NEE PROBLEMS COMPLETED BEFORE 1100PM

Problem 5.17

Your finance text book sold 52,000 copies in its first year. The publishing company expects the sales to grow at a rate of 15.0 percent for the next three years, and by 11.0 percent in the fourth year. Calculate the total number of copies that the publisher expects to sell in year 3 and 4. (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answers to the nearest whole number.)

Number of copies sold after 3 years
Number of copies sold in the fourth year

Problem 5.21

Find the present value of $4,700 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 6.15

Calculate the annual cash flows for each of the following investments: (Round answers to nearest whole dollar, e.g. 5,275.)

$266,975 invested at 6 percent. Annual cash flows $

$51,844 invested at 12 percent. Annual cash flows $

$91,412 invested at 10 percent. Annual cash flows $

Problem 6.23 Modern Energy Company owns several gas stations. Management is looking to open a new station in the western suburbs of Baltimore. One possibility they are evaluating is to take over a station located at a site that has been leased from the county. The lease, originally for 99 years, currently has 73 years before expiration. The gas station generated a net cash flow of $97,737 last year, and the current owners expect an annual growth rate of 6.3 percent. If Modern Energy uses a discount rate of 10.0 percent to evaluate such businesses, what is the present value of this growing annuity? (Round intermediate calculations to 6 decimal places, e.g. 1.521253 and final answer to 2 decimal places, e.g. 15.25.) Present value $

Problem 7.15

Kate recently invested in real estate with the intention of selling the property one year from today. She has modeled the returns on that investment based on three economic scenarios. She believes that if the economy stays healthy, then her investment will generate a 30 percent return. However, if the economy softens, as predicted, the return will be 10 percent, while the return will be -25 percent if the economy slips into a recession. If the probabilities of the healthy, soft, and recessionary states are 0.3, 0.5, and 0.2, respectively, then what are the expected return and the standard deviation of the return on Kate’s investment? (Round expected return to 3 decimal places, e.g. 0.125 and round intermediate calculations and standard deviation to 5 decimal places, e.g. 0.07680.)

Expected return
Standard deviation

Problem 8.24

Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $942.92. The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $1,034.67, 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 9.16

The preferred stock of Axim Corp. is currently selling at $51.73. If the required rate of return is 11.3 percent, what is the dividend paid by this stock? (Round answer to 2 decimal places, e.g. 15.25.)

Dividend paid

$