What is the current market price of this security

Assignment Help Financial Management

Reference no: EM131544143

Combinations:

a. A bank markets the following product. You take out a loan today and then repay 2,000 for eight years and 3,000 for another eight years (so that there are 16 payments total). If the interest rate is 4%, what is the size of the loan?

b. A construction company issues the following security. It pays 15 for 10 years. After that it pays 10 forever. If the discount rate is 4.5% what is the current market price of this security? What happens to the price of the security if the interest rate increases to 5.5%?

c. A chemical producer decides to issue a security that makes the following payments. It pays 5 for seven years (it pays 5 starting in one year and then makes another six payments of 5 each year). Then the payments start growing at 3.5% each year and continue forever. (i) What is the payment in year 8? (ii) If the discount rate is 7% what is the present value?

d. An auto parts maker is planning ahead. In 10 years, the auto parts maker must make an investment that will cost 700,000. The auto parts maker has 200,000 in capital today and plans to save a fixed amount at the end of each year for 9 years (at the end of years 1 to 9). If the interest rate is 5% what is the amount that has to be saved every year?

Reference no: EM131544143

Questions Cloud

Develop a guerrilla marketing strategy for small business : Develop a guerrilla marketing strategy for your small business. Discuss the most appropriate location for a second store (an actual street address).

What is the property tax rate does paragon need to adopt : What is the property tax rate does Paragon need to adopt to balance their 2009 budget

Create an argument to assert : Create an argument to assert that the financial planning process is of high value to a health care organization. Provide support for your argument.

The systematic risk and unsystematic risk of stock : What are the beta of Stock X and Stock Y? What are the systematic risk and unsystematic risk of Stock X?

What is the current market price of this security : what is the current market price of this security? What happens to the price of the security if the interest rate increases to 5.5%?

Integrate your critical thinking and perspective : Integrate your critical thinking and perspective on an aspect of this topic that relates to International Economics, answering a question you may have about it

Analyze the influence of members decisions on sales outcomes : Analyze the influence of member's decisions on sales outcomes or metrics of SNC. Analyze the influence of member's decisions on EBIT outcomes or metrics of SNC.

Improve operational decision making : Include a breakdown explanation of how managers should use CBA information to improve operational decision making and provide an example.

Structure of a chosen firm operates : Identify the market structure of a chosen firm operates in, analyze your chosen firm's current market share, and identify the firm's local/global competitors.

User Account

All Pages