Determine the value of the investment today

Assignment Help Finance Basics
Reference no: EM133116412

Question

(a) When interest rates fall, how might businesses and consumers change their economic behavior.

(b) Determine the present value of a cash flows stream of $2,250 to be received every year at a required rate of return of 5%. How the value would differ if the cash flows stream starts at year 4 at the same required rate of return. Round your answer to 2 decimal places. Discuss why the values of the two cash flows streams is different.

(c) A company has just issued a $1,000 par value zero coupon bond, due to mature 15 years from today. If the current market price of the bond is 315.24, what is the rate of return on this bond?

(d) Twenty-five years ago, you invested $10000 in an account paying an annual interest rate of 5.75%. Determine the value of the investment today and the interest component earned on this investment.

Reference no: EM133116412

Questions Cloud

Compute the direct materials price variance : Purchase of raw materials (15,000 yards @ $13 per yard) $195,000. Compute the direct materials price variance
Determine the expected earnings per share : Biller Industries plc is a global haulage equipment and scaffolding manufacturer. The company has never borrowed before but feels that in order to maximize grow
Project weighted-average cost of capital : A project has an initial cost of $45,000. The incremental inflows associated with the project are $20,000 in year 1, $15,000 in year 2, $10,000 in year 3 and $8
Investment for a diversified investor : (a) Firm A has a standard deviation of 42 percent per year and a beta of +0.10. Firm B has a standard deviation of 31 percent a year and a beta of +0.66. Explai
Determine the value of the investment today : (a) When interest rates fall, how might businesses and consumers change their economic behavior.
Should you delete chili from the menu permanently : Should you delete chili from the menu permanently? Why or why not? Justify your answer based on classification of menu items using menu engineering
Determine the present value of a cash flows stream : Determine the present value of a cash flows stream of $2,250 to be received every year at a required rate of return of 5%. How the value would differ if the cas
What is the company degree of operating leverage : The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month. What is the company degree of operating leverage
Calculate the effective annual yield on bond : This is semiannual coupon, the bond matures in ten years. Calculate the bond's price. Calculate the effective annual yield on this bond.

Reviews

Write a Review

Finance Basics Questions & Answers

  Problem regarding the efficient market hypothesis

What does the Efficient Market Hypothesis say about investment advisors' recommendations and technical analysis helping investors outperform the market? Include two items of evidence to support your answer?

  What is the bank cost of preferred stock

Calculating Cost of Preferred Stock. Sixth Fourth Bank has an issue of preferred stock with a $4.20 stated dividend that just sold for $93 per share.

  What is the probability that a stock-out condition

If the reorder point is kept at 187.6 gallons (equal to the mean demand during lead time) what is the probability that a stock-out condition would occur?

  What is the stock required return

Rubenstein Bros. Clothing is expecting to pay an annual dividend per share of $0.9 out of annual earnings per share of $5. Currently, Rubenstein Bros.

  How many us dollars will a pound buy in 30 days

Suppose one British pound can purchase 1.912 U.S. dollars today in the foreign exchange market, and currency forecasters predict that the pound sterling

  Some may argue that the production-line approach may not

1.some may argue that the production-line approach may not treat the process as a service process but as what type of

  Bdj co wants to issue new 25-year bonds for some

bdj co. wants to issue new 25-year bonds for some much-needed expansion projects. the company currently has 7.8 percent

  Describe importance of international capital structure

If you are the CFO of a multinational company. What steps could you take to minimize international risk? Describe how cash flows are used to minimize political

  Calculate its price if the ytm

(a) A 3-year bond (maturing on 1/1/2023) with a par value of $1000 makes semiannual payments at a coupon rate of 4%. Calculate its price if the YTM is 5.1%.

  List the various types of ird assets

Is a Roth IRA considered income in Respect of a Decedent (IRD)? Please explain

  Developing a company goals and objectives

Who is responsible for developing a company's goals and objectives?

  Selection of expected return by rational investor

Investment A has an expected return of 15 percent per year, while investment B has an expected return of 12 percent per year.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd