1) Phantom Limited borrows $100,000 at an interest rate of 12% per annum compounding monthly, repayable by equal monthly instalments over 20 years.Calculate the principal and interest components of the first repayment.

2)The next dividend for the Upper Growth Company will be $0.50 per share.Investors require a 14% return on companies such as Upper.Uppers dividend increases by 5% every year.Based on the dividend growth model, what is the value of Uppers shares today?

3)Suppose you are examining an asset that promised to pay $500 at the end of each of the next 5 years.If you are looking for 10% per annum interest on your money, how much would you offer for this annuity?

4)Avicorp has a $10 million debt issue outstanding, with a 6% coupon rate.The debt has semi-annual coupons, the next coupon is due in 6 months, and the debt matures on 5 years.It is currently prices at 95% of its $1,000 face value.What is Avicorps cost of debt?

5)In 2004 you signed a contract that entitles you to receive 4 future cash flows, as follows:

Year Cash Flows

2005 $20,000

2006 $15,000

2007 $25,000

2008 $35,000

Assume that the interest rate is 5% per annum, calculate the present value of this contract.

6)The market price for TILs irredeemable preference shares for was $1.50 and the next dividend of $0.08 per share is due next year.Calculate the cost of TILs irredeemable preference share.