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Problem 1:


Paltrow Company made an investment in another that guarantees cash flow $ 22,500 each year for the next five years. If the company uses a discount rate of 15% on their investments, what is the present value of this investment?


Problem 2:


The company Argentinian Grill has a 7-year loan $ 23.500 with the local bank. His plan is to start paying the loan in seven equal installments starting today. If the interest rate
It is 8.4%, calculates the annuity payment.

Problem 3:


You currently have 25 and want to retire at the age of 65. As a complement to other sources of retirement, you could deposit $ 3,000 at the end of each year in an IRA. This financial instrument would earn 9.75% over the next 40 years.

a) How much money will accumulate at the end when you turn 65?

Problem 4:
Solve each situation separately, where P = principal; r = interest rate; t = time in years; I = interest and future value FV =

A) P = $ 10.800; r = 6.50%; t = 7 years; I =?

B) I = $ 1.550; t = 11 months r = 7.75%; P =?

C) P = $ 30.500; r = 6.75%; t = 10; VF =

D) FV = $ 320,000; r = 5.40% compounded monthly; t = 30; P =?

b) If you decide to wait 10 years to begin to deposit, how much money will accumulate to reach age 65?

c) Discuss the impact of waiting 10 years on the accumulated amount.

Problem 5:

You want to start a bakery business. For this, you will need a capital of $ 75,000 to start operating. If you have to operate within four years. What sum must now invest 12% quarterly composite, the amount needed to keep and operate your business?

** NOTE** IT IS VERY IMPORTANT TO COMPLETE THE ENTIRE EXERSICE. INCLUDE ALL THE CALCULATIONS, PLEASE, THANK

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Patrina Schowalter
Patrina SchowalterLv2
29 Sep 2019

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Please show workout and aswer all questions, thank you

1) If you deposit money today in an account that pays 4.5% annual interest, how long will it take to double your money? Round your answer to two decimal places.

years

2) The real risk-free rate is 2.65%. Inflation is expected to be 3.2% this year, 4.1% next year, and then 2.5% thereafter. The maturity risk premium is estimated to be 0.05(t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note? Round your answer to two decimal places.

?%

3) An investment will pay $50 at the end of each of the next 3 years, $250 at the end of Year 4, $400 at the end of Year 5, and $550 at the end of Year 6.

a) If other investments of equal risk earn 9% annually, what is its present value? Round your answer to the nearest cent.

b)If other investments of equal risk earn 9% annually, what is its future value? Round your answer to the nearest cent.

4) A company's 5-year bonds are yielding 8.7% per year. Treasury bonds with the same maturity are yielding 5.9% per year, and the real risk-free rate (r*) is 2.65%. The average inflation premium is 2.85%, and the maturity risk premium is estimated to be 0.1(t - 1)%, where t = number of years to maturity. If the liquidity premium is 1.35%, what is the default risk premium on the corporate bonds? Round your answer to two decimal places.

5) Amortization schedule

Set up an amortization schedule for a $14,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 7% compounded annually. Round all answers to the nearest cent.

Beginning Remaining
Year Balance Payment Balance
1 $ $ $
2 $ $ $
3 $ $ $

What percentage of the payment represents interest and what percentage represents principal for each of the 3 years? Round all answers to two decimal places.

% Interest % Principal
Year 1: %? ?%
Year 2: %? ?%
Year 3: %? ? %

Why do these percentages change over time?

please answer all questions and Thank you !

1. Susan Wilson is a sales executive at a Baltimore firm. She is25 years old and plans to invest $3,800 every year in an IRAaccount, beginning at the end of this year until she reaches theage of 65. If the IRA investment will earn 8.45percent annually,how much will she have in 40 years, when she turns 65? (Roundanswer to 2 decimal places)

2. Donna Clark is a sales executive at a Baltimore firm. She is25 years old and plans to invest $2,500 each year in an IRA accountuntil she is 65 at which time she will retire (a total of 40payments). If Donna invests at the beginning of each year, and theIRA investment will earn 11.00 percent annually, how much will shehave when she retires? Assume that she makes the first paymenttoday.(Round answer to 2 decimal places)

3. Kevin Hall is saving for an Australian vacation in threeyears. He estimates that he will need $5,920 to cover his airfareand all other expenses for a week-long holiday in Australia. If hecan invest his money in an S&P 500 equity index fund that isexpected to earn an average annual return of 10.5 percent over thenext three years, how much will he have to save every year if hestarts saving at the end of this year?

4.Your grandfather is retiring at the end of next year. He wouldlike to ensure that his heirs receive payments of $9,600 a yearforever, starting when he retires. If he can earn 6.1 percentannually, how much does your grandfather need to invest to producethe desired cash flow? (Round answer to 2 decimal places)

5.Joseph Moore borrowed $15,550 from a bank for three years. Ifthe quoted rate (APR) is 8.90 percent, and the compounding isdaily, what is the effective annual interest rate (EAR)? (Roundanswer to 2 decimal places)

6.You are evaluating a growing perpetuity investment from alarge financial services firm. The investment promises an initialpayment of $24,700 at the end of this year and subsequent paymentsthat will grow at a rate of 2.6 percent annually. If you use a 9percent discount rate for investments like this, what is thepresent value of this growing perpetuity?(Round answer to 2 decimalplaces)

7.Cullumber Productions borrowed some money from the CaliforniaFinance Company at a rate of 13.90 percent for a seven-year period.The loan calls for a payment of $1,253,000 each year beginningtoday. How much did Cullumber borrow?(Round answer to 2 decimalplaces)

The payment made each period on an amortized loan is constant, and it consists of some interest and some principal. The closer we are to the end of the loan's life, the smaller the percentage of the payment that will be a repayment of principal.

a. True

b. False

2. The market value of any real or financial asset, including stocks, bonds, or art work purchased in hope of selling it at a profit, may be estimated by determining future cash flows and then discounting them back to the present.

a. True

b. False

3. A bond has a $1,000 par value, makes annual interest payments of $100, has 5 years to maturity, cannot be called, and is not expected to default. The bond should sell at a premium if interest rates are below 10% and at a discount if interest rates are greater than 10%.

a. True

b. False

4.Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds?

a. Market interest rates decline sharply.

b. Market interest rates rise sharply.

c. Inflation increases significantly.

d. The company's financial situation deteriorates significantly.

e. The company's bonds are downgraded.

5. A 15-year bond has an annual coupon rate of 8%. The coupon rate will remain fixed until the bond matures. The bond has a yield to maturity of 6%. Which of the following statements is CORRECT?

a. If market interest rates remain unchanged, the bond's price one year from now will be lower than it is today.

b. The bond is currently selling at a price below its par value.

c. If market interest rates decline, the price of the bond will also decline.

d. If market interest rates remain unchanged, the bond's price one year from now will be higher than it is today.

e. The bond should currently be selling at its par value.

6. Which of the following statements is CORRECT?

a. The expected return on a corporate bond will generally exceed the bond's yield to maturity.

b. If a bond's coupon rate exceeds its yield to maturity, then its expected return to investors exceeds the yield to maturity.

c. All else equal, senior debt generally has a lower yield to maturity than subordinated debt.

d. Under our bankruptcy laws, any firm that is in financial distress will be forced to declare bankruptcy and then be liquidated.

e. An indenture is a bond that is less risky than a mortgage bond.

7. Your investment account pays 6.8%, compounded annually. If you invest $5,000 today, how many years will it take for your investment to grow to $9,140.20?

Select the correct answer.

a. 10.47

b. 11.77

c. 9.17

d. 13.07

e. 7.87

8. You want to purchase a motorcycle 4 years from now, and you plan to save $3,500 per year, beginning immediately. You will make 4 deposits in an account that pays 5.7% interest. Under these assumptions, how much will you have 4 years from today?

a. $16,918

b. $19,584

c. $16,112

d. $17,763

e. $18,652

9. Suppose you earned a $135,000 bonus this year and invested it at 8.25% per year. How much could you withdraw at the end of each of the next 20 years?

Select the correct answer.

a. $14,006.84

b. $13,994.04

c. $13,997.24

d. $14,000.44

e. $14,003.64

10.Your older brother turned 35 today, and he is planning to save $30,000 per year for retirement, with the first deposit to be made one year from today. He will invest in a mutual fund that's expected to provide a return of 7.5% per year. He plans to retire 30 years from today, when he turns 65, and he expects to live for 25 years after retirement, to age 90. Under these assumptions, how much can he spend each year after he retires? His first withdrawal will be made at theend of his first retirement year.

Select the correct answer.

a. $119,069

b. $119,090

c. $119,076

d. $119,097

e. $119,083

11. Rogoff Co.'s 15-year bonds have an annual coupon rate of 9.5%. Each bond has face value of $1,000 and makes semiannual interest payments. If you require an 11% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

Select the correct answer.

$888.91

$882.64

$886.82

$891.00

$884.73

12. Haswell Enterprises' bonds have a 10-year maturity, a 6.25% semiannual coupon, and a par value of $1,000 . The going interest rate (rd) is 9.75%, based on semiannual compounding. What is the bond's price?

Select the correct answer.

$782.32

$787.80

$779.58

$785.06

$790.54

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