Please use excel spreadsheets to answer the following questions. Provide the excel formulas used.

1. You are thinking about buying a new car with a sticker price of $25,000. Since you do not have that kind of cash saved, you are inquiring about financing the car. The dealer is offering you monthly. compounding loan with fixed monthly payments of $500 over 5 years, at which the loan will be fully paid off.

1. What is the monthly rate of the financing offer?

2. What is the annual percentage rate (APR) that is being offered?

3. What is your effective annual rate (EAR)?

2. You are buying your first home and decide to obtain a mortgage for $350,000. The mortgage will fully amortize the loan over 15 years and charges a fixed annual interest of 7.5% compounded annually

Note: Most mortgages compounded monthly and require monthly payments. To keep this problem simpler for the exam, we use annual compounding and annual payments.

1. What are your annual payments?

2. What will be your mortgage balance in 10 years from now?

3. How much in interest will you be paying in year 11?

4. How much more interest in total will you be paying for the remainder of the mortgage, years 11 through 15?

5. If you made an extra payment at the end of year 10 of $50,000, how many years would you have left to pay-off the mortgage?

3. Which of the following statements is correct?

1. Interest payments are higher at the beginning of the mortgage than at the end.

2. Principal payments are higher at the beginning of the mortgage than at the end.

3. Since it is a fixed mortgage, the interest and principal payments stay constant throughout the life of a mortgage.

4. A stock just paid its annual dividend of $2.75. You expect the stock to grow its dividends by 20% each year for the next five years. Afterwards, you predict a more modest dividend growth of 5% per year forever. The required return for similar stocks is 25%.

1. How much are dividends in year 5?

2. How much are dividends in year 6?

3. How much would the stock be worth at the end of year 5?

4. For how much should the stock be trading today?

5. How much is the stock worth at the end of year 20?

5. You are the CFO of a company and are analyzing one of your company's semiannual bonds with a 10-year maturity that were issued in September of 2014 (9 years ago). The bonds carry semiannual coupons of 7.5%. will mature in September of 2024 (1 year from now) and have a face value of $1,000

1. When the company issued these bonds in 2014, the yield-to-maturity (YTM) was 5.800%. What was the price of the bond when they were issued in 2014?

2. In 2014, the company received 10 million dollars from issuing these bonds. How many bond certificates were issued?

3. Now, in 2023, the bonds are trading at $955.00 per bond. What is the yield-to-maturity for these bonds now?

4. Now, with one year left to maturity, what will be the capital gains yield (CGY) for the last year?

6. in 2023. the bond is considered a

(A) discount bond.

(B) premium bond.

C. par bond.

7. When yields rise,

1. bond prices rise as well.

2. bond prices decline.

3. rise or decline depending on the maturity of the bonds.

4. rise or decline depending on the coupon rate of the bonds.