Reference no: EM131325854
Assignment: Time Value of Money
Instructions
Demonstrate your understanding of financial concepts by completing the following problems. Where appropriate, show or explain your work. You may use Excel to work the problems. Note that the tables for Problems 2-5 are also available in the Financial Concepts 2 Assessment Tables document linked in the assessment resources.
Problem 1.Calculate the future value of $3,500, compounded annually for each of the following:
• 10 years at 7 percent.
• 15 years at 9 percent.
• 20 years at 5 percent.
Problem 2.Calculate the present value for each of the following:
Problem 2. Calculating Present Values
|
Present Value
|
Years
|
Interest Rate
|
Future Value
|
|
5
|
4%
|
$15,250.
|
|
8
|
7%
|
$30,550.
|
|
12
|
10%
|
$850,400.
|
|
20
|
15%
|
$525,125.
|
Problem 3.Calculate the interest rate for each of the following:
Problem 3. Calculating Interest Rates
|
Present Value
|
Years
|
Interest Rate
|
Future Value
|
$282.
|
2
|
|
$325.
|
$607.
|
6
|
|
$891.
|
$32,600.
|
12
|
|
$142,385.
|
$57,435.
|
22
|
|
$463,200.
|
Problem 4. Calculate the number of years in each of the following:
Problem 4. Calculating the Number of Periods
|
Present Value
|
Years
|
Interest Rate
|
Future Value
|
$765.
|
|
6%
|
$1,385.
|
$845.
|
|
9%
|
$4,752.
|
$17,200.
|
|
11%
|
$432,664.
|
$23,700.
|
|
14%
|
$182,529.
|
Problem 5. Refer to the cash flows listed for the Kelly Company investment projects in the table below. The discount rate is 6 percent. Calculate the present value of these cash flows. What is the present value at:
• 12 percent?
• 17 percent?
Problem 5. Present Value and Multiple Cash Flows
|
Year
|
Cash Flow
|
1
|
$750.
|
2
|
$840.
|
3
|
$1,230.
|
4
|
$1,470.
|
Problem 6. Value the bond Midcorp has issued, with the following characteristics:
• Par: $1,000.
• Time to maturity: 28 years.
• Coupon rate: 7.50 percent.
• Semiannual payments.
Calculate the price of this bond if the YTM is each of the following:
• 7.50 percent.
• 9 percent.
• 4 percent.
Problem 7. Calculate the bond yield in the following scenario: Two years ago, Walters Electronics Corporation issued 20-year bonds at a coupon rate of 6.75 percent. The bonds make semiannual payments, and currently sell for 106 percent of par value. Calculate the YTM.
Problem 8. Calculate the stock value in the following scenario: The next dividend payment by RST, Incorporated will be $3.45 per share. The dividends are projected to sustain a 6.50 percent growth rate into the future. If RST stock currently sells for $67 per share, what is the required return?
Problem 9. Calculate the stock value in the following scenario: Nickels Corporation will pay a $3.10 per share dividend next year. The company plans to increase its dividend by 4.25 percent per year, indefinitely. How much will you pay for the company's stock today if you require a 12 percent return on your investment?
Investigating the crime as well as seizing evidence
: Provide a couple of examples of computer crimes and explain how they differ from traditional crimes. Describe the unique challenges computer crimes present to investigators. Your discussion of challenges should include identifying and investigati..
|
Determine which of two bonds is the cheaper bond
: It is August 20, and you are trying to determine which of two bonds is the cheaper bond to deliver on the December Treasury bond futures contract.
|
Determine the implied repo rate on the contract
: The June futures price is 100 17/32. - Assume a 5.5 percent reinvestment rate. Determine the implied repo rate on the contract. Interpret your result.
|
Major contributor to sustained economic growth
: It is sometimes said that declining fertility was a major contributor to sustained economic growth among the Asian tigers. Do you agree with this view? Use the microeconomic theory of fertility to argue that it was a rise in wages, spectacular g..
|
Calculate the price of this bond if the ytm is nine percent
: Calculate the price of this bond if the YTM is 7.50 percent, 9 percent and 4 percent. Calculate the bond yield in the following scenario: Two years ago, Walters Electronics Corporation issued 20-year bonds at a coupon rate of 6.75 p..
|
Impact on the market
: A sudden and sharp increase in gas prices will have what impact on the market for the following (be sure to discuss both supply and demand):
|
Determine if an arbitrage opportunity was available
: On July 5, a stock index futures contract was at 394.85.- Determine if an arbitrage opportunity was available, and explain what transactions were executed.
|
Identify and discuss criminal investigative techniques
: Describe three of the new-age crimes termed "white collar crime." Identify and discuss criminal investigative techniques employed in the white-collar crimes you described
|
Why do you believe that laws are needed in our society
: You have been discovering what the law is, the sources upon which the U.S. legal system is based, the structures of the state and federal court systems in the United States, the differences between criminal law and civil law, as well as the defini..
|