Question Description
Demonstrate your understanding of financial concepts by completing the following problems. Where appropriate, show or explain your work. It is recommended that you use Excel and its built-in formulas to work on the problems.
Problem 1. Calculate the future value of $3,500, compounded annually for each of the following:
- 10 years at 7 percent.
- 15 years at 9 percent.
- 20 years at 5 percent.
Problem 2. Calculate the present value for each of the following:
| Present Value | Years | Interest Rate | Future Value |
|---|---|---|---|
| 5 | 4% | $15,250 | |
| 8 | 7% | $30,550 | |
| 12 | 10% | $850,400 | |
| 20 | 15% | $525,125 |
Problem 3. Calculate the interest rate for each of the following:
| Present Value | Years | Interest Rate | Future Value |
|---|---|---|---|
| $282 | 2 | $325 | |
| $607 | 6 | $891 | |
| $32,600 | 12 | $142,385 | |
| $57,435 | 22 | $463,200 |
Problem 4. Calculate the number of years in each of the following:
| Present Value | Years | Interest Rate | Future Value |
|---|---|---|---|
| $765 | 6% | $1,385 | |
| $845 | 9% | $4,752 | |
| $17,200 | 11% | $432,664 | |
| $23,700 | 14% | $182,529 |
Problem 5. Refer to the cash flows listed for the Kelly Company investment projects in the table below. The discount rate is 6 percent. Calculate the present value of these cash flows as well as the present value at 12 percent and at 17 percent.
| Year | Cash Flow |
|---|---|
| 1 | $750 |
| 2 | $840 |
| 3 | $1,230 |
| 4 | $1,470 |
Problem 6. Value the bond Midcorp has issued, with the following characteristics:
- Par: $1,000.
- Time to maturity: 28 years.
- Coupon rate: 7.50 percent.
- Semiannual payments.
Calculate the price of this bond if the yield to maturity (YTM) is each of the following:
- 7.50 percent.
- 9 percent.
- 4 percent.
Problem 7. Calculate the bond yield in the following scenario: Two years ago, Walters Electronics Corporation issued 20-year bonds at a coupon rate of 6.75 percent. The bonds make semiannual payments, and currently sell for 106 percent of par value. Calculate the YTM.
Problem 8. Calculate the stock value in the following scenario: The next dividend payment by RST Incorporated will be $3.45 per share. The dividends are projected to sustain a 6.50 percent growth rate into the future. If RST stock currently sells for $67 per share, what is the required return?
Problem 9. Calculate the stock value in the following scenario: Nickels Corporation will pay a $3.10 per share dividend next year. The company plans to increase its dividend by 4.25 percent per year, indefinitely. How much will you pay for the company's stock today if you require a 12 percent return on your investment?
Problem 10. Provide a three-column table identifying four key characteristics of stocks (equity) and bonds (debt) and comparing them. Briefly discuss why a firm would prefer one over the other as a method of financing.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Place Order” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.