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1.Suppose you invest $2000 today and receive $10,000 in five years.
a. What is the IRR of this opportunity?
b. Suppose another investment opportunity also requires $2000 upfront, but pays an equal amount at the end of each year for the next five years. If this investment has the same IRR as the first one, what is the amount you will receive each year?
2.You are shopping for a car and read the following advertisement in the newspaper: “Own a new Spitfire! No money down. Four annual payments of just $10,000.” You have shopped around and know that you can buy a Spitfire for cash for $32,500. What is the interest rate the dealer is advertising (what is the IRR of the loan in the advertisement)? Assume that you must make the annual payments at the end of each year.
3.A local bank is running the following advertisement in the newspaper: “For just $1000 we will pay you $100 forever!” The fine print in the ad says that for a $1000 deposit, the bank will pay $100 every year in perpetuity, starting one year after the deposit is made. What interest rate is the bank advertising (what is the IRR of this investment)?
If the relevant tax rate is 35 percent, what is the aftertax cash flow from the sale of this asset?
xyz company has a cost of capital of 9.8 percent. the companys cost of equity is 15 percent and its cost of debt is 7.5
Warren Buffett believes that "value will always in time be reflected in market price". Does this contradict with the beliefs of Graham and Buffet that you should always buy with a "margin of safety"? Explain.
the chen company is considering the purchase of a new machine to replace an obsolete one. the machine being used for
1. Toby Imports issued 17 year bonds 2 years ago at a coupon rate of 10.3 percent. The bonds make semiannual payments. These bonds currently sell for 102 percent of par value. What is the yield?
Why can balance-of-payments deficits force some countries to implement a contractionary monetary policy?
a firm issues a bond at par value. shortly thereafter interest rates fall. if you calculated the coupon rate coupon
Tunney Industries can issue perpetual preferred stock at a price of $74.00 a share. The stock would pay a constant annual dividend of $6.00 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places.
If the discount rate is 9%, calculate a fair price for the stock of United Sports, Inc.
health services continue to affect the gross domestic product and this dramatic transformation has great demands on
you will outline and explain ethical theories and then apply that knowledge to how organizations would function were
The last stock added to this portfolio is Lauren clothing,co., which has a beta of .70. What was the portfolio's beta before Lauren's stock was added?
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