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I need assistance with the attached homework assignment. 1. In 1803, the U.S. doubled in size with the Louisiana Purchase. That well-known real estate mogul

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I need assistance with the attached homework assignment.

image text in transcribed 1. In 1803, the U.S. doubled in size with the Louisiana Purchase. That well-known real estate mogul Napoleon Bonaparte sold us 827,000 square miles (529,280,000 acres-there are 640 acres in a square mile). We paid $15 million. Assume that part of the US is worth an average of $5,000 per acre in 2015. What is the annual rate of return of this purchase for the U.S.? 2. John won a $75 million lottery today. The payout is the following: John gets $2.5 million today and $2.5 million each year for the next 29 years. How much money worth today for the lottery assuming federal tax rate is 39.6%, state tax is 8% and John's discount rate is 10%? 3. Suppose someone offered to sell you a note calling for the payment of $1,200 in three years. They offer to sell it to you for $880. You have $880 deposit in a bank that pays a 9.5% nominal rate with daily compounding, and you plan to leave the money in the bank unless you buy the note. The note is not risky--you are sure it will be paid on schedule. Should you buy the note? Check the decision in three ways: (1) by comparing your future value if you buy the note versus leaving your money in the bank, (2) by comparing the present value of the note with your current bank account, and (3) by comparing the effective annual rate on the note versus that of the bank account. 4. Answering the following questions. a. What is the value of a 5-year, $1,000 par value bond with a 9 percent annual coupon if its required rate of return is 10 percent? Does the bond sell at par? b. What would happen to the value of the above 5-year bond over time if the required rate of return remained at 10 percent? c. What is the yield to maturity (YTM) on a 10-year, 9 percent annual coupon, $1,000 par value bond that sells for $1,050? d. Suppose a 10-year, 10 percent, semiannual coupon bond with a par value of $1,000 is currently selling for $1,135.90, producing a yield to maturity (YTM) of 8 percent. However, the bond can be called after 5 years for a price of $1,025. 1. What is the bond's yield to call (YTC)? 2. If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why? 4. Company DIMOND just paid annual dividend of $5 today. The dividend is expected to grow at 3% for the next 5 years, then it will grow at 5% in perpetuity. If stocks of similar company earn 9% annual return, what is the price of a share of Company DIMOND stock? 5. Miami Book Publishers (MBP) just reported earnings of $20 million, and it plans to retain 35 percent of its earnings. If MBP's historical return on equity (ROE) was 15 percent, what is the expected growth rate for MBP's earnings? 6. California Fishing Company (CFC) is expected to pay a dividend next year of $50 per share. Future Dividends for CFC are expected to grow at a rate of 5% per year indefinitely. If an investor is currently willing to pay $500 each CFC share, what is the investor's required return for this investment

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