How to answer finance exam Q3

Oct 3rd, 2015
Anonymous
Category:
Accounting
Price: $55 USD

Question description

41. Two years ago you purchased a new SUV. You financed your SUV for 60 months (with payments made at the end of the month) with a loan at 5.9% APR.  Your monthly payments are $617.16 and you have just made your 24th monthly payment on your SUV.

Required: Assuming that you have made all of the first 24 payments on time, how much interest have you paid over the first two years of your loan? (10 marks)

42. Consider the following list of projects:

Project

Investment

NPV

A

405,000

18,000

B

600,000

90,000

C

375,000

60,000

D

450,000

6,000

E

525,000

30,000

F

225,000

30,000

G

240,000

27,000

H

600,000

60,000

I

150,000

12,000

J

270,000

30,000

You are given a budget of only $1,800,000 to invest in projects.

Required: Which projects will you select, in what order will you select them, and why? (10 marks)

43. Consider the following three individuals' portfolios consisting of investments in four stocks:

Stock

Beta

Peter's Investment

Paul's Investment

Mary's Investment

Eenie

1.3

2,500

5,000

10,000

Meenie

1.0

2,500

5,000

10,000

Minie

0.8

2,500

5,000

-5,000

Moe

-0.5

2,500

-5,000

-5,000

Required: Assuming that the risk-free rate is 4% and the expected return on the market is 12%, then calculate the required return on Mary's portfolio. (10 marks)


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