Finance (excel assignment)

Assignment Instructions

Complete the following problems in Microsoft Excel. Your work must be completed in the attached template.

Chapter 1:

1-6

In most large corporations, ownership and management are separated. What are the main implications of the separations?

1-8 

We can imagine the financial manager doing several things on behalf of the firm’s stockholders. For example, the manager might:

a. Make shareholders as wealthy as possible by investing in real assets.

b. Modify the firm’s investment plan to help shareholders achieve a particular time pattern of consumption.

c. Choose a high-or-low-risk assets to match shareholders’ risk preferences.

d. Help balance shareholder’s checkbooks.

But in well-functioning capital markets, shareholders will vote for only one of those goals, which one and why?

Chapter 2:

2-9

a. The cost of a new 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 for school fees at the end of each of the next 6 years, if the interest rate is 8% how much do you need to set aside today to cover these bills?

c. You have invested $60,476 at 8%. After paying the above school fees, how much would remain at the end of the six years?

 2-12

What is the PV of $100 received in:

a. Year 10 (at 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 year 1 through 3 (at a discount rate of 12%)?

Chapter 3:

3-3

In February 2009 Treasury 6s of 2026 offered a semiannually compounded yield of 3.596%. Recognizing that coupons are paid semiannually, calculate the bond’s price.

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 bond had the longest and shortest durations? Computations must be solved using Excel. Show all your work to earn partial credit. Essay questions require references.