Question
I need help in financial management course, Problem 1: Mr. Francesco Berlusconi is planning to save for his retirement 34 years from now. He plans
I need help in financial management course,
Problem 1: Mr. Francesco Berlusconi is planning to save for his retirement 34 years from now. He plans to invest $4,200 per year for the first 7 years, $6,900 per year for the next 11 years, and $14,500 per year for the following 16 years. Mr. Berlusconi makes all investments at the end of each year. The investments will earn an annual rate of return of 9.7%. What will Mr. Berlusconi's investment be worth 34 years from now?
Problem 2: East Commercial Bank offers to lend you $40,000 at a nominal rate of 7.5%, compounded monthly. The loan (principal plus interest) must be repaid at the end of the year.West Commercial Bank also offers to lend you the $40,000, but it will charge an annual rate of 8.0%, with no interest due until the end of the year. How much higher or lower is the effective annual rate charged by West Commercial Bank versus the rate charged by East Commercial Bank?
Problem 3: 5-year Treasury bonds yield 5.5%.The inflation premium (IP) is 1.9%, and the maturity risk premium (MRP) on 5-year T-bonds is 0.4%. There is no liquidity premium on these bonds.What is the real risk-free rate, r*?
Problem 4:
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