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26 Jan 2018

Question 1. Critically evaluate various approaches to the financial management. (Points 2)

Question 2. What are the differences between fund flow and cash flow? (Points 2)

Question 3. (a) What is the present value of a perpetuity of $100 per year if the appropriate discount rate is 7%? If interest rates in general were to double and the appropriate discount rate rose to 14%, what would happen to the present value of the perpetuity? (Points 2)

(b) Your company is planning to borrow $1 million on a 5-year, 15%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? (Points 2)

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Irving HeathcoteLv2
28 Jan 2018

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Related questions

Your company is planning to borrow $1.5 million on a 7-year, 8%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places.

)Washington-Pacific (W-P) invests $3 million to buy a tract of land and plant some young pine trees. The trees can be harvested in 8 years, at which time W-P plans to sell the forest at an expected price of $6 million. What is W-P's expected rate of return? Round your answer to two decimal places. %

A mortgage company offers to lend you $85,000; the loan calls for payments of $8,964.13 at the end of each year for 30 years. What interest rate is the mortgage company charging you? Round your answer to two decimal places.

You need to accumulate $10,000. To do so, you plan to make deposits of $1,650 per year - with the first payment being made a year from today - into a bank account that pays 10.18% annual interest. Your last deposit will be less than $1,650 if less is needed to round out to $10,000. How many years will it take you to reach your $10,000 goal? Round your answer up to the nearest whole number.
year(s)

How large will the last deposit be? Round your answer to the nearest cent.
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Present Value of a Perpetuity

What is the present value of a perpetuity of $100 per year if the appropriate discount rate is 4.22%? Round your answer to the nearest cent.
$

If interest rates in general were to double and the appropriate discount rate rose to 8.44%, what would its present value be? Round your answer to the nearest cent.
$

)Washington-Pacific (W-P) invests $3 million to buy a tract of land and plant some young pine trees. The trees can be harvested in 8 years, at which time W-P plans to sell the forest at an expected price of $6 million. What is W-P's expected rate of return? Round your answer to two decimal places. %

A mortgage company offers to lend you $85,000; the loan calls for payments of $8,964.13 at the end of each year for 30 years. What interest rate is the mortgage company charging you? Round your answer to two decimal places.

You need to accumulate $10,000. To do so, you plan to make deposits of $1,650 per year - with the first payment being made a year from today - into a bank account that pays 10.18% annual interest. Your last deposit will be less than $1,650 if less is needed to round out to $10,000. How many years will it take you to reach your $10,000 goal? Round your answer up to the nearest whole number.
year(s)

How large will the last deposit be? Round your answer to the nearest cent.
$

Present Value of a Perpetuity

What is the present value of a perpetuity of $100 per year if the appropriate discount rate is 4.22%? Round your answer to the nearest cent.
$

If interest rates in general were to double and the appropriate discount rate rose to 8.44%, what would its present value be? Round your answer to the nearest cent.
$

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