Offered to buy a financial security that guarantees

Assignment Help Financial Management

Reference no: EM131297444

Angela is offered to buy a financial security that guarantees to pay $30 every 3 years. The annual interest rate is 9%. Calculate and explain in words all calculations for the following:

(a) How much would Angela pay for it today if the first payment will be received today? There will be a total of 20 payments.

(b) How much would Angela pay for it today if the first payment will be received in 3 years? Again, there will be a total of 20 payments.

(c) How much would Angela pay for it today if every other payment time the payments will be twice as large? I.e., $30, $60, $30, $60, and so on. The first payment will be received today, and there will be a total of 20 payments.

Reference no: EM131297444

Questions Cloud

Calculate the mean adjusted abnormal return : Which of the following are inconsistent with the semi-strong form of the efficient market hypothesis? Suppose a security's mean return is 1.50%. On a particular day, the return on the market is 1.20% while the return on the security is 1.85%. Calcul..

Hedge the foreign currency value of the foreign asset : The basic approach to the use of currency futures is to hedge the foreign currency value of the foreign asset. To accomplish this, managers would sell short currencies in the amount of an asset’s value. buy long currencies in the amount of an asset’s..

What is the second offers post-money valuation of firm : Your? start-up company needs capital. Right now, you own 100% of the firm with 9.9 million shares. You have received two offers from venture capitalists. The first offers to invest $2.99 million for 1.05 million new shares. The second offers $1.96 mi..

Available to pay for their childs college education : Suppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for their child's college education. Currently, college tuition, books, fees, and other costs average $ 12,700 per year. On a..

Offered to buy a financial security that guarantees : Angela is offered to buy a financial security that guarantees to pay $30 every 3 years. The annual interest rate is 9%. Calculate and explain in words all calculations for the following: How much would Angela pay for it today if the first payment wil..

What is the impact from your faith : Develop a cause and effect (fishbone) diagram to address everything that impacts your grade in this course. How much is under your control? What is the impact from your faith?

Develop software for gaming applications : Starware Software was founded last year to develop software for gaming applications. The founder initially invested $1,000,000 and received 12 million shares of stock. What will the value of the whole firm be after this investment? (the post-money? v..

At what price will the stock reach an equilibrium : A share of stock with a beta of .68 now sells for $58. Investors expect the stock to pay a year-end dividend of $2. The T-bill rate is 3%, and the market risk premium is 6%. a. Suppose investors believe the stock will sell for $60 at year-end. Is the..

Ethical standards or not considering the prevailing level : Discussion and explanation of how conventional banks determine th interest rate that thery charge to borrowers acccompanied by an opinion of whether you believe taht it complies with ethical standards or not considering the prevailing level of bank i..

User Account

All Pages