Money Management Midterm-1 Essay Example | Topics and Well Written Essays - 1500 words

Money Management Midterm-1 - Essay ExampleIt is assertive to note that, the insurance companies are obliged to make regular and demeanorlong payments until the holder dies (Brealey & Myers, 1997). Consider the legislation of calculating life annuity returns Payout= P*R*(1+R) exponent N/ (1+R) Whereby P is the principal, R interest group evaluate and payout refers to the periodic payment. Take a percentage interest of 6% and use the annuity data processor for easy calculation. For a single life annuity, fixed amount to be paid is 3,333 per month. This adds up to EUR 39,996 yearbookly. Therefore, annual periodic payment would be A = EUR 39,996 Now I believe that I would need more than money than EUR 39,996 annually. There would be different factors that would reduce the value of EUR 39,996 at that time like inflation. Therefore, when I retire and I think EUR 45,000 should be a valuable amount that I would need all year to spend my life happily. In order to have this amount ev ery year, the interest rate should be 7% as calculated using Goal Seek option in Microsoft Excel. The life expectancy and retirement age considered in this context is 70 and 55 years respectively. PART II- packet ANALYSIS This part intends to examine and analyze two companies from the investment analysis. Various financial ratios will be applied to analyze the performances of the society. The implication created by the ratios will be used to recommend a worthy smart set for investors to invest. The two companies intended for analysis for this report are Lockheed Martin Corporation and Altera Corporation. Lockheed Martin Corporation Background information about the company Lockheed Martin is a global leader in providing aeronautics and defense security services. The company is the worlds largest federal contractor of the agency with unique product portfolio. Headquarter of the company is situated in Bethesda, Maryland in Washington Metropolitan Area. The company is present in mor e than 75 countries. The company has partnership with more than 300 industry players across the globe. It employs around 120,000 employees worldwide who include 80,000 scientists, engineers and IT professionals. This research establishes that, Lockheed report $46.5 billion revenue in 2011 through its portfolio that includes aeronautics, electronics system, IT and global services, and space system. Net Income of the company is $2.65 billion in 2011. Presently, its share price is $93. Financial Ratios of Lockheed Martin Earnings per Share The Earnings per share shows how much return a shareholder is earning for each share (Friedlob and Plewa, 1996). The earnings per share of the Lockheed Martin were 7.81 in 2011. However, the average 3-year EPS growth rate of the profligate is zero. set Earnings Ratio Price Earnings ratio is the calculated by the following formula. Price earnings ratio = the market price per share/ annual earnings per share. A higher P/E of the stock implies that, i nvestors are paying more for earning every dollar consequently the share becomes more expensive compared to the