FIN/370 Week 2 Calculating Present Values, accounting homework help

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timer Asked: Mar 8th, 2017
account_balance_wallet $10

Question description

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Prepare in Microsoft® Excel® or Word.

  • Ch. 5: Questions 3 & 4 (Question and Problems section): Microsoft® Excel® templates provided for Problems 3 and 4
  • Ch. 6: Questions 2 & 20 (Questions and Problems section)
  • Ch. 7: Questions 3 &11 (Questions and Problems section)
  • Ch. 8: Questions 1 & 6 (Questions and Problems section): Microsoft® Excel® template provided for Problem 6

Format your assignment consistent with APA guidelines if submitting in Microsoft® Word

• 3. Calculating Present Values [LO2] For each of the following, compute the present value: 4. Calculating Interest Rates [LO3] Solve for the unknown interest rate in each of the following: 2. Present Value and Multiple Cash Flows [LO1]2. Investment X offers to pay you $4,700 per year for eight years, whereas Investment Y offers to pay you $6,700 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent? 20. Calculating Loan Payments [LO2, 4] You want to buy a new sports coupe for $79,500, and the finance office at the dealership has quoted you an APR of 5.8 percent for a 60-month loan to buy the car. What will your monthly payments be? What is the effective annual rate on this loan? 3.Valuing Bonds Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 23 years to maturity, and a coupon rate of 5.8 percent paid annually. If the yield to maturity is 4.7 percent, what is the current price of the bond? 11.Valuing Bonds [LO2] Union Local School District has a bond outstanding with a coupon rate of 3.7 percent paid semiannually and 16 years to maturity. The yield to maturity on this bond is 3.9 percent, and the bond has a par value of $5,000. What is the price of the bond? 1. Stock Values [LO1] The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.95 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. If investors require a return of 10.5 percent on The Jackson–Timberlake Wardrobe Co. stock, what is the current price? What will the price be in three years? In 15 years? 6. Stock Valuation [LO1] Suppose you know that a company’s stock currently sells for $63 per share and the required return on the stock is 10.5 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it’s the company’s policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?

Tutor Answer

MarkZ
School: Boston College

please find the attached completed assignment.

FIN 370 WEEK 2

“FIN 370 WEEK 2.”
Name:
Course code:
Institution of affiliation:
Date of submission:

1

FIN 370 WEEK 2

3. Calculating Present Values [LO2] For each of the following, compute the present
value:

SOLUTION.
Present value refers to the current value of the money which is payable at some specified
future time.
It can be calculated by the formula
PV= FV[1/(1+i)n
Where:
PV is the present value
FV is the future value
I is interest rate
N is the number of years.
For:
i.

FV given as $15,451
i= 9%
n= 13yrs
2

FIN 370 WEEK 2

PV

= $15,451x[1/(1+0.09)13
= $15,451 x 1/3.066
= $5,039.47

Hence here the PV = $5,039.47
ii.

For;
FV given as $51,557
i is 7%
n is 4 years
PV

= 51, 557 x [1/ (1+0.07)4]
= 51,557x [1/1.311]
= $39,326.47

Hence PV is calculated as $39,326.47
iii.

For;
FV is given as $886,073
i is 24%
n is 29 years
PV

= 886,073 x [1/ (1+0.24)29]
= 886,073 x [1/511.95}
= $1.73

Hence the PV is calculated as $1.73
iv.

For;
FV is given as $550,164
3

FIN 370 WEEK 2

i is 35%
n is 40 years
= 550,164 x [1/(1+0.35)40]

PV

=550,164 x [1/163,437.13]
=$3.37
Hence PV is given as calculated as $3.37
4. Calculating Interest Rates [LO3] Solve for the unknown interest rate in each of the
following:

SOLUTION.
Interest rate is calculated using the formula:
Interest rate= (future value/present value) 1/years – 1
i.

given;
PV = $181
Years = 4 years
FV = $ 297

4

FIN 370 WEEK 2

Interest rate (i)

= (297/181)1/4 -1
= (1.6409)1/4 – 1
= 1.1318 – 1...

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Anonymous
Goes above and beyond expectations !

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