, investing, and financing activities over a period of time. E. A balance sheet reports on a company's assets and liabilities over a period of time. Selected ratios follow for BJ Services for the year ended September 31, 2008 (in millions). What is the company's return on equity (ROE) for the year? Return on net operating assets (RNOA) Profit margin (PM) Net operating profit margin (NOPM) Asset turnover (AT) Financial leverage (FL) 17.10% 11.23% 11.69% 1.081 1.595 Answer A. 12.64% B. 19.36% C. 20.16% D. 27.27% E. None of the above Procter & Gamble's June 30, 2008 financial statements reported the following (in millions): Cash, beginning of year $ 5,354 Cash, end of year 3,313 Cash from operating activities 15,814 Cash from investing activities $(2,549) What did Procter & Gamble report for Cash from financing activities for the year ended June 30, 2008? Answer A. $(13,265) million B. $(21,932) million C. $(15,306) million D. $15,306 million E. $13,265 million Commercial paper is issued with maturities of less than 270 days because: Answer A. Usually the collateral consists of short-term assets B. It exempts the borrowing from SEC regulation C. Companies use it to fund working capital needs D. Companies do not want to pay high interest rates Arizona Company currently has a current ratio of 0.9. The company decides to borrow $1,000,000 from First Granite Bank for a period of nine months. After the borrowing Arizona's current ratio will be: Answer A. 0.9 B. Unable to determine without more information C. Less than 0.9 D. Greater than 0.9 In its 2007 annual report, Caterpillar, Inc. reported the following (in millions): 2007 2006 Sales $44,958 $41,517 Cost of goods sold $32,626 $29,549 As a percentage of Sales, did Caterpillar's Gross profit increase or decrease during 2007? Answer A. Gross profit increased from 27% to 29% B. Gross profit decreased from 29% to 27% C. Gross profit increased from 71% to 73% D. Gross profit decreased from 73% to 71% E. There is not enough information to answer the question. Which of the following concepts is not captured by one of the variables in Altman's Z-Score? Answer A. Current level of efficiency B. Current level of profitability C. Current level of liquidity D. Current level of net operating assets Liquidity refers to: Answer A. The life cycle of the company B. The amount of receivables the company has in the balance sheet C. The amount of financial leverage D. None of the above The variable EBIT divided by Total Assets in the Altman Z-Score measures which of the following concepts? Answer A. Current level of liquidity B. Current level of net operating assets C. Current level of profitability D. Current level of efficiency The 2008 financial statements of The Washington Post Company reveal average shareholders' equity of $3,171,176 thousand, net operating profit after tax of $79,895 thousand, net income of $65,722 thousand, and average net operating assets of $ 3,279,742 thousand. The company's return on equity (ROE) for the year is: Answer A. 2.00% B. 2.07% C. 2.44% D. 2.52% E. There is not enough information to calculate the ratio Which of the following is a measure of liquidity? Answer A. Liabilities-to-Equity Ratio = Total Liabilities / Stockholder's Equity B. Times Interest Earned = Earning before interest and taxes / Interest Expense C. Quick Ratio = (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities D. Return on net operating assets (RNOA) E. All of the above The 2008 balance sheet of E.I. DuPont et Nemours and Company shows average shareholders' equity of $9,131 million, net operating profit after tax of $2,254 million, net income of $2,007 million, and common shares issued of 867 million. The company has no preferred shares issued. DuPont's return on equity (ROE) for the year is: Answer A. 21.98% B. 24.68% C. 231% D. 18.98% E. There is not enough information to calculate the ratio Cash collected on accounts receivable would produce what effect on the balance sheet? Answer A. Increase liabilities and decrease equity B. Decrease liabilities and increase equity C. Increase assets and decrease assets D. Decrease assets and decrease liabilities E. None of the above How would a purchase $100 of inventory on credit affect the income statement? Answer A. It would increase liabilities by $100 B. It would decrease liabilities by $100 C. It would increase non-cash assets by $100 D. Both A and C E. None of the above RainStorm Industries manufactures weather equipment. Selected financial data for RainStorm is presented below; use the information to answer the question that follows: Current Assets As of Dec. 31, 2008 Dec. 31, 2007 Cash and cash equivalents $276,843 $255,088 Marketable Securities $166,106 $187,064 Accounts Receivable (net) 258,387 289,100 Inventories 424,493 391,135 Prepaid Expenses 55,369 25,509 Other current assets 83,053 85,029 Total Current Assets $1,264,252 $1,232,925 Plant Property and Equipment 1,384,217 625,421 Long-Term Investment 568,000 425,000 Total Assets 3,216,469 2,283,346 Current Liabilities Short-term borrowings $156,376 $95,419 Current portion of long-term debt 155,000 168,000 Accounts payable 254,111 286,257 Accrued liabilities 273,658 166,983 Income taxes payable 97,735 178,911 Total Current Liabilities $936,879 $895,571 Long-Term Debt 450,000 325,000 Deferred Income Taxes 215,017 262,403 Total Liabilities $1,601,896 $1,482,973 Common Stock $425,250 $125,000 Additional Paid-in Capital 356,450 279,951 Retained Earnings 832,874 395421 Total Stockholders' Equity 1,614,573 800,372 Total Liabilities and Stockholders' Equity $3,216,469 $2,283,346 Selected Income Statement Data - for the year ending December 31, 2008: Net Sales $4,585,340 Cost of Goods Sold (2,942,353) Selling Expenses (884,685) Operating Income 758,302 Interest Expense (35,240) Earnings before Income Taxes 723,062 Income Tax Expense (285,609) Net Income 437,453 Selected Statement of Cash Flow Data - for the year ending December 31, 2008: Cash Flows from Operations $1,156,084 Capital Expenditures $845,862 RainStorm's Times interest earned ratio in 2008 was: Answer A. 1.00 B. 0.05 C. 21.5 D. 20.5 The fiscal 2008 balance sheet for Whole Foods Market reports the following data (in thousands). What is the company's current ratio? Cash and cash equivalents Accounts receivable Merchandise inventories Current assets Current liabilities $30,534 $115,424 $327,452 $622,606 $666,177 Answer A. 0.22 B. 0.93 C. 1.08 D. 1.65 E. None of the above The fiscal 2008 balance sheet for Whole Foods Market reports the following data. What is the company's quick ratio? Cash and cash equivalents Accounts receivable Merchandise inventories Current assets Current liabilities $30,534 $115,424 $327,452 $622,606 $666,177 Answer A. 0.05 B. 0.22 C. 0.71 D. 0.93 E. None of the above

Question 5

"1. Jeanie has deposited $33,000 today in an account which will earn 10 percent annually. She plans to leave the funds in this account for seven years earning interest. If the goal of this deposit is to cover a future obligation of $65,000, what recommendation would you make to Jeanie? 2. Fred has inherited $6,000 from the death of Barney. He would like to use this money to buy Wilma a new rockmobile costing $7,000 for their 10th anniversary celebration which will take place in 2 years from now. Will Fred have enough money to buy the gift if he deposits his money in an account paying 8 percent compounded semi annually? 3. Calculate the future value of an annuity of $5,000 each year for eight years, deposited at 6 percent. 4. Calculate the present value of an annuity of $3,900 each year for four years, assuming an opportunity cost of 10 percent. 5. Joie is planning to attend college when she graduates from high school 7 years from now. She anticipates that she will need $10,000 at the beginning of each college year to pay for tuition and fees, and have some spending money. Joie has made an arrangement with her father to do the household chores if her dad deposits $3,500 at the end of each year for the next 7 years in a bank account paying 8 percent interest. Will there be enough money in the account for Joie to pay for her college expenses? Assume the rate of interest stays at 8 percent during the college years. 6. You have provided your friend with a service worth $8,500. Your friend offers you the following cash flow instead of paying $8,500 today. Should you accept his offer if your opportunity cost is 8 percent? Year Cash Flow 1 $4,000 2 3,000 3 2,000 4 1,000 7. Mr. Handyman has been awarded a bonus for his outstanding work. His employer offers him a choice of a lump sum of $5,000 today, or an annuity of $1,250 a year for the next five years. Which option should Mr. Handyman choose if his opportunity cost is 9 percent? 8. Suzy wants to buy a house but does not want to get a loan. The average price of her dream house is $500,000 and its price is growing at 5 percent per year. How much should Suzy invest in a project at the end of each year for the next 5 years in order to accumulate enough money to buy her dream house with cash at the end of the fifth year? Assume the project pays 12 percent rate of return. 9. Marc has purchased a new car for $15,000. He paid $2,500 as down payment and he paid the balance by a loan from his hometown bank. The loan is to be paid on a monthly basis for two years charging 12 percent interest. How much are the monthly payments? 10. To expand its business, the Kingston Outlet factory would like to issue a bond with par value of $1,000, coupon rate of 10 percent, and maturity of 10 years from now. What is the value of the bond if the required rate of return is 1) 8 percent, 2) 10 percent, and 3) 12 percent? 11. Peter has recently inherited $10,000 and is considering purchasing 10 bonds of the Lucky Corporation. The bond has a par value of $1,000 with 10 percent coupon rate and will mature in 10 years. Does Peter have enough money to buy 10 bonds if the required rate of return is 9 percent? 12. Fancy Food, Inc. has issued a bond with par value of $1,000, a coupon rate of 9 percent that is paid semi annually, and that matures in 10 years. What is the value of the bond if the required rate of return is 12 percent? 13. The H&H Computer Company has an outstanding issue of bond with a par value of $1,000, paying 12 percent coupon rate semi annually. The bond was issued 25 years ago and has 5 years to maturity. What is the value of the bond assuming 14 percent rate of interest? 14. In response to the stock market?s reaction to its dividend policy, the Paper Company has decided to increase its dividend payment at a rate of 4 percent per year. The firm?s most recent dividend is $3.25 and the required rate of interest is 9 percent. What is the maximum you would be willing to pay for a share of the stock? 15. Kingston Kitchen Stuff has recently sold 1,000 shares of $6.75 preferred stock. What is the value of the stock assuming 10 percent required rate of return? 16. The Fur Company has been experiencing several years of financial difficulty and, thus, has considered maintaining its dividend payment at $2.50 indefinitely. What is the value of its common stock if the required rate of return is 8.5 percent? 17. The Bradshaw Company?s most recent dividend was $6.75. The historical dividend payment by the company shows a constant growth rate of 5 percent per year. What is the maximum you would be willing to pay for a share of its common stock if your required rate of return is 8 percent? 18. The Medical Equipment Company paid $2.25 common stock dividend last year. The company?s policy is to allow its dividend to grow at 5 percent per year indefinitely. What is the value of the stock if the required rate of return is 8 percent? 19. A firm has an issue of preferred stock outstanding that has a stated annual dividend of $4. The required return on the preferred stock has been estimated to be 16 percent. The value of the preferred stock is _________. (a) $64 (b) $16 (c) $25 (d) $50 Table 7.2 Year Dividends($) 2003 2.89 2002 2.53 2001 2.22 2000 1.95 1999 1.71 1998 1.50 20. Calculate the estimated dividend for 2004. (See Table 7.2.) Asuma que la tasa de crecimiento, g, es de 14%. 21. The required return is assumed to be 17 percent. Using the Gordon model, calculate the per share value of the stock. (See Table 7.2.) 22. Sopp Accounting Services has an outstanding issue of 1,000 shares preferred stock with a $100 par value, an 8 percent annual dividend, and 5,000 shares of common stock outstanding. If the stock is cumulative and the board of directors has passed the preferred dividend for the last two years, how much must preferred stockholders be paid prior to paying dividends to common stockholders? "