Reference no: EM131102105
Chapter : Time Value of Money
Reference Equations 2.1, 2.2, 2.3
Compute the present value of the following sums:
a. 2000 to be received in five years, expected interest rate of 6%.
b. 1000 to be received in 10 years, expected interest rate of 6%.
Compute the future value of the following sums:
c. 2000 today, valued five years in the future at a rate of 6%.
d. 1000 today, valued ten years in the future at a rate of 6%.
Chaper, Equation 5.1
Compute the value of the following bonds:
a. A 3% coupon bond with 1000 face value and a 20 year maturity with Yield to Maturity of 5%.
b. A 12% coupon bond with a 1000 face value and a 20 year maturity with Yield to Maturity of 10%
3. Compute the value of XYZ corporation if the quarterly dividend paid yesterday was $0.20 and the annual growth rate is a constant 12%. XYZ Corp reports a cost of equity of 22%.
Reference Chapter, Equation 5.2, 5.3, 5.4 and 5.5.
4. Compute the required return of ABC Corp. ABC trades on the New York exchange at a price of $22.00 per share, and pays a dividend of $1.00 per year. The capital gains growth rate is estimated to be 3%.
Reference Chapter 5, Equation 5.2.
5. Compute the expected eps (earnings per share) and standard deviation of eps for ABC corp, given the scenario analysis shown below.
Reference Chapter 6, Equations 6.2 and 6.3
| eps |
Probability |
| $1.00 |
10% |
| $1.20 |
25% |
| $1.50 |
25% |
| $1.60 |
40% |
6. Compute the correlation coefficient between ABC corps returns (given above) and XYZ corp, given the below information on XYZ corp's eps.
Reference Chapter 6, Equations 6.2 through 6.5
| eps |
Probability |
| $0.50 |
10% |
| $0.70 |
25% |
| $0.90 |
25% |
| $1.00 |
40% |
7. Given the rate on a 10 year T-bill of 2.0% and an average return on the S&P 500 stock index over a 10 year period of 5%, compute the cost of equity for the following cases:
Reference Chapter 7 (all)
a. XYZ corp with a reported beta of .3
b. ABC corp with a reported beta of -.3
c. In a portfolio equally weighted between XYZ and ABC corp, what is the expected return of the portfolio?
Attachment:- ProblemSet.rar
|
Contract implied-in-law contract
: An unwritten, unspoken contract, also known as "a contract implied by the acts of the parties", which can be either an implied-in-fact contract implied-in-law contract, may also be legally binding?
|
|
Use total cost analysis to determine
: Given the following information, use total cost analysis to determine which supplier is more cost-effective. Late delivery of raw material results in 60 percent lost sales and 40 percent back orders if finished goods.
|
|
Determine the components of all forces acting on each member
: Determine the components of all forces acting on each member of the loaded fraHow to solve these problems?
|
|
Difficulties might there be in establishing such as case
: The problem with being locked-in to a product or technology is only a problem if such a product can be clearly shown to be inferior to an alternative. What difficulties might there be in establishing such as case?
|
|
Compute the expected eps and standard deviation
: Compute the expected eps (earnings per share) and standard deviation of eps for ABC corp - Compute the required return of ABC Corp. ABC trades
|
|
A current exposure draft requires companies
: A current exposure draft requires companies to recognize the fair value of employee stock options as an operating expense. Options pricing models are used to estimate the fair value of the options.
|
|
Attitudes towards the recent business practices
: Three of the biggest competitors are banking together and yet the Government is still trying to slow us down.' Should the AOL-Netscape merger alter attitudes towards the recent business practices of Microsoft?
|
|
Field industries outstanding bonds
: Field Industries outstanding bonds have a 25-year maturity and $1,000 par value. Their nominal yield to maturity is 9.25% they pay interest semiannually, and they sell at a price of $850. What is the bond's nominal (annual) coupon interest rate?
|
|
The money compounds at a simple
: If you save $1,200 per year and the money compounds at a simple 8.0% rate how much money will you have in 20 years? What lump sum could you invest today to have the same amount in 20 years?
|