You hope to buy your dream house six years from now. Today your dream house costs $189,900. You expect housing prices to rise by an average of 4.5% per year over the next six years. How much will your dream house cost by the time you are ready to buy..
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Finding the required interest rate Your parents will retire in 16 years. They currently have $370,000, and they think they will need $1,400,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any ..
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Shares of common stock of the Leafpad Co. offer an expected total return of 8.7 percent. The dividend is increasing at a constant 4.4 percent per year. What must be the dividend yield?
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Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.012, while in the 180-day forward market 1 Japanese yen = $0.0126. 180-day risk-free securities yield 1.8% in Japan. What is the yield on 180-day risk-free securities in t..
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The Down and Out Co. just issued a dividend of $2.81 per share on its common stock. The company is expected to maintain a constant 4 percent growth rate in its dividends indefinitely. If the stock sells for $50 a share, what is the company's cost of ..
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Many privately purchased health insurance plans have stringent "preexisting conditions" exclusions, which deny coverage to insured persons for any health conditions that were known at the time of enrollment.- Why does this exclusion reflect a mark..
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Seether, Inc., has the following two mutually exclusive projects available. Year Project R Project S 0 –$ 81,500 –$ 101,200 1 28,600 25,300 2 27,600 25,300 3 25,600 40,300 4 19,600 35,300 5 10,700 14,300. What is the crossover rate for these two proj..
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Your firm needs a computerized machine tool lathe which costs $51,000 and requires $12,100 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category...
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To accumulate $18,000 at the end of 7n years, a deposit of $5,000 is made at the end of the first 3n years and another deposit of %7,200 is made at the end of 5n years. Find where v is taken from our normal actuarial notation and v > 0.
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Charlie inherited a house at the beach from his grandmother. She had purchased it in the 1950’s for $50,000. At the date of her death (04/05/15), it was worth $5,000,000. Charlie sold it on 06/03/15 for $5,250,000. What is Charlie’s gain or loss on t..
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Consider the following information concerning three portfolios, the market portfolio, and the risk-free asset: Portfolio RP σP βP X 14.0 % 31 % 1.35 Y 13.0 26 1.10 Z 7.0 14 .75 Market 10.2 19 1.00 Risk-free 6.0 0 0 What is the Sharpe ratio, Treynor r..
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Sam opens up a savings account with AEIR(Annual Effective Interest Rate) i with a deposit of $500. He deposits $300 9 months later, and $800 18 months after opening the account. His balance at the end of 18 months was 1750. Calculate i.
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