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Orange Valley Packaging just bought a new ropes course. To pay for the ropes course, the company took out a loan that requires Orange Valley Packaging to pay the bank a special payment of 6,550 dollars in 4 month(s) and also pay the bank regular payments. The first regular payment is expected to be 4,790 dollars in 1 month and all subsequent regular payments are expected to increase by 0.61 percent per month forever. The interest rate on the loan is 1.81 percent per month. What was the price of the ropes course? You own a store that is expected to make annual cash flows forever. The cost of capital for the store is 14.43 percent. The next annual cash flow is expected in one year from today and all subsequent cash flows are expected to grow annually by 3.99 percent. What is the value of the store if you know that the cash flow in 3 years from today is expected to be 12,400? Jabari has an investment worth 354,361 dollars. The investment will make a special payment of X to Jabari in 7 quarters in addition to making regular quarterly payments to Jabari forever. The first regular quarterly payment to Jabari is expected to be 4,220 dollars and will be made in 3 months. All subsequent regular quarterly payments are expected to increase by 0.47 percent per quarter forever. The expected return for the investment is 1.71 percent per quarter. What is X, the amount of the special payment that will be made to Jabari in 7 quarters? Grace owns two investments, A and B, that have a combined total value of 161,434 dollars. Investment A is expected to pay 7,009 dollars per year forever; its next payment is expected in 1 year; and its expected return is 5.41 percent per year. Investment B is also expected to make annual payments forever and make its next payment in 1 year. Investment B’s next payment is expected to be 3,532 and all subsequent payments are expected to grow by 1.1 percent per year forever. What is the annual expected return for investment B? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
The Wall Street Journal reports that the current rate on 5-year Treasury bonds is 2.85 percent and on 10-year Treasury bonds is 5.35 percent. Assume that the maturity risk premium is zero. Calculate the expected rate on a 5-year Treasury bond purchas..
Calculate the expected rate on a 5-year Treasury bond purchased five years from today, E(5r5).
A European call option written on one share of Medident Corp. has the following parameter values: S = $220,
St. Johns River Shipyards is considering the replacement of a 10-year-old riveting machine with a new one that will increase earnings before depreciation from $25,000 to $40,000 per year and require an additional $4,500 per year in working capital.
If MARR is 12%, what is the project's approximate ERR?
What was your annualized Holding Period Return? (show all work)
You are trying to pick the least-expensive car for your new delivery service.
A stock has an expected return of 15 percent, the risk-free rate is 4.6 percent and the market risk premium is 9.3 percent. What must the beta of this stock be.
If an investment advisor is recommending a bond that is essentially risk free, that is, a bond that is guaranteed by the US government (e.g. Ginnie Mae), does that advisor have an obligation to explain the investment risk to his/her client fully?
Suppose that you intend to buy a house for $200,000. Calculate leverage ratio for this investment in each of the given situations:
Which of the following bonds bears the greatest risk for a bondholder? A. 5% coupon;10 years to maturity B. 5% coupon; 15 to years maturity C. 7% coupon; 10 years to maturity D. 7% coupon; 15years to maturity
Johnson Industries sells on terms of 3/10, net 30. Total sales for the year are $912,500. Forty percent of customers pay on the 10th day and take discounts; the other 60% pay, on average, 40 days after their purchases. What is the days sales outstand..
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