Question 1- (10 Points)

You are thinking on purchasing a set of shares that will give you 10,000 per year, endless, starting next year. For this type of operations, the desired profitability is a 10%. How much should you pay for these shares?

Question 2 (10 Points)

You are thinking on purchasing a set of shares that will give you 10,000 per year, endless, starting in 10 years. For this type of operations, the desired profitability is a 10%. How much should you pay for these shares?

Question 3 (10 Points)

You are thinking on purchasing an asset that will give you infinite inflows, the first one of them of 10,000 next year, and inflows growing in a 2% per year. For this type of operations, the desired profitability is a 10%. How much should you pay for that asset? BCO126 Mathematics of Finance Bassel Michel A Nafeh Task brief & rubrics

Question 4 (10 Points)

You are thinking on purchasing an asset that will give you infinite inflows, the first one of them of 10,000 will be received in 8 years, and inflows growing in a 3% per year. For this type of operations, the desired profitability is a 6%. How much should you pay today for that asset?

Formula to be used: =

9 =

= 0 = (1 + ) = 1

= 0 = (1 + ) Annuities

Question 5 (10 Points)

a) Your company has the opportunity to enter a business that will generate cash-flows of 24,000 per year, starting next year, and during 10 years. Calculate the future value of the immediate annuity under yearly profitability of 6%. (2.5 Points)

b) Your company has the opportunity to enter a business that will generate cash-flows of 24,000 per year, starting next year, and during 10 years. Calculate how much your company should invest today in order to obtain a yearly profitability of 4%. (2.5 Points)

c) Your company has the opportunity to enter a business that will generate cash-flows of 24,000 per year, starting in 5 years, and during 10 years. Calculate the future value of such delayed annuity under yearly profitability of 6%. (Same as the previous exercise, but it will start generating cashflows in 5 years instead of next year) Please show the workout and all the steps you follow to reach the final results. (2.5 Points)

d) Your company has the opportunity to enter a business that will generate cash-flows of 24,000 per year, starting in 5 years, and during 10 years. Calculate how much your company should invest today in order to obtain a profitability of 6%. Please show the workout and all the steps you follow to reach the final results (2.5 Points)Loan and redemption debt

Question 6 (10 Points)

You are thinking on purchasing some assets that will give you 10,000 per year, starting next year, and during the next 10 years How much should you pay for assets, if you want to get a profitability of a 6%?

Question 7 (10 Points)

Youll invest amounts of 10,000 per year, starting next year, and during the next 10 years. How much will you have in that account if the bank offers a profitability of a 12%? Question 8 (10 Points) If you invest 400 per month, from next month on, and during the next 12 years, in a bank account that offers an annual interest rate of a 6% compounded monthly, how much money youll have there after those 12 years? n= 12 years = 144 months r= 6% annual = 0.5% month

Question 9 (10 Points)

You are thinking on purchasing some assets that will give you 10,000 per year, starting in 5 years, and during the next 10 years How much should you pay for assets, if you want to get a profitability of a 6%?

Formula to be used: = (1 + ) 1 (1 + ) = (1 + ) 1 = = (1 + ) 1 (1 + ) = 0 = (1 + ) Bond

Question 10 (10 Points)

Suppose a 12 % coupon,30-year bond is selling for $1300.50 what is the average rate of return