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Erika and Kitty, who are twins, just received $10,000 each for their 22th birthdays. They both have aspirations to become millionaires. Each plans to make a $5,000 annual contribution to her "early retirement fund" on her birthday, beginning a year from today. Erika opened an account with the Safety First Bond Fund, a mutual fund that invests in high quality bonds whose investors have earned 8% per year in the past. Kitty invested in the New Issue Bio-Tech Fund, which invests in small, newly issued bio-tech stocks and whose investors on average have earned 13% per year in the fund's relatively short history. Round all answers to the nearest hundredth
a. If Erika's funds earn the same returns in the future as in the past, how old will she be when she becomes a millionaire?
b. If Kitty's funds earn the same returns in the future as in the past, how old will she be when she becomes a millionaire?
c. How large would Erika's annual contributions have to be for her to become a millionaire at the same age as Kitty, assuming their expected returns are realized?
A loan commitment of $4.36 million has an up-front fee of 65 basis points and a back-end fee of 35 basis points. The take down on the loan is 50 percent. Calculate the total fees you will pay on this loan commitment. (Round your answer to 2 decima..
The pure rate of interest is 3%,investors demand a 5% inflation premium on long-term investments, and risk premium for a stok with beta of 1 is 7%.ZZZ stock has a beta of 1.35
Calculate the stock's expected return and standard deviation
The magic box would cost $3,600 to buy and would be straight-line depreciated to zero salvage value over three years. The firm can borrow at 6%, and the marginal corporate tax rate is 30%. What is the NPV of the lease?
Calculate the IRR, the NPV, and the MIRR for each project, and indicate the correct accept-reject decision for each.
He observes that the January 620 call is priced at $46, while the April 600 call is priced at $75. What are two reasons why the April 600 call is more expensive than the January 620 call?
What is the equilibrium price? Output and profits of the low cost gold mine and for what parameter values could the low cost gold mine exercise market power?
You find a stock that had returns of 14 percent, -27 percent, 19 percent, 21 percent for four of the last five years . The average return of stock over this period was 9.5 percent. What is the standard deviation of the stock's returns?
Target Stock Price= $163.02 Assuming the company pays no dividends, what is the implied return on the company's stock over the next year?
A stock that currently trades at $10 has a beta of 1.6. The risk-free interest rate for the is 10%, and the market price of risk is expected to be 5%.
Company A is thinking about buying and then merging with Company B. At the moment the yearly growth rate of Company B is 4% but after the merger the expected growth rate is 5% without a need for additional investments.
Estimate of Cost of Capital with target capital structure mix of debt and equity - Evaluate your final estimate for rs?
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