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

Net Asset Value = (225000000-5000000)/4400000 = $50 per Share

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?

Gross Profit = 120000-100000 = 20000

b. What is his net profit/loss?

Net Profit = 20000 – (3*90000*8.5%) = $2950

c. What is the rate of return on investment?

Rate of Return = (2950)/10000 = (29.50%)

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.

Shelly Net Worth = 108800 – 16300 = $92500

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?

Amount = 2*12000*3 = 72000 (78000 as per 2009 or 2010 rates)

(Barry and Mary can give $12000 (2008 Rate) with incurring gift tax. Gift tax rate in 2009 and 2010 is 13000)

B- How much money can Barry and Mary gift to their grandchildren?

Amount = 2*12000*5 = $120000 ($130000 as per 2009 or 2010 rate)

C- What is the total amount of estate removed from Barry and Mary’s estate?

Total amount of estate removed = 72000 + 120000 = 192,000 (208000 as per 2009 or 2010)

5. Dave bought a rental property for $200,000 cash. One year later, he sold it for $240,000.

A- What was the return on his $200,000 investment?

ROI = 40000/2000000 = 20%

B- 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?

ROI = 40000/20000 = 200%