Reference no: EM131308656
Problem 1:-
You have a loan outstanding. It requires making three annual payments at the end of the next three years of $1,000 each. Your bank has offered to allow you to skip making the next two payments in lieu of making one large payment at the end of the loan's term in three years.
If the interest rate on the loan is 5%, what final payment will the bank require you to make so that it is indifferent between the two forms of payment?
- Annual payment: -$1,000
- Interest rate: 5.00%
- Number of payments: 3
Requirement:-
Calculate the future value of the three year annuity.
Problem 2:-
Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 6%. You hold the bond for five years before selling it.
a. If the bond's yield to maturity is 6% when you sell it, what is the internal rate of return of your investment?
b. If the bond's yield to maturity is 7% when you sell it, what is the internal rate of return of your investment?
c. If the bond's yield to maturity is 5% when you sell it, what is the internal rate of return of your investment?
- Years to maturity: 30
- Years held : 5
- Coupon : $0
- Par value : $1,000
- Yield to maturity : 6%
Price at original issue
Years left to maturity
a. If the bond's yield to maturity is 6% when you sell it, what is the internal rate of return of your investment?
Price when sold
Internal rate of return
b. If the bond's yield to maturity is 7% when you sell it, what is the internal rate of return of your investment? New yield to maturity 7%
Price when sold
Internal rate of return
c. If the bond's yield to maturity is 5% when you sell it, what is the internal rate of return of your investment?
Price when sold
Internal rate of return
Requirements
1. To calculate the price of the bond when it was originally issued, you will use the function PV. By using the function PV calculate the price of the bond when it was originally issued.
2. Calculate the number of years left to maturity when the bond is sold.
3. To calculate the price of the bond when it was sold as in part (a), you will use the function PV. By using the function PV and absolute and relative references, calculate the price of the bond when it was sold.
4. To calculate the internal rate of return of the bond as in part (a), you will use the function RATE. By using the function RATE and absolute and relative references, calculate the internal rate of return of the bond.
5. To calculate the price of the bond when it was sold as in part (b) and part (c).
6. To calculate the internal rate of return of the bond when it was sold as in part (b) and part (c).
|
Write an application that retrieves a student name
: Write an application that retrieves a student name and three scores per line from a text file. Process the values by calculating the average of the scores per student.
|
|
What is the most you would pay per share
: The dividend for Should I, Inc., is currently $1.9 per share. It is expected to grow at 24 percent next year and then decline linearly to a 6 percent perpetual rate beginning in four years. If you require a 21 percent return on the stock, what is the..
|
|
Analyze change to medicaid resulting from the implementation
: Analyze two (2) changes to Medicaid resulting from the implementation of the Affordable Care Act. Determine the impact that these changes will have on both Medicare eligibility and your state government's fiscal responsibility.
|
|
What is the projects discounted payback
: Project L costs $45,000, its expected cash inflows are $11,000 per year for 8 years, and its WACC is 8%. What is the project's discounted payback?
|
|
Calculate price of the bond when it was originally issued
: To calculate the price of the bond when it was originally issued, you will use the function PV. By using the function PV calculate the price of the bond when it was originally issued.
|
|
Indifferent between the new and the old leases
: A store has 5 years remaining on its lease in a mall. Rent is $1,900 per month, 60 payments remain, and the next payment is due in 1 month. The mall's owner plans to sell the property in a year and wants rent at that time to be high so that the prope..
|
|
Analyze the impact that the choice of model
: From the first e-Activity, specify whether your state follows the private insurance model or the Medicaid model for its CHIP. Analyze the impact that the choice of model has on the fiscal health of your state. Provide two (2) examples of this impa..
|
|
Obtain a packet sniffer and install it on your home system
: Obtain a packet sniffer and install it on your home system. The instructions below have been written presuming that Wireshark has been your choice.
|
|
Comparing return and growth on investments
: Donald and Gabby are going to invest some of their money for two years from January 1, 2016 to December 31, 2017. Use 2016 rates, etc for both 2016 and 2017. Their taxable income without any return is $200,000. They will invest $55,720 for two years,..
|