User Account

All Pages

What will his savings be if he follows his plan for 5 years

Assignment Help Finance Basics
Reference no: EM132370452

Practical Question Practice

These questions are computations and requires data which is attached below. Along with the accuracy you should show working as well.

Data- Table

1 Value of stolen gold $14,400,000 In 1550

2 10-year government bond rate 1.6% Pa

3 Mortgage interest rate 3.6% Pa

4 British empire equivalent return 4.8% Pa

5 credit card interest rate 11.3% Pa

6 Savings account interest rate 0.7% Pa

7 Term deposit interest rate 2.2% Pa

8 W. Buntings credit card debt $12,700.00

9 Bravo LTD. current share price $8.40

10 Bravo LTD. Share price in 2 years $12.67 FV

11 Bravo LTD. Share price dividend $0.33 Pa

12 Ace Debenture Face value $1,100.00

13 Ace Debenture Coupon Payment $22.55 Semi Annual

14 Charlie Hebros saving target $1,100.00

15 Market yield on debentures 6.6%

16 Current market price of Ace debentures $990.49

Question 1

It is said that the entire financial fortune of the British Empire can be computed using the compound rate of interest shown in the data table in row 4 applied to the gold that the English stole from the Spanish in the sixteenth century. If this was the case and by the year 1550 the English had stolen the amount shown in row 1 of the data table, what would the value of the British Empire have been at its peak in 1950 assuming compounding based on annual stops?

Question 2

Charlie Hebro intends to save for a house by making monthly deposits into a term savings account that earns interest at the rate shown in row 7 of the data table, with interest compounded monthly. His budget allows him to save the monthly amount shown in row 14 of the data table starting at the end of this month.

a) What will his savings be if he follows his plan for 5 years?

b) If he receives an unexpected inheritance of $50,000 today which he deposits to start off his home savings, what will his total savings be at the end of the five years.

Question 3

William Bunting has credit card debt shown in row 8 of the data table. He is considering increasing his home mortgage loan to pay it off. The credit card and home mortgage interest rates are shown in rows 5 and 3 respectively of the data table. Both loan types are computed on monthly stops. He is intending to increase his home mortgage payments so as to amortise the credit card debt over five years.

a) How much would his monthly repayments to the credit card company be if he intended to pay out the debt over five years?

b) By how much will his mortgage payments increase if he adopts this plan to deal with his credit card debt?

c) How much would he save by transferring his credit card debt to his mortgage?

Question 4

Shares in Bravo Ltd. Are currently trading at a price shown in row 9 of the data table. Their expected price in exactly two years times is shown in row 10.

a) What is the return on Bravo shares assuming they pay no dividend?

b) What is the return on Bravo shares assuming they pay an annual dividend equal to what is shown in row 11 of the data table?

Question 5

Ace Corp. is offering five-year debentures with a face value as shown in row 12 of the data table. The debentures will also pay a semi-annual coupon equal to row 13 of the data table.

c) What would you expect to pay for an Ace debenture if the market was expecting a total yield as shown in row 15 of the data table?

d) What would the yield on the debentures be if they could be purchased for the price shown in row 16 of the data table?

Reference no: EM132370452

Questions Cloud

How and why you selected the person for the interview : Interview someone who uses service learning or equivalent in her/his teaching practice within higher education. What model do they use, how do they see.
Appropriate discount rate for the remaining cash flows : Bond investors worldwide accepted the offer (rather than declaring war). And all bond investors agree that an appropriate discount rate
Produces wine and exports to various european countries : McCanna Corp., a U.S. firm has a French subsidiary that produces wine and exports to various European countries. All of the countries where it sells
What event or series of events led the organizations : Identify one or two health care organizations that have a negative brand image. What event or series of events led the organizations to this situation?
What will his savings be if he follows his plan for 5 years : What will his savings be if he follows his plan for 5 years?
Do such schisms exist in contemporary social work : Post an analysis of historical divides (such as the schism between Jane Addams and Mary Richmond) and historical influences on current social work practice.
Information governance failures has cost businesses : Information Governance failures has cost businesses and governments millions and billions of dollars.
How you can apply the concepts learned in the course : Reflect upon how you can apply the concepts learned in this course to your current or future career. How might the lessons you have learned positively impact.
Is there an ad that speaks to you personally : Health advertisements are a part of our daily lives. Do you believe health advertisements are helpful in encouraging good choices? Is there an ad that speaks.

Reviews

Write a Review

Finance Basics Questions & Answers

  How are junk bonds different from other bonds

Junk Bonds- How are junk bonds different from other bonds? As an potential investor, would you invest in junk bonds? Why or why not?

  Example of vertical and horizontal integration

What could be an example of vertical and horizontal integration? What are the advantages and disadvantages to these two types of integration?

  Describe four methods of payment on international sales

Describe four methods of payment on international sales. What is a banker's acceptance, and how is it used in international trade? What is discounting, and how is it used in international trade?

  Capital structure on leverage

A company's capital structure represents their view on leverage. With corporate taxes, discuss and explain why a company's value can be higher with leverage even though its earnings are lower.

  What do you estimated to be current market rate of interest

A company has outstanding 8 per cent debentures of Rs.10,00,000 on which interest is payable annually on 31 December. The debentures are due for redemption at par on 1.1.1993. The market price of debenture at 31.12.1989 was Rs.103 cum-interest.

  What is the amount of goodwill that the home centre

The Home Centre is buying Nadine's for $37.5 million in cash. The acquisition will be recorded using the purchase accounting method. What is the amount of goodwill that The Home Centre will record on its balance sheet as a result of this acquisiti..

  A survey on british social attitudes asked respondents if

a survey on british social attitudes asked respondents if they had ever boycotted goods for ethical reasons statesman

  What is the yield to maturity of the bonds

Springfield nuclear energy inc. bonds are currently trading at $1,687.37. The bonds have a face value of $1,000, a coupon rate of 11% with coupons paid annually, and they mature in 25 years. What is the yield to maturity of the bonds?

  What is the portfolio weight of stock d

You own a portfolio that consists of $8,000 in stock A, $4,600 in stock B, $13,000 in stock C, and $5,500 in stock D. What is the portfolio weight of stock D?

  What rate of return did julie earn on her investment

Last year, Julie Johnson bought one share of common stock for $950. During the year, Julie received a $47.50 dividend.

  What is the probability that frank will have

Based upon the graph result, what is the probability that Frank will have at least $900,000 of his portfolio value for his retirement at the end of 2051

  Rank the following according to the degree of credit risk

1 rank the following according to the degree of credit risk highest credit risk 1 lowest credit risk 4i advances

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd