Question
support answer. All cash flows are end-of-period unless otherwise stated . 7. You have been following a company, AmazingDotCom, Inc., that is about to go
support answer. All cash flows are end-of-period unless otherwise stated .
7. You have been following a company, AmazingDotCom, Inc., that is about to go public this afternoon. You believe that the company will not pay any dividends for the first eight years of its operations. At the end of the ninth year, you foresee receiving $1 per share as a dividend. You forecast that the tenth years dividend will be $1.75 per share and after that dividends will grow at an annual rate of 2-1/2 percent forever. What would you pay for a share of this stock today if you wished to earn twenty percent per annum on your investment?
8. On June 30, 2018, you closed on your new condominium and obtained a $250,000 thirty year mortgage at an APR of 4.32%. The first monthly payment was due at that time (June 30, 2018), and then on the last day of each month thereafter (this is an annuity in advance or an annuity due).
a. What was the amount of your required monthly payment?
b. Assuming that you made all payments exactly when due, how much interest would you have paid on the mortgage in the year ending December 31, 2018?
c. How much interest would you pay in 2019 if you made all of your scheduled payments exactly when due?
d. If the interest rate were to increase to 4.62% after sixty payments, what would be the amount of your new monthly payment? (the life of the mortgage would be unchanged).
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started