Corporate Fianace

[DarleneRic1]

2. Present Value. What is the present value of

a. $453 to be received 8 years from now at a 14 percent discount rate?

b. $1200 to be received 7 years from now at a 12 percent discount rate?

3. Future Value of an Annuity. What is the future value of

a. $1321 a year for 13 years at 13 percent compounded annually?

b. $867 a year for 10 years at 13 percent compounded annually?

4. Present Value of an Annuity. What is the present value of

a. $487 a year for 5 years at a 9 percent discount rate?

b. $798 a year for 13 years at a 11 percent discount rate?

5. Annuity. How many years will it take for a payment of

a. $590 to grow to 9090.91 at a compound rate of 14 percent?

b. $900 to grow to future value of 10,586.21 at a compound rate of 14 percent?

6. Mortgage. (Hint: P/Y=12) What is the payoff on a 30 year, 7% original mortgage of

a. $550,552 with a payment of 3,744.50 with 12 years remaining?

b. $190788 with a payment of 1,143.87 with 15 years remaining?

7. Stock. What is the required rate of return on a stock with a

a. $0.75 expected dividend and a 34 price with 7% growth?

b. $1.25 expected dividend and a 15 price with 8% growth?

 

[Deleted member 4993]

2. Present Value. What is the present value of

a. $453 to be received 8 years from now at a 14 percent discount rate?

b. $1200 to be received 7 years from now at a 12 percent discount rate?

3. Future Value of an Annuity. What is the future value of

a. $1321 a year for 13 years at 13 percent compounded annually?

b. $867 a year for 10 years at 13 percent compounded annually?

4. Present Value of an Annuity. What is the present value of

a. $487 a year for 5 years at a 9 percent discount rate?

b. $798 a year for 13 years at a 11 percent discount rate?

5. Annuity. How many years will it take for a payment of

a. $590 to grow to 9090.91 at a compound rate of 14 percent?

b. $900 to grow to future value of 10,586.21 at a compound rate of 14 percent?

6. Mortgage. (Hint: P/Y=12) What is the payoff on a 30 year, 7% original mortgage of

a. $550,552 with a payment of 3,744.50 with 12 years remaining?

b. $190788 with a payment of 1,143.87 with 15 years remaining?

7. Stock. What is the required rate of return on a stock with a

a. $0.75 expected dividend and a 34 price with 7% growth?

b. $1.25 expected dividend and a 15 price with 8% growth?

What are your thoughts?

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[stapel]

2. Present Value. What is the present value of
a. $453 to be received 8 years from now at a 14 percent discount rate?
b. $1200 to be received 7 years from now at a 12 percent discount rate?

Part (a): To find the present value, you need to find the amount which would need to be invested now at the given ("discount") rate in order to get the stated amount at the end. So you'd use the compound-interest formula, with i = 0.14, t = 8, and A = 453. Solve A = P(1 + r/n)^(nt) for the value of the present value P. (Note: No compounding frequency is stated, so you don't know the value for n. I'd guess yearly or monthly.) The same method works for part (b).

3. Future Value of an Annuity. What is the future value of
a. $1321 a year for 13 years at 13 percent compounded annually?
b. $867 a year for 10 years at 13 percent compounded annually?

4. Present Value of an Annuity. What is the present value of
a. $487 a year for 5 years at a 9 percent discount rate?
b. $798 a year for 13 years at a 11 percent discount rate?

5. Annuity. How many years will it take for a payment of
a. $590 to grow to 9090.91 at a compound rate of 14 percent?
b. $900 to grow to future value of 10,586.21 at a compound rate of 14 percent?

6. Mortgage. (Hint: P/Y=12) What is the payoff on a 30 year, 7% original mortgage of
a. $550,552 with a payment of 3,744.50 with 12 years remaining?
b. $190788 with a payment of 1,143.87 with 15 years remaining?

7. Stock. What is the required rate of return on a stock with a
a. $0.75 expected dividend and a 34 price with 7% growth?
b. $1.25 expected dividend and a 15 price with 8% growth?

If you get stuck following the instructions for the first exercise, please reply showing your work so far. Otherwise, please proceed to the next exercise. Reply if/when you get stuck, clearly showing what you have tried. Thank you!