Question
need help with these homework questions. Please show your work. 1.Calculate the future value of $200 received today and deposited at 8% per year for
need help with these homework questions. Please show your work.
1.Calculate the future value of $200 received today and deposited at 8% per year for three years.
2. Calculate the present value of $200 to be received 10 years from today, assuming an opportunity cost
of 10% per year.
3.Calculate the present value of $89,000 to be received in 15 years, assuming an opportunity cost of
14% per year.
4.Calculate the present value of a $10,000 annual perpetuity, assuming a 6% annual discount rate.
5.Calculate the future value of an annuity of $5,000 each year for eight years, deposited at a 6%
annual interest rate.
6.Dorothy has decided to set up an account that will pay her granddaughter, Lexi, $5,000 per year
indefinitely. How much should Dorothy deposit in an account paying 8% annual interest to
accomplish this goal?
. 7. $100 is received at the beginning of Year 1; $200 is received at the beginning of Year 2; and
$300 is received at the beginning of Year 3. If these cash flows are deposited at a 12% annual
interest rate, calculate their combined future value as of December 31, Year 3.
8. To expand its business, the Kingston Outlet Factory would like to issue a bond with a par value of
$1,000, a coupon interest rate of 10%, and a maturity of 10 years from now. Calculate the market
value of the bond at each of the following levels of required rate of return:
a. Required rate of return of 8%.
b. Required rate of return of 12%.
9. Zhen Yi Computers has an outstanding bond issue with a par value of $1,000, with an annual
12% coupon rate. However, note that interest payments on this bond are paid semi-annually.
The bond was issued 25 years ago and has 5 years remaining until maturity. What is the market value of
this bond today, assuming a 14% annual required rate of return?
a. First, label the bond variables:
1. Semi-annual coupon payment (PMT):
2. Semi-annual required rate of return:
3. Bond par value:
4. Semi-annual time periods remaining until maturity:
b. Calculate the current market value of this bond:
10.A firm has an issue of preferred stock outstanding that has a par value of $100 and a 4% dividend. If the
current market price of the preferred stock is $50 per share, calculate the yield percentage on this
preferred stock.
11.The common stock issued by Anderson Enterprises currently has a beta of 1.3; the risk-free rate (R F)
is an annual rate of 6%; and the market return (r m) is an annual rate of 12%. Using the
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