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1. You just deposited $4,000 in a savings account paying 12% for one year. Suppose that the price level is expected to grow at a rate of 3% over the course of that year. a. Find the expected growth rate of the purchasing power of your money. Make sure to show your work. b. If the inflation rate turns out to be 3.75%, are you better off or worse off? Explain your answers.
2. Consider a 5-year bond paying 8 percent coupon. The bond is currently priced at $975. a. Find the yield to maturity. Make sure to show your work. b. Find the realized yield if cash flows are reinvested at the yield to maturity. Explain your answers. Make sure to show your work. c. Find the realized yield if reinvestment rates are: 9 percent today, 10 percent in one year, 11 percent in two years, 12 percent in three years, 11 percent in four years, 10 percent in five years. Explain your answers. Make sure to show your work.
Maggie's Muffins, Inc., generated $2,000,000 in sales during 2015, and its year-end total assets were $1,400,000. What is its self-supporting growth rate?
In the context of Property and Liability insurance, explain the differences between low-severity, high-frequency lines and high-severity, low-frequency lines. For which of these lines will insurance companies charge a higher premium?
What is the net effect on a firm's cash flow from changes in NET WORKING CAPITAL if a new project requires: $30,000 increase in inventory, $10,000 increase in accounts receivable, and a $20,000 increase in accounts payable?
Determine the percentage change in the value of the given currencies relative to the U.S. dollar between November 15, 2001 and February 20, 2004.
You are charged with making the decision on a capital investment project.
The Shakey Company can finance the purchase of a new building costing $2 million with a bond issue, for which it would pay $100,000 interest per year, and then repay the $2 million at the end of the life of the building. Use AW analysis based on equi..
Kelso Electric is debating between a leveraged and an unleveraged capital structure.
Atlantic Northern Inc. pays an annual dividend rate of 8.00% on its preferred stock that currently returns 10.72% and has a par value of $100.00. What is the value of Atlantic Northern Inc.'s stock? Suppose, due to high inflation, interest rates rise..
Customers arrive at a bank at a rate of 50 per hour. The bank has 3 tellers and on average, it takes 2 minutes to service a customer. What is the utilization rate?
What is the company's equity multiplier? What is the company's total asset turnover? What is the company's profit margin?
Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.43 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $1,990,000 in annual sales, ..
RAD has 916.18 million shares outstanding today, trading at $6.67 per share. Assuming that the book value of debt on its books, which is $5.904 billion, is equal to market value (of debt), estimate the bottom-up levered beta for RAD. The firm has a m..
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