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A 6 year annuity pays $1,000 at the end of each year.
a. Compute the price of the annuity at an effective annual interest rate of 2%.
b. Compute the modified duration at an effective annual interest rate of 2%.
c. Compute the (Macaulay) duration at an effective annual interest rate of 2%.
d. Compute the modified convexity at an effective annual interest rate of 2%.
e. Compute the Macaulay convexity at an effective annual interest rate of 2%.
f. Estimate the new price of the annuity if the interest rate changes to 1.9% using the first-order modified approximation.
g. Estimate the new price of the annuity if the interest rate changes to 1.9% using the first-order Macaulay approximation.
Which one of the following is defined as the average compounded return earned per year over a multiyear period?
The applicable corporate tax rate is 40%, and the firms cost of capital is 12%. The old machine has been fully depreciated and has no salvage value. Should it be replaced by the new machine?
Are the benefits of further education worth the associated costs?
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A firm plans to retire outstanding bonds in the next planning period. the statements that will be affected are the: a. pro forma balance sheet and cash budget b.pro forma income statement and pro forma balance sheet c. cash budget and statement of re..
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if Parramore could lower its inventories and receivables by 12% each and increase its payables by 12%, all without affecting sales or cost of goods sold?
As an intern for Coca-Cola, you have been asked to help with developing an IMC budget. Evaluate your manager’s strategy.
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