FIN571 - Week 5 Problems solved in excel sheet. Just input your figures and get your answers
Find the present value of $3,900 under each of the following rates and periods.
(If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.)
a. 8.9 percent compounded monthly for five years.
Present value $
b. 6.6 percent compounded quarterly for eight years.
Present value $
c. 4.3 percent compounded daily for four years.
Present value $
d. 5.7 percent compounded continuously for three years.
Present value $
Problem 2.
Trigen Corp. management will invest cash flows of $1,289,241, $323,512, $1,258,323, $818,400, $1,239,644, and $1,617,848 in research and development over the next six years. If the appropriate interest rate is 6.71 percent, what is the future value of these investment cash flows six years from today? (Round answer to 2 decimal places, e.g. 15.25.)
Future value $
Problem 3.
Problem 7.16
Barbara is considering investing in a stock and is aware that the return on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that four states of the economy can affect the return on the investment. Using the table of returns and probabilities below, find
Probability Return
________________________________________
Boom 0.1 25.00%
Good 0.3 15.00%
Level 0.2 10.00%
Slump 0.4 -5.00%
________________________________________
What is the expected return on Barbara’s investment? (Round answer to 3 decimal places, e.g. 0.076.)
Expected return
What is the standard deviation of the return on Barbara's investment? (Round intermediate calculations and answer to 5 decimal places, e.g. 0.07680.)
Standard deviation
Problem 8.24
Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $943.84. The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $1,004.89, what is the yield that Trevor would earn by selling the bonds today? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)
Effective annual yield
%
Problem 9.15
The First Bank of Ellicott City has issued perpetual preferred stock with a $100 par value. The bank pays a quarterly dividend of $1.65 on this stock. What is the current price of this preferred stock given a required rate of return of 11.0 percent? (Round answer to 2 decimal places, e.g. 15.25.)
Current price $
12 years ago
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- fin571_-_week_5.xlsx