Corporate Finance

3. You have just taken out an installment loan for $100,000. Assume that the loan will be repaid in 12 equal monthly installments of $9,456 and that the first payment will be due 1 month from today. How much is the rate of interest? How much of your third monthly payment will go toward the repayment of principal? 4. Use the following table to calculate: State of the Probability Projected Return Economy Recession 10 -15% Moderate 20 0% Average 40 10% Good 20 15% Outstanding 10 20% a. The Expected rate of return on this investment b. The risk (i.e. the standard deviation) of the investment. 5.Calculate both the present value and the future value of the following annuities Case Payment No of years Rate of Interest A $10,000 5 12% B $20,000 10 10% a. Calculate the values as an ordinary annuity, i.e. payment made at the end of the period b. Calculate the values as an annuity due, i.e. payment made at the beginning of the period 6. The financial manager at Domino Inc is considering an investment that requires an initial outlay(investment) of $30,000 and is expected to result in cash inflows of $5,000 at the end of year 1, $8,000 at the end of year 2 and 3, and $15,000 at the end of year 4, $12,000 at the end of year 5, and $10,000 at the end of year 6. Find the present value of the investment. (Hint: find the present value of all the cash inflow and then subtract the initial investment) 7 You have invested $100,000 in three different companies. The following are a breakdown of the investments: Company Investment Expected Return Aberdeen Inc $30,000 38% Beximco $45,000 25% Chilli Inc $25,000 29% What is the Expected rate of return on this portfolio