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Words 674

Pages 3

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1. Calculating the Number of Periods

At 8 percent interest, how long does it take to double your money? To quadruple it?

FV = PV (FVF) 8%, t = ?

$2 = $1 (FVF) 8%, t = ?

$2/ 1 = 2.0; so for FVF at 8 %, “t” is approximately 9 years.

2. Perpetuities

An investor purchasing a British consul is entitled to receive annual payments from the British government forever. What is the price of a consul that pays $160 annually if the next payment occurs one year from today? The market interest rate is 4.5 percent.

PV = C / r

PV = $160 / 0.045

PV = $3,555.56

3. Present Value and Multiple Cash Flows

Investment X offers to pay you $6,000 per year for nine years, whereas Investment Y offers to pay you $8,500 per year for ﬁve years. Which of these cash ﬂow streams has the higher present value if the discount rate is 9 percent? If the discount rate is 21 percent?

PVA = C ({1 – [1/(1 + r)]^t} / r

X @ 9%: PVA $6,000 {[1 – (1 / 1.09)^9] / .09} = $35,974.48

Y @ 9%: PVA $8,500 {[1 – (1/1.09)^5] / .09} = $33,062.04

X @ 21%: PVA $6,000 {[1 – (1 / 1.21)^9] / .21} = $23,432.61

Y @ 21%: PVA $8,500 {[1 – (1/1.21)^5] / .21} = $24,870.87

4. Calculating EAR First National Bank charges 15.1 percent compounded monthly on its business loans. First United Bank charges 15.5 percent compounded semiannually. As a potential borrower, which bank would you go to for a new loan?

EAR = [1 + (APR / m)]^m – 1

First National: EAR = [1 + (0.151 / 12)]^12 – 1 = 0.1619 – 16.19%

First United: EAR = [1 + (0.155 / 2)]^2 – 1 = 0.1510 – 16.10%

5. Calculating Annuities

You are planning to save for retirement over the next 30 years. To do this, you will invest $700 a month in a stock account and $300 a month in a bond account. The return of the stock account is expected to be 11 percent, and the bond…...

...FIN515_HOMEWORK3_DeANGELA L. DIXON Problem 5-1 Maturity 12 YTM 9% PYMT $80.00 FV $1,000.00 PV $928.39 Problem 5-2 MATURITY 12 COUPON RATE 10% PV -$850.00 FV $1,000.00 PMT $100.00 RATE 12.48% Problem 5-6 RISK FREE 3% INFLATION 3% 6% TREASURY SECURITY 6.3% MRP 0.3% Problem 5-7 MATURITY 16 COUPON RATE 10% PMT 50.00 FV $1,000.00 YTM 4.25% PV $1,085.80 Problem 5-13 MATURITY 5 COUPON RATE 8% PMT $80.00 FV $1,000.00 PV -974.42 RATE 8.65% Question 6-6 Not necessarily. If a beta were to double, its expected return would not double. According to the SML equation, an increase in beta will increase a company’s return by an amount equal to the market risk premium times the change in beta. Problem 6-1 STOCK BETA $35,000.00 0.8% $40,000.00 1.4% $75,000.00 PORTFOLIO BETA 1.12% Problem 6-2 RISK FREE 6% MARKET RETURN 13% BETA 0.7% RATE OF RETURN 10.9% Problem 6-7 a. RISK FREE 9% MARKET RETURN 14% BETA...

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...FIN 534 Week 6 Homework Set 3 Purchase here http://chosecourses.com/FIN%20534/fin-534-week-6-homework-set-3 Product Description Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Use the following information for questions 1 through 8: The Goodman Industries’ and Landry Incorporated’s stock prices and dividends, along with the Market Index, are shown below. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends. Goodman Industries Landry Incorporated Market Index Year Stock Price Dividend Stock Price Dividend Includes Dividends 2013 $25.88 $1.73 $73.13 $4.50 17.49 5.97 2012 22.13 1.59 78.45 4.35 13.17 8.55 2011 24.75 1.50 73.13 4.13 13.01 9.97 2010 16.13 1.43 85.88 3.75 ...

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...FIN 550 FIN550 week 1 to week 11 Complete Course Click below link for Answer visit www.workbank247.com http://workbank247.com/q/fin-550-week-1-to-week-11-complete-course-fin550-w/9896 http://workbank247.com/q/fin-550-week-1-to-week-11-complete-course-fin550-w/9896 FIN 550 Week 1 Discussion "Investment Performance and Decisions" Please respond to the following: * From the e-Activity, predict the performance of the DOW for the next two years. Provide support for your prediction. * Analyze the factors that influence investment decisions at different stages in an investor’s life cycle, and make a recommendation at which stage the average investor should consider financial investments. Provide support for your recommendation. FIN 550 Week 1 Homework * Chapter 1: Problems 5(a-d), 7, 9, and 12 * Chapter 2: Problems 4(a-b), 5(a-b), and 6(a-b) * •Chapter 1: Problems 5(a-d), 7, 9, and 12 * * 5. During the past five years, you owned two stocks that had the following annual rates of * * return: * * Year Stock T Stock B * * 1 0.19 0.08 * * 2 0.08 0.03 * * 3 −0.12 −0.09 * * 4 −0.03 0.02 * *......

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...FIN 534 Week 6 Homework Set 3 Purchase here http://chosecourses.com/FIN%20534/fin-534-week-6-homework-set-3 Product Description Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Use the following information for questions 1 through 8: The Goodman Industries’ and Landry Incorporated’s stock prices and dividends, along with the Market Index, are shown below. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends. Goodman Industries Landry Incorporated Market Index Year Stock Price Dividend Stock Price Dividend Includes Dividends 2013 $25.88 $1.73 $73.13 $4.50 17.49 5.97 2012 22.13 1.59 78.45 4.35 13.17 8.55 2011 24.75 1.50 73.13 4.13 13.01 9.97 2010 16.13 1.43 85.88 3.75 ...

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...FIN 534 Week 6 Homework Set 3 Purchase here http://chosecourses.com/FIN%20534/fin-534-week-6-homework-set-3 Product Description Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Use the following information for questions 1 through 8: The Goodman Industries’ and Landry Incorporated’s stock prices and dividends, along with the Market Index, are shown below. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends. Goodman Industries Landry Incorporated Market Index Year Stock Price Dividend Stock Price Dividend Includes Dividends 2013 $25.88 $1.73 $73.13 $4.50 17.49 5.97 2012 22.13 1.59 78.45 4.35 13.17 8.55 2011 24.75 1.50 73.13 4.13 13.01 9.97 2010 16.13 1.43 85.88 3.75 ...

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...FIN 515 WEEK 3 HOMEWORK ASSIGNMENT To purchase this visit following link: http://www.activitymode.com/product/fin-515-week-3-homework-assignment/ Contact us at: SUPPORT@ACTIVITYMODE.COM FIN 515 WEEK 3 HOMEWORK ASSIGNMENT FIN 515 Week 3 Homework Assignment Week 3 Homework Assignment Complete the following graded homework assignment in a Word document named “FIN515_Homework3_yourname.” Show the details of your calculation/work in your answer to the problems. • Problems (pp. 210-211) o 5-1 Bond Valuation with Annual Payments o 5-2 YTM for Annual Payments o 5-6 Maturity Risk Premium o 5-7 Bond Valuation with Semi-Annual Payments o 5-13 Yield to Maturity and Current Yield • Questions (p. 257) o 6-6 Beta and expected return • Problems (pp. 258-259) o 6-1 Portfolio Beta o 6-2 Required Rate of Return Stock o 6-7 Required Rate of Return Activity mode aims to provide quality study notes and tutorials to the students of FIN 515 Week 3 Homework Assignment in order to ace their studies. FIN 515 WEEK 3 HOMEWORK ASSIGNMENT To purchase this visit following link: http://www.activitymode.com/product/fin-515-week-3-homework-assignment/ Contact us at: SUPPORT@ACTIVITYMODE.COM FIN 515 WEEK 3 HOMEWORK ASSIGNMENT FIN 515 Week 3 Homework Assignment Week 3 Homework Assignment Complete the following graded homework assignment in a Word document named “FIN515_Homework3_yourname.” Show the details of your calculation/work in your answer to the problems. • Problems (pp....

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...FIN 534 Week 6 Homework Set 3 Purchase here http://homeworkonestop.com/FIN%20534/fin-534-week-6-homework-set-3 Product Description Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Use the following information for questions 1 through 8: The Goodman Industries’ and Landry Incorporated’s stock prices and dividends, along with the Market Index, are shown below. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends. Goodman Industries Landry Incorporated Market Index Year Stock Price Dividend Stock Price Dividend Includes Dividends 2013 $25.88 $1.73 $73.13 $4.50 17.49 5.97 2012 22.13 1.59 78.45 4.35 13.17 8.55 2011 24.75 1.50 73.13 4.13 13.01 9.97 2010 16.13 1.43 85.88 3.75 9.65 ...

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...FIN 534 Week 6 Homework Set 3 Purchase here http://homeworkonestop.com/FIN%20534/fin-534-week-6-homework-set-3 Product Description Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Use the following information for questions 1 through 8: The Goodman Industries’ and Landry Incorporated’s stock prices and dividends, along with the Market Index, are shown below. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends. Goodman Industries Landry Incorporated Market Index Year Stock Price Dividend Stock Price Dividend Includes Dividends 2013 $25.88 $1.73 $73.13 $4.50 17.49 5.97 2012 22.13 1.59 78.45 4.35 13.17 8.55 2011 24.75 1.50 73.13 4.13 13.01 9.97 2010 16.13 1.43 85.88 3.75 9.65 ...

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...FIN 515 Week 3 Homework Assignment Purchase here http://devrycourse.com/fin-515-week-3-homework-assignment Product Description Week 3 Homework Assignment Complete the following graded homework assignment in a Word document named “FIN515_Homework3_yourname." Show the details of your calculation/work in your answer to the problems. • Problems (pp. 210-211) o 5-1 Bond Valuation with Annual Payments o 5-2 YTM for Annual Payments o 5-6 Maturity Risk Premium o 5-7 Bond Valuation with Semi-Annual Payments o 5-13 Yield to Maturity and Current Yield • Questions (p. 257) o 6-6 Beta and expected return • Problems (pp. 258-259) o 6-1 Portfolio Beta o 6-2 Required Rate of Return Stock o 6-7 Required Rate of Return FIN 515 Week 3 Homework Assignment Purchase here http://devrycourse.com/fin-515-week-3-homework-assignment Product Description Week 3 Homework Assignment Complete the following graded homework assignment in a Word document named “FIN515_Homework3_yourname." Show the details of your calculation/work in your answer to the problems. • Problems (pp. 210-211) o 5-1 Bond Valuation with Annual Payments o 5-2 YTM for Annual Payments o 5-6 Maturity Risk Premium o 5-7 Bond Valuation with Semi-Annual Payments o 5-13 Yield to Maturity and Current Yield • Questions (p. 257) o 6-6 Beta and expected return • Problems (pp. 258-259) o 6-1 Portfolio Beta o 6-2 Required Rate of Return Stock o 6-7 Required Rate of Return FIN 515 Week 3...

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...FIN 571 Week 3 Individual Homework Solution To Buy this Class Copy & paste below link in your Brower http://homeworkregency.com/downloads/fin-571-week-3-individual-homework-solution/ Or Visit Our Website Visit : http://www.homeworkregency.com Email Us : homeworkregency@gmail.com FIN 571 Week 3 Individual Homework Solution University Of Phoenix Week 3 Homework & Solutions Week 3 Individual Homework Submit Through Gradebook In Excel Proforma Cash Flows I- The Martinsen Company is considering the purchase of a chemical analysis machine. Although the machine being considered will not produce any increase in sales revenues, it will result in before tax the reduction of labor costs by $35,000 per year. The machine has a purchase price of $100,000, and it would cost an additional $5,000 to properly install this machine. In addition, to properly operate this machine, inventory must be increased by $5,000. This machine has an expected life of 10 years, after which it will have no salvage value. Also, assume simplified straight line depreciation and that this machine is being depreciated down to zero, a 34 percent marginal tax rate, and a required rate of return of 15 percent. 1. What is the initial outlay associated with this project? 2. What are the annual after tax cash flows associated with this project, for years 1thru 9. 3. What is the terminal cash flow in year 10. 4. Should the machine be purchased? Ie Calculate NPV, IRR, MIRR CPI &......

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...FIN 516 Week 3 Homework To Buy This material Click below link http://www.uoptutors.com/fin-516-new/fin-516-week-3-homework Problem 20-6 on Call Options Based on Chapter 20 You own a call option on Intuit stock with a strike price of $40. The option will expire in exactly 3 months’ time. a) If the stock is trading at $55 in 3 months, what will be the payoff of the call? b) If the stock is trading at $35 in 3 months, what will be the payoff of the call? c) Draw a payoff diagram showing the value of the call at expiration as a function of the stock price at expiration. Problem 20-8 on Put Options Based on Chapter 20 You own a put option on Ford stock with a strike price of $10. The option will expire in exactly 6 months’ time. a) If the stock is trading at $8 in 6 months, what will be the payoff of the put? b) If the stock is trading at $23 in 6 months, what will be the payoff of the put? c) Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration. Problem 20-11 on Return on Options Based on Chapter 20 Consider the September 2012 IBM call and put options in Problem 20-3. Ignoring any interest you might earn over the remaining few days’ life of the options, consider the following. a) Compute the break-even IBM stock price for each option (i.e., the stock price at which your total profit from buying and then exercising the option would be 0). b) Which call option is most likely to have a return of −100%? c) If...

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...FIN 516 Week 3 Homework Problem To Buy this Class Copy & paste below link in your Brower http://homeworkregency.com/downloads/fin-516-week-3-homework-problem/ Or Visit Our Website Visit : http://www.homeworkregency.com Email Us : homeworkregency@gmail.com FIN 516 Week 3 Homework Problem Problem 20-6 on Call Options Based on Chapter 20 (Excel file included) You own a call option on Intuit stock with a strike price of $40. The option will expire in exactly 3 months’ time. a) If the stock is trading at $55 in 3 months, what will be the payoff of the call? b) If the stock is trading at $35 in 3 months, what will be the payoff of the call? c) Draw a payoff diagram showing the value of the call at expiration as a function of the stock price at expiration. Problem 20-8 on Put Options Based on Chapter 20 (Excel file included) You own a put option on Ford stock with a strike price of $10. The option will expire in exactly 6 months’ time. a) If the stock is trading at $8 in 6 months, what will be the payoff of the put? b) If the stock is trading at $23 in 6 months, what will be the payoff of the put? c) Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration. Problem 20-11 on Return on Options Based on Chapter 20 Consider the September 2012 IBM call and put options in Problem 20-3. Ignoring any interest you might earn over the remaining few days’ life of the options, consider the following. a)......

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...FIN 571 Week 3 Individual Homework Solution To Buy this Class Copy & paste below link in your Brower http://homeworkregency.com/downloads/fin-571-week-3-individual-homework-solution/ Or Visit Our Website Visit : http://www.homeworkregency.com Email Us : homeworkregency@gmail.com FIN 571 Week 3 Individual Homework Solution University Of Phoenix Week 3 Homework & Solutions Week 3 Individual Homework Submit Through Gradebook In Excel Proforma Cash Flows I- The Martinsen Company is considering the purchase of a chemical analysis machine. Although the machine being considered will not produce any increase in sales revenues, it will result in before tax the reduction of labor costs by $35,000 per year. The machine has a purchase price of $100,000, and it would cost an additional $5,000 to properly install this machine. In addition, to properly operate this machine, inventory must be increased by $5,000. This machine has an expected life of 10 years, after which it will have no salvage value. Also, assume simplified straight line depreciation and that this machine is being depreciated down to zero, a 34 percent marginal tax rate, and a required rate of return of 15 percent. 1. What is the initial outlay associated with this project? 2. What are the annual after tax cash flows associated with this project, for years 1thru 9. 3. What is the terminal cash flow in year 10. 4. Should the machine be purchased? Ie Calculate NPV, IRR, MIRR CPI &......

Words: 802 - Pages: 4