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Mr. Richards has a client ready to retire. They have approximately, $1.5 million in an account with the firm. They are very conservative clients and he wants to give them options. The first is to have the money paid out over 30 years earning a 2% rate, then 4%. He also wants to show them that a little risk could preserve their equity so he wants to show the monthly payout of interest only on full balance with rates of 4% and 8%.
Excel: Use the standard TVM setup and calculate the pmt using the two different rates. Calculate the monthly income by multiplying the rate by the account balance for each different rate. Create a summary table show the four different methods, the rates and another column showing the balance after 30 years for each different method.
Written: Briefly describe the analysis that you have performed and explain the effect of compound interest on the payouts. What are the benefits of paying interest only and what are the risks? If this client were retiring in good health with a life expectancy of 40 years, and current income needs of $80,000 per year (not eligible for social security) which payout strategy would you recommend for these clients and why?
Hubbard Industries is an all equity firm whose shares have an expected return of 11.3%. Hubbard does a leveraged recapitalization, issuing debt and repurchasing stock, until its debt-equity ration is 0.71. Due to the increase risk, shareholders now e..
dear sir madam ltbrgt ltbrgtcan you please provide me the attached solution plagiarism free. looking forward to hear
Joanne Germano works in an accounts payable department of a major retailer. She has attempted to convince her boss to take the discount on the 1/15 net 65 credit terms most suppliers offer, but her boss argues that giving up the 1% discount is less c..
What is the initial outlay associated with the project? What are the expected annual free cash flows for years 1 through 9?
A portfolio manager in charge of a portfolio worth $8 million is concerned that the market might decline rapidly during the next six months and would like to use options on the S&P 100 to provide protection against the portfolio falling below $7 mill..
What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering?
Two investment advisors are comparing performance. Advisor A averaged a 20% return with a portfolio beta of 1.75 and Advisor B averaged a 15% return with a portfolio beta of 1.45. If the T-bill rate was 2% and the market return during the period was ..
What is the relationship between your companies (Walmart and Target) and their respective employees and investors? How do these relationships affect financial performance? Are there any issues outstanding for your companies? Provide a rationale for y..
The Impact of Marking to Market and Margin Requirements on Futures Investments. Suppose an investor has a $1 million long position in T-bond futures.
Beyond Year 3, growth will level off at 2% per year indefinitely. What is the Stock Price for each share of Stock C ?
Suppose that a firm wants to issue bonds at par. Which of the following would cause the firm to increase the coupon rate?
Assume a trade creditor offers you terms of 2/10 net 40. What is the effective annual cost of forgoing the discount?If the firm=s bank charges 14% on loans, would you take the trade credit discount?
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