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You would like to take out a $300,000 loan for a 30-year fixed mortgage and the bank is offering a 30-year fixed rate annual rate of 5.0% with monthly payments. (Note: the interest rate given here is an annual value and you must correct for monthly payments.) Use the APR convention for rate conversion. Call the worksheet “Simple Loan”. 1. Create a spreadsheet model with a vertical (by column) timeline to calculate the beginning principal, payment amount, interest paid, principal component, and ending principal in each month for 30 years. If after five years (5*12=60 monthly mortgage payments) you receive a promotion and are transferred to another city, how much money is left on the principal? 2. Create a new worksheet called “Down Payment Decision” and copy your completed answer from part 1 to it. Modify the worksheet and formulas as needed for the following changes: a. The bank is willing to offer a lower interest rate (annual rate of 4.85%) if you put $30,000 as a down payment, reducing the amount of the loan. If the alternative to putting $30,000 down is to leave the money in a bank savings account that yields 1% annually, what financial decision makes more sense? Defend your answer and be sure to explain any assumptions made. b. Now use Goal Seek to determine the interest rate required for the bank account to make the decision alternatives equivalent.
Ramstucky Corp bonds just paid their annual coupon of 4%. They mature in 6 years. What is the price of the bonds as a percentage of par?
A bank can purchase an additional ATM for $110,000 that has an estimated life of 6 years. What are the equivalent annual costs of acquiring one ATM
Big steve's makers of swizzle tickets is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $110,000 nd will generate net cash inflows of $16,000 per year for 8 years. What is the projected NPV u..
Using the Gordon formula, Önd the WACC for Colgate-Palmolive Company at the end of 2010.
Which of the following is correct regarding cash basis breakeven?
The risk-free rate of interest is 7% per annum and the index provides a dividend yield of 4% per annum.- Calculate the value of a three-month European put with an exercise price of 700.
What is the fundamental price of the stock? What is the stock's expected return?
If the risk-free rate is 4 percent and the expected return on the market is 12 percent, what is the company's cost of equity capital?
Suppose that a loan is being repaid with 20 annual payments with the first payment coming one year from now. The first 5 payments are for $250, the next 8 are $310 each, and the final 7 are $440 each. If the effective rate of interest is 6.6%, how mu..
An automaker is considering installing a three-dimensional (3-D) computerized car-styling system at a cost of $215,000.
Winston Inc. is trying to determine the effect of its inventory turnover ratio and days sales outstanding on its cash conversion cycle.
Two years ago Abilia purchased a $13,000 car; she paid $2,500 down and borrowed the rest. She took a fixed rate 60-month instalment loan at a stated rate of 7.0% per year. Interest rates have fallen during the last two years and she can refinance her..
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