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Bill Christenson deposited $40,000 in his credit union on September 23, 1993. Recently, while going through some papers he discovered the account. Before going to the credit union, he searched their web site and learned that the interest rate on his deposit was 4.4%, compounded quarterly, during the first six years, then it increased to 4.68% compounded weekly for the next six years, and then dropped to 4.0%, compounded continuously, for the final ten years.
a. How much should Bill have in this account on September 23, 2015?
AND b. If Bill had invested in a twenty-two year certificate of deposit with a fixed rate of interest, what single annual rate of interest would Bill have needed to earn to be in the same position as in part a?
As a graduating senior, Gwen Kumora of Manhattan, Kansas, is eager to enter the job market at an anticipated annual salary of $34,000. Assuming an average inflation rate of 3 percent and an equal cost-of living raise, what will Gwen’s salary be in te..
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Calculate the NPV if you sell the old machine and buy new machine A. (Round up to the nearest dollar amount. DO NOT use $, commas, or decimal points) (Example $23,345.50 is entered as 23346)
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During the year a company increased the production capacity by acquiring more machines. Compute company's capital expenditures during the year.
Figure 3.6 gives a decision tree for Mr. Smart’s situation. Mr. Smart is risk-averse. The amount of utility he derives from a payoff is Utility = 2In (payoff). Because of a planned major purchase, Mr. Smart intends to sell his investment one year lat..
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Jendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 8%. the company’s weighted average cost of c..
A default free convertible bond can be converted to 1.4 shares of stock at the option of the bondholder. Each convertible bond carries a face value of 100 and an annual coupon rate 6%. The conversion to stock may take place today or at the end of yea..
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ECB borrows $2 billion dollars by issuing 10 year bonds. ECB cost of debt is 6% so it will need to pay $120M in interest each year for 10 years, and the, and repay the principal $2B in year 10. ECB's marginal tax rate will remain 35% throughout this ..
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