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With interest rates so low, some investors have considered replacing bond investments with stable dividend paying stocks. First we’ll look at a bond.
a. ONT 3.5 June/2/2043 is a bond issued by the Province of Ontario. The 3.5% coupon is paid semi-annually on June 2 and December 2 (i.e. $ 1.75 per $100). Set up a column of dates and cash flows and manually discount them by a rate that you can adjust. (Pretend it is June 2 right now so we don’t have to deal with accrued)
b. What discount rate gets you a Present Value close t o the trading price of $106? (Guess and check)
c. Check your answer with the XNPV function. (Put a 0 cash flow for June 2, 2015 to hack the formula).
d. What is the present value of the final $101.75 cash flow (that is 28 years from now)?
Your retirement strategy is to invest 500 per month in an equity mutual fund and 200 per month in a bond fund. Your retirement date is 30 years from now. The expected return on the stock fund is expected to be 8% and the expected return on the bond f..
Xytex Products just paid a dividend of $1.62 per share, and the stock currently sells for $28. If the discount rate is 10 percent, what is the dividend growth rate?
Miller Mfg. is analyzing a proposed project. The company expects to sell 11,000 units, give or take 4 percent. The expected variable cost per unit is $7.00 and the expected fixed cost is $35,000. The fixed and variable cost estimates are considered a..
One (Portfilio A) will require a payment of $100,000,000 at the end of 5 years (target date) while the other (Portfolio B) will require a payment of $100,000,000 at the end of 10 years (target date). The goal is to develop an immunized dedicated port..
An individual is saving for retirement. He has $100,000 right now and is trying to have $1.5 million in 25 years. If he can earn 5%, how much must be invest each month in order to reach his goal? At retirement the investor decides to withdraw $8000 e..
Describe how the average accounting return is usually calculated and describe the information this measure provides about a sequence of cash flows. What is the Average Accounting Return criterion decision rule? What problems associated with using the..
Capital budgeting can be affected by exchange rate risk, political risk, transfer pricing, and strategic risk. Explain how these factors may and can impact capital budgeting.
the attributes of the two widely accepted models used for option pricing: Black-Scholes and Binomial Models. Your paper should be completed in Word and be no less than two pages in length following APA format.
question 1 american standard co. has a 90 day pound1 million receivable. american standards bank bank of america
What factors may contribute to the decline in usefulness of operating assets? Should the choice of depreciation method be related to these factors? Must a company choose just one method of depreciation for all assets? Explain
Rogue Industries reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Expense = $30,000; Marketing Expenses = $80,000; an..
Bill Dukes has $100,000 invested in a 2-stock portfolio. $77,500 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta?
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