Question
The US Treasuries had the following term structure of annual interest rates on February 17, 2023: 1 Mo 2 Mo 3 Mo 4 Mo 6
The US Treasuries had the following term structure of annual interest rates on February 17, 2023: 1 Mo 2 Mo 3 Mo 4 Mo 6 Mo 1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr 4.64 4.81 4.84 4.95 4.99 5.00 4.60 4.33 4.03 3.95 3.82 4.01 3.88 Calculate the present value on February 17, 2023 of an investment that pays with certainty $1,000 in six months, $2,000 in five years, and $4,000 in ten years
A semi-annual bond with $1000 par value, 5 years to maturity, and 7% coupon rate is issued at a price of $970. What is the yield to maturity, expressed as a stated rate (APR)?
A one-year zero-coupon bond with face value of $1,000 is priced at $970. A two-year zero-coupon bond with face value of $1,000 is priced at $940. A three-year bond with face value of $1,000, annual coupons, and 4% coupon rate is priced at $1,012.40. Price a three-year bond with face value of $1,000, annual coupons, and 6% coupon rate.
A company is evaluating a new 5-year project. The project will result in sales of $300,000 each year for the next 5 years. The costs of production will be $200,000 each year. The project requires an initial purchase of equipment worth $250,000. The equipment will be depreciated to zero using the straight line method over its life of five years. The equipment will be sold at a price of $30,000 at the end of five years. The project also requires net working capital of $30,000 for the first year. After that the net working capital requirement falls to $25,000 for years 2 to 5. Finally, no net working capital is needed in year 6. The projections are based on a market research study conducted by a consulting firm for which the company has already paid $6,000 to the consulting firm. The corporate tax rate is 20% and the discount rate for the project is 12%. Assume all cash flows for a year (including net working capital changes) occur at the end of year. What is the net present value of the project? If the firm has 100,000 shares, how does taking the project affect a share's value (round the impact to cents)? make a table or use another method to show your calculation
You are bidding for a contract in which you will maintain all computing infrastructure for a firm for the next six years. Your bid specifies the annual price that you will charge the firm for your services. You have already determined all the costs associated with providing the service. You have to bid an annual price that the firm will pay you in each of the next five years. The NPV of a bid with an annual price of $400,000 is $80,000. What is the most competitive (lowest) annual price that you should be willing to bid? The corporate tax rate is 30% and the discount rate is 15% per year
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