A. You have just purchased a home and taken out a $430,000 mortgage. The mortgage has a 30-year term with monthly payments and an APR of 5.92%. How much will you pay in interest, and how much will you pay in principal, during the 20^th year (i.e., between 19 and 20 years from now)?

B. If the rate of inflation is 4.6%, what nominal interest rate is necessary for you to earn a 3.9% real interest rate on your investment?

C. You are saving for retirement. To live comfortably, you decide you will need to save $3,000,000 by the time you are 65. Today is your 28^th birthday, and you decide, starting today and continuing on every birthday up to and including your 65^th birthday, that you will put the same amount into a savings account. If the interest rate is 10%, how much must you set aside each year to make sure that you will have $3,000,000 in the account on your 65^th birthday?

D. Krell Industries has a share price of $21.94 today. If Krell is expected to pay a dividend of $1.05 this year, and its stock price is expected to grow to $23.03 at the end of the year, what is Krell's dividend yield and equity cost of capital?

1. You currently have a 4-year-old mortgage outstanding on your house. You make monthly payments of $1,800. You have just made a payment. The mortgage has 26 years to go (i.e., it had an original term of 30 years). If you were going to build a timeline, from your perspective, for the payoff of the loan, what amount would be entered for Date 0, Date 1, and how many months would it include?

2. You have just purchased a home and taken out a $430,000 mortgage. The mortgage has a 30-year term with monthly payments and an APR of 5.92%. How much will you pay in interest, and how much will you pay in principal, during the first year?

3. In addition to footwear, Kenneth Cole Productions also designs and sources handbags, apparel, and other accessories. You decide, therefore, to consider comparables for KCP outside the footwear industry. You also know the following about KCP: it has sales of $518 million, EBITDA of $55.6 million, excess cash of $100 million, $3 million of debt, EPS of $1.65, book value of equity of $12.05 per share, and 21 million shares outstanding.

4. Suppose that Tommy Hilfiger Corporation has an enterprise value to EBITDA multiple of 7.99 and a P/E multiple of 17.12. What share price would you estimate for KCP using each of these multiples based on the data for KCP?

5. Assume the zero-coupon yields on default-free securities are as summarized in the following table:

Maturity	1 year	2 years	3 years	4 years	5 years
Zero-Coupon Yields	5.30%	5.80%	6.20%	6.60%	6.80%

What is the price of a three-year, default-free security with a face value of $1,000 and an annual coupon rate of 3%?

7. Suppose you purchase a 10-year bond with 12% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 10.57% when you purchased and sold the bond, what cash flows will you pay and receive from your investment in the bond per $100 face value?

8. You are enrolling in an MBA program. To pay your tuition, you can either take out a standard student loan (so the interest payments are not tax deductible) that has an EAR of 5.625% or you can use a tax-deductible home equity loan with an APR (monthly) of 6%. You anticipate being in a very low tax bracket so your tax rate will be only 15%. Which loan should you use?

9. You currently have a 4-year-old mortgage outstanding on your house. You make monthly payments of $1,800. You have just made a payment. The mortgage has 26 years to go (i.e., it had an original term of 30 years). If you were going to build a timeline, from the bank's perspective, for the payoff of the loan, what amount would be entered for Date 0, Date 1, and how many months would it include?

10. Marian Plunket owns a business and is considering an investment. If she undertakes the investment it will pay $32,000 at the end of each of the next three years. The opportunity requires an initial investment of $8,000 plus an additional investment at the end of the second year of $40,000. What is the NPV of this opportunity if the interest rate is 6% per year? Should Marian take it?

11. Dorpac Corporation has a dividend yield of 1.8%. Dorpac's equity cost of capital is 8.4%, and its dividends are expected to grow at a constant rate. What is the expected growth rate of Dorpac's share price?

12. Grummon Corporation has issued zero-coupon corporate bonds with a 5-year maturity (assume $100 face value bond). Investors believe there is a 25% chance that Grummon will default on these bonds. If Grummon does default, investors expect to receive only 45 cents per dollar they are owed. If investors require a 6% expected return on their investments in these bonds, what will be the yield to maturity on these bonds?

13. Assume the zero-coupon yields on default-free securities are as summarized in the following table:

Maturity	1 year	2 years	3 years	4 years	5 years
Zero-Coupon Yields	5.30%	5.80%	6.20%	6.60%	6.80%

What is the yield to maturity for this bond?

14. Grummon Corporation has issued zero-coupon corporate bonds with a 5-year maturity (assume $100 face value bond). Investors believe there is a 25% chance that Grummon will default on these bonds. If Grummon does default, investors expect to receive only 45 cents per dollar they are owed. If investors require a 6% expected return on their investments in these bonds, what will be the price of these bonds?

15. Dorpac Corporation has a dividend yield of 1.8%. Dorpac's equity cost of capital is 8.4%, and its dividends are expected to grow at a constant rate. What is the expected growth rate of Dorpac's dividends?

16. In addition to footwear, Kenneth Cole Productions also designs and sources handbags, apparel, and other accessories. You decide, therefore, to consider comparables for KCP outside the footwear industry. You also know the following about KCP: it has sales of $518 million, EBITDA of $55.6 million, excess cash of $100 million, $3 million of debt, EPS of $1.65, book value of equity of $12.05 per share, and 21 million shares outstanding.

18. Suppose that Fossil, Inc., has an enterprise value to EBITDA multiple of 11.68 and a P/E multiple of 17.79. What share price would you estimate for KCP using each of these multiples, based on the data for KCP?

19. Suppose you purchase a 10-year bond with 12% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 10.57% when you purchased and sold the bond, what is the internal rate of return of your investment?