answers are given. please show calculation with calculator or formulas below.
3) 3) A Xerox DocuColor photocopier costing S44.000 is paid off in 60 monthly installments at 6.90% APR. Ater three years the company wishes to sell the photocopier. What is the minimum price for which they can sell the copier so that they can cover the cost of the balance remaining on the loan? A) $23,319 B) $27,206 C) $15,546 $19,433 .10% 4) 4) An investor buys a property for $608,000 with a 25- year mortgage and monthly payments at 8 . APR. After 18 months the investor resells the property for $667,525. How much cash will the investor have from the sale, once the mortgage is paid off? A) $100,129 B) S57,216 O $71,521 D) $143,041 5) Corey buys 10 Tufflift 4- post, 4.5-ton car hoists for his parking garage at a total cost of $432,000. 5) He finances this with a five-year loan at 7.80% APR with monthly payments. After he has made the first 20 payments, how much is the outstanding principal balance on his loan? A) $428,689 B) $244,965 O s306,206 D) $612,412 6) What is the yield to maturity of a(n) eight-year, S5000 bond with a 4.4% coupon rate and 6) semiannual coupons if this bond is currently trading for a price of $4723.70? 5.26% B)6.31% C) 7.36% D) 2.63% 7) A $1000 bond with a coupon rate of 6.2% paid semiannually has eight years to maturity and a 7) yield to maturity of 8.3%. If interest rates rise and the yield to maturity increases to 8.6%, what will happen to the price of the bond? The price of the bond will fall by $15.78. C) The price of the bond will rise by $15.78. B) The price of the bond will fall by $18.93. D) The price of the bond will not change. 8) What must be the price of a $1000 bond with a 5.8% coupon rate, annual coupons, and 20 years to 8) maturity if YTM is 7.8% APR? B) $960.82 D $800.68 A) $640.54 C) 1120.95 9) What is the coupon rate of an eight-year, $10,000 bond with semiannual coupons and a price of 9) S90066568, if it has a yield to maturity of 6.5%? A) 5.87% B) 6.84% C) 3.91% D) 4.888% Time Value of Money and Interest Rates Future value in n periods of one cash flow C received today: Present value today of one cash flow C received in n periods : Rate of return in order to go from PV to FV in period n: Present value of perpetuity: FV PV PV(C in perpetuity) C/r PVC in perpetuity grows at rate g) Cr-g) Present value of growing perpetuity: Present value of regular annuity: Future value of a regular annuity: PMT in a regular annuity: PV-cr11-m) PV Present Value of a growing annuity: Equivalent n-period discount rate= (1 + r)"-1 where r is the discount rate for one period I+EAR-(1+Am where m is the number converting an APR to EAR: 772 compounding periods per year Bonds Coupon Rate x Face Value Coupon payment (CPN) - Number of Coupon Payments per Year Zero Coupon Bonds: YTM for a zero coupon bond: 1+YTM-Face Value Price Coupon Bonds: 1Face Value Stocks Holding Period Return: 2 Earnings, xDividend Payout Rate, Shares Outs tan ding, EPS Dividend Payout Rate, Dividend: Div, 0-1+ Div , (1 + r,()' Discounted dividend model (DDM): with PN-DlVN. Constant Growth DDM model PV (Future Total Dividends and Net Repurchases) Shares Outstandingo Total Payout model Earnings Growth Rate Retention Rate X Return on New Investment (ROE) Where Retention Rate-1-Payout rate If earnings growth rate is the same as the dividend growth rate, then G Retention Rate X Return on New Investment Project Evaluation NPV = PV(Benefits)-PV(Costs) IRR is the discount rate that sets NPV = 0 Profitability index = Value Created/Resource Consumed = NPV/Resource consumed Capital Budgeting Incremental Earnings = (Incremental Revenues-Incremental Cost-Depreciation) X (1-Tax Rate) Free Cash Flow (Revenues - Costs - Depreciation) X (1 - Tax Rate) + Depreciation CapEx - Change in NWC After-Tax Cash Flow from Asset Sale Sale Price-(Tax Rate X Capital Gain) Capital Gain = Sale Price-Book Value Book Value Purchase Price-Accumulated Depreciation
