Question 8

Question text

How much would I have to deposit in an account today that pays 12% interest, compounded quarterly, so that I have a balance of $20,000 in the account at the end of 10 years?

Do not round intermediary calculations. Use full precision of your calculator or excel. Round final answer to 2 decimal places.

Please put your answer in the format xxxxxx.xx (no $,no commas, 2 decimal places).

Question 9

Question text

Suppose I want to be able to withdraw $5,000 at the end of five years and withdraw $6,000 at the end of six years, leaving a zero balance in the account after the last withdrawal. If I can earn 5% on my balances, how much must I deposit today to satisfy my withdrawals needs?

Given: Hint -- There are two different future values. Treat as two separate present values, then combine.

Do not round intermediary calculations. Use full precision of your calculator or excel. Round final answer to 2 decimal places.

Please put your answer in the format xxxxxx.xx (no $,no commas, 2 decimal places).

Question 10

Question text

You expect to receive the following cash flows. How much are these cash flows worth today?

The current interest rate is 5% compounded annually

After one year: $80.00

After two years: $80.00

After three years: $180.00

(If doing this problem on a calculator, please take intermediary calculations out to four decimal places. Answer in dollars and cents: #,###0.00)

Question 11

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A corporation issues a bond today with a $1,000 face value, maturity in 25 years, and an 8% coupon interest rate; interest is paid annually. An investor purchases the bond for $1,000. What is the yield to maturity?

Question 12

Question text

A level coupon bond paying 8% interest semi-annually has a face value of $1,000 and 10 years left to maturity. If the present market rate of interest is 6%, what is the present value of the bond?

Question 13

Question text

A company pays a current dividend (D₀) of $1.20 per share on its common stock. The annual dividend will increase by 3%, 4% and 5%, respectively, over the next three years, and then by 6% thereafter. The appropriate discount rate is 12%. What is the current price of the stock?

Question 14

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A company's dividend this year is $2.25 per share, and dividends are expected to grow at 12% for the next four years and at 5% indefinitely after that. If the firm's discount rate is 8%, what is the value of one share today?

Question 15

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Balance sheet assets are recorded at market value.

Select one:

True

False