Corporate Finance, business and finance assignment help

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Question Description

Please use the attached files to complete the assignment

For this assignment complete the mini case, "Williamson Mortgage, Inc.," from Chapter 25, page 803, in your Corporate Finance text. The goal in this scenario is to determine the needs, risk, and requirements of borrowing and lending money.

You may find that the optional finance problems assigned in this unit, and possibly the optional activities provided in this unit, can help you prepare for, and complete, this assignment. Prior to submitting this assignment, look at the Mini Case: Williamson Mortgage, Inc. Scoring Guide to make sure you have met the expectations of this assignment. In addition, as you work on your assignment, make sure that you use the materials presented in this course to justify your answers and work.

Corporate Finance, business and finance assignment help
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Heretohelpyou
School: Purdue University

Attached.

𝑟𝑃(1+𝑟)𝑁
−1

1. Monthly mortgage payments 𝑐 = (1+𝑟)𝑁

r = (5.5/12)/100 = 0.004583, P = $500,000, N = 25*12 = 300
c = $3070.40
2. The most significant risk Jennifer faces in this deal is that Max Cabell has agreed to purchase
the mortgage at the market rate after three months whereas Jennifer has already fixed the
interest rate for Jerry at 5.5%. So if the market rate increases after three months, then
Jennifer faces a serious loss in this deal.
3. Jennifer can hedge this risk with the help of Treasury bond futures. In case the interest rates
go up in future, the treasury bonds value will decrease thus nullifying the increase in interest
rate and hedging the risk.
4. A. Max wil...

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