Finance Homework

homework_finance.xlsx

Instructions

		Instructions
To complete the homework assignments in the templates provided:
1.	The question is provided for each problem. You may need to refer to your textbook for additional information in a few cases.
2.	You will enter the required information into the shaded cells.
3.	The cells are coded:
	a) T requires a text answer. Essay questions require references; use the textbook.
	b) C requires a calculation, using Excel formulas or functions. You cannot perform the operation on a calculator and then type the answer in the cell. You will enter the calculation in the cell, and only the final answer will show in the cell. I will be able to review your calculation and correct, if necessary.
	c) F requires a number only. In some problems, a “Step 1” is added to help you solve the problem.
	d) Formula requires a written formula, not the numbers. For example, the rate of return = [(1 + nominal)/ (1+inflation)]-1, or D (debt) + E (equity) = V (value).
4.

Problem 2-9
A. The cost of an automobile is $10,000. If the interest rate is 5%, how much would you have to set aside now to provide this sum in five years? B. You have to pay $12,000 a year in school fees at the end of each of the next six years. If the interest rate is 8%, how much do you set aside today to cover these bills? C. You have invested $60,476 at 8%. After paying the above school fees, how much would you remain at the end of six years?
Answers:
		Calculation
A.	PV	C
B.	Annuity factor	C	Annuity factor is the present value of $1 paid for each of t periods - p. 29 in text
	Set aside amount	C
C.	Remainder after 6 years	C

Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer.

Principles of Corporate Finance, Concise, 2nd Edition

Problem 2-12

What is the PV of $100 received in: A. Year 10 (at a discount rate of 1%) B. Year 10 (at a discount rate of 13%) C. Year 15 (at a discount rate of 25%) D. Each of years 1 through 3 (at a discount rate of 12%)?
Answers:
		Calculation
A.	Year 10/1%	C
B.	Year 10/13%	C
C.	Year 15/25%	C
D.	Year 1	C
	Year 2	C
	Year 3	C
	Total	C

Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer.

Principles of Corporate Finance, Concise, 2nd Edition

Problem 3-3
In February 2009 Treasury 6s of 2026 offered a semiannually compounded yield of 3.5965%. Recognizing that coupons are paid semiannually, calculate the bond's price.
Answer:
Enter the values in blue colored cells
Settlement (start) Date	C	TIP: Use the Date function under Formulas to enter dates
Maturity Date	C
Coupon Rate	F	TIP: See p. 47 for determining coupon rate
YTM	F
Price	C	Use Excel's PRICE function to find the value of the bond
		Use 100 as standard redemption when one is not provided

Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer.

Principles of Corporate Finance, Concise, 2nd Edition

Problem 3-4

Here are the prices of three bonds with 10-year maturities:
	Bond Coupon (%)	Price (%)
	2	81.62
	4	98.39
	8	133.42
If coupons are paid annually, which bond offered the highest yield to maturity? Which had the lowest? Which bonds had the longest and shortest durations?
Answer:
Use Excel's YIELD function to find the YTM and the DURATION function of the bond under each of the above assumptions:
Coupon Rate	2%	4%	8%
Price (%)	F	F	F
Settlement Date	C	C	C	TIP: Use the Date function under Formulas to enter dates
Maturity Date	C	C	C
YTM	C	C	C
Duration	C	C	C
Highest yield to maturity	T
Lowest yield to maturity	T
Longest duration	T
Shortest duration	T

Instructions: Please refer to your book for assistance with your homework. Post your work in the worksheet. Highlight your final answer.

Principles of Corporate Finance, Concise, 2nd Edition