Questionayou are thinking of buying a fridge-freezer two

Assignment Help Corporate Finance

Reference no: EM13380916

Question

a) You are thinking of buying a fridge-freezer. Two competitive retailers, Flurrys Plc and Power-House Plc sell this machine with a price tag of £500. They have a buy now pay later scheme with Flurrys Plc charging a flat interest rate of 9.4% with monthly compounding and Power-House Plc charging a rate of 9.2% with quarterly compounding. If you plan to repay in one year's time, which retailer would you prefer to buy your machine from? What are the EARs charged by the two firms?

b) You borrow £30,000 from a friend and agree that you will repay the loan by five equal end-of-year installments. Your friend will charge you a constant annual interest rate of 5%. What will be your annual repayments?

c) A 6 year government bond (with a face value of £100) makes annual coupon payments of 5% and offers a yield to maturity of 3% annually compounded. Suppose that one year from now the bond still yields 3%. If you buy the bond today and sell it after one year, what is the return on your investment over the 12 month period?

Reference no: EM13380916

Questions Cloud

1 an investment project requires a net investment of 100000 : 1 an investment project requires a net investment of 100000. the project is expected to generate annual net cash flows

1what is the holding period return to an investor who : 1what is the holding period return to an investor who bought 100 shares of charter oil nine months ago for 36 a share

You are engaged as a consultant to advice a company mdis : you are engaged as a consultant to advice a company mdis plc. suppose you have data on four similar or comparator

Question 1giving examples where possible explain any three : question 1giving examples where possible explain any three of the followinga perfect capital markets and fishers

Questionayou are thinking of buying a fridge-freezer two : questionayou are thinking of buying a fridge-freezer. two competitive retailers flurrys plc and power-house plc sell

Questionnbsp the managers of msaf plc are considering the : questionnbsp the managers of msaf plc are considering the following projects all values in poundsgiven the riskiness of

Aconsider a company that operates in a world with perfect : aconsider a company that operates in a world with perfect capital markets including no taxation and is financed

Question 1adiscuss the various types of financing available : question 1adiscuss the various types of financing available for quoted and unquoted businesses.bwhat possible motives

Questiona dolphin industries is closing down an outmoded : questiona dolphin industries is closing down an outmoded factory which will make all the workers redundant. dolphins

User Account

All Pages