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Use the following information for Questions 1 through 5:
Assume that you are nearing graduation and have applied for a job with a local bank. The bank'sevaluation process requires you to take an examination that covers several financial analysis techniques. The first section of the test asks you to address these discounted cash flow analysis problems:
What is the present value of the following uneven cash flow stream -$50, $100, $75, and $50 at the end of Years 0 through 3? The appropriate interest rate is 10%, compounded annually.
We sometimes need to find out how long it will take a sum of money (or something else, such as earnings, population, or prices) to grow to some specified amount. For example, if a company's sales are growing at a rate of 20% per year, how long will it take sales to double?
Will the future value be larger or smaller if we compound an initial amount more often than annually- for example, every 6 months, or semiannually-holding the stated interest rate constant? Why?
What is the effective annual rate (EAR or EFF%) for a nominal rate of 12%, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily?
Suppose that on January 1 you deposit $100 in an account that pays a nominal (or quoted) interest rate of 11.33463%, with interest added (compounded) daily. How much will you have in your account on October 1, or 9 months later?
Use the following information for Questions 6 and 7:
A firm issues a 10-year, $1,000 par value bond with a 10% annual coupon and a required rate of return is 10%.
What would be the value of the bond described above if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond?
What would happen to the bond's value if inflation fell and rd declined to 7%? Would we now have apremium or a discount bond?
What is the yield to maturity on a 10-year, 9% annual coupon, $1,000 par value bond that sells for $887.00? That sells for $1,134.20? What does a bond selling at a discount or at a premium tell youabout the relationship between rd and the bond's coupon rate?
What are the total return, the current yield, and the capital gains yield for the discount bond in Question #8 at $887.00? At $1,134.20? (Assume the bond is held to maturity and the company does not default on the bond.)
Diamond Bank considers borrowing 10 million Singapore dollars in the interbank market and investing the funds in dollars for 60 days. Estimate the profits (or losses) that could be earned from this strategy. Should Diamond Bank pursue this strateg..
Clarion contractors finished the given transactions and events. Jan 1 paid 255440 cash plus 15200 in sales tax and 2500 in transportation fees for a new loader.
what is the pv of a perpetuity paying 5 each month beginning next month if the monthly interest rate is a constant
Identify and explain one strategy presented in this video that you think is important to apply to their future retirement needs. Why do you feel this is an important strategy?
If the interest rate on a 3-year Treasury Note is 3.00%, and 5-year Notes are yielding 3.75%, then based on the expectations theory, what does the market believe that 2-year Treasuries will be yielding 3 years from now?
a company purchased 25000 worth of inventory. the terms of sale were 25 net 45. whats the implicit interest if a buyer
What is the price(expressed as a percentage of the face value) of a one-year, zero-coupon corporate bond with a AAA rating?
investment guru warren buffet is one of the largest investors in the coca cola company. he originally became interested
Depreciation is computed using MACRS over a 5-year life, and the cost of capital is 9 percent. Assume a 40 percent tax rate. What will the year 1 operating cash flow for this project be?
A7X, Inc., has an average collection period of 33 days. Its average daily investment in receivables is $92,000.
rights offerings borkin incorporated is proposing a rights offering. currently there are 560000 shares outstanding at
Holliday Manufacturing is considering the replacement of an existing machine
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