complete as an EXCEL Spreadsheet. Time Value of Money Project Name: __________________ Please show all your work if you use the Calculator. If done in Excel, please send me the spreadsheet / workbook. 1. What is the market value of the following bond? Coupon 8% Maturity date 2038 Interest paid semiannually Par Value $1000 Market interest rate 10% 2. What is the market value of the following bond? Coupon 9% Maturity date 2028 Interest paid semiannually Par Value $1000 Market interest rate 8% 3. What is the yield to maturity of the following bond? Coupon 9% Maturity date 2027 Interest paid semiannually Par Value $1000 Market price $955.00 4. What is the current yield of bond in Question 3? 5. The risk free rate is 7%, the return in the market is 10%, and the beta is 1.30. What return must you receive to be satisfied that you are being fairly compensated for the risk of the firm? 6. What should a zero coupon bond maturing for $1000 in 9 years with a 7% market rate sell for? Page Two 7. Preferred stock has a dividend of $12 per year. The required return is 6%. What should be the price per share? 8. Hurricane Corporation expects to grow its dividend by 5% per year. The current dividend is $2 per share. The required return is 8%. A. What is the estimated value of a share of common stock? B. If price is $40 and dividends were $1.50 per share but expected to grow at 4% per year, what would be the required rate of return? 9. Compute the expected return for the following investment State of nature Probability Return Boom 25% 20% Average 60% 8% Recession 15% 0% 10. The following are the expected returns on a portfolio of investments. What is the expected rate of return on the portfolio? Investment # of shares Price per share Expected return A. 2000 $20 10% B. 3000 $10 15% C. 1000 $15 8% 11. You take out a $200,000 mortgage for 30 years at 6%. What is your monthly payment? What is the principle and interest on the first payment? What is the principle and interest on the twelfth payment? How much interest will you pay over the 20 years? 12. You bought a house 8 years ago with a $250,000 mortgage. It was a 15 year loan with monthly payments which will pay off the loan when you make the last payment. The interest rate was 6%. What are your monthly payment and your current loan balance? How much interest will you pay in the upcoming year? Page Three 13. You want to retire has a millionaire. How much do you need to put away each month if: A. You use common stocks and have an average return of 10%? B. You use corporate bonds and have an average return of 6%? C. You use government bonds and have an average return of 4%? D. You put your money in a CD at 3.5% interest rate? (Please use your own age. If you are over 45, please solve for saving a $100,000.) 14. You are offered a contract with a signing bonus. If they offered you either $215,000 in cash or $2,000 a month guaranteed which do you take (based strictly on the math)? Your safe rate of return is 7.5%. 15. You are 30 years old but and planning to retire at age 62. You want to plan my finances for living 35 years past age 62 and die dead broke. You determine you will need $3000 per month year from age 62 on. Ignore inflation. At age 62, you plan to go live in the tropics on the beach and live on coconuts and fishing. You need to conclude your retirement savings at age 55 because all your spare money then will be going to your kids education. The question is how much money do you need to save each month between now and 55 so that you can quit contributing. The expected return on your investments over the whole period is 10% per year