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Given the following X-Corp.’s options between two CD offerings, perform the following tasks by applying appropriate techniques/methods where necessary in M. Keep in mind that it is absolutely essential for you to figure out even the highlighted areas other than questions, though not directly asked, to correctly perform the task. The answer choices are found at the end of the problem group.
Which one is better? Principal APR comp Maturity (in yrs) frequency t*f $ Interest FV (Maturity Value
Citi $ 100,000.00 10.25% 4 2 Q15
Chase $ 100,000.00 8.50% 4 4 Q16
a. 139,995.19 b. 49,158.52 c. 149,158.52 d. 39,995.19 e. 16
How much would you pay for perpetuity which pays $500 (the first payment coming three years from today) every three years grows by 2% each payment? The discount rate is a 5% per year.
Junkman's Warehouse and Storage Company has an unusual bond outstanding with three years remaining until maturity. The bond is unusual because the annual coupon payments remaining are $100, $200, and $300 and the face value of the bond is $1,200. Wha..
A 2-year bond with par value $1,000 making annual coupon payments of $80 is priced at $980. What is the yield to maturity of the bond? What will be the realized compound yield to maturity if the one-year interest rate next year turns out to be 8%.
A five-year, $2000.00 note bearing interest at 10% compounded annually was discounted at 12% compounded semi-annually yielding proceeds of $1900.00. How many months before the due date was the note discounted?
Are there any slack values? Are there any surplus values? What are the extreme points of the feasible region?
The book value of equity of a firm is $100 million and the market value of equity is $200 million. The face value of debt of the firm is $50 million and the market value of debt is $60 million. What is the market value of assets of the firm?
You are considering two investments, a conventional, FDIC insured 1-year bank CD with an interest rate of 5% and a 1-year “Inflation Plus” CD offering 1.5% plus the rate of inflation, which is also FDIC insured. Which investment is safer? If you expe..
Yellow jacket, Inc., a large textile company, is trying to decide how long it should retain one of its machines used in the sludge dewatering processes. The machine currently is estimated to have a $35,000 market value and a future market value of $1..
Superlink Inc. is considering an investment that has the following cash flows: What is the payback period for the investment project? What is the project's NPV if the firm's cost of capital is 12%?
A trader creates a long butterfly spread from options with strike prices $60, $65, and $70 by trading a total of 4 options. The options are cost $11, $14, and $18. What is the maximum profit on the position (remember to subtract the cost of the optio..
Duke Energy has recently issued a bond with the following characteristics: maturity: 20 years, coupon rate: 8% (paid semi-annually), face value: $1000. Your investment advisor has told you that the yield-to-maturity on this bond is 7%. What should be..
The drawbridge corporation had a net income of $100,000 for 20X2. Its income statement reflected depreciation of $50,000 and amortization expense of $10,000. Accounts receivable increased by 100,000 during 20X2 while accounts payable declined by 5,00..
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