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Professor’s Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $84,000 at age 65, the firm will pay the retiring professor $700 a month until death. a. If the professor’s remaining life expectancy is 15 years, what is the monthly interest rate on this annuity? What is the effective annual rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Monthly rate on annuity % b. What is the effective annual interest rate? (Use the monthly rate computed in part (a) rounded to 2 decimal places when expressed as a percent. Enter your answer as a percent rounded to 2 decimal places.) Effective annual rate % c. If the monthly interest rate is .75%, what monthly annuity payment can the firm offer to the retiring professor? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Monthly annuity payment $
You are considering two independent (not mutually exclusive) projects both of which have been assigned a discount rate of 15%. Based on the profitability index, what is your recommendation concerning these projects?
The Constant Growth (Gordon) Model 5. The Spinnaker Company has paid an annual dividend of $2 per share for some time. Recently the board of directors voted to grow the dividend by 6% from now on. What is the most you would be willing to pay for a sh..
An investor is looking to buy a $1,000,000 T-bill issue at an Ask Discount of 1.13 on January 22 for a maturity date of February 27 (36 days to maturity), what is the discount rate, dollar discount, purchase price, and the holding period yield and an..
Calculate its amount of principal repaid in the first payment?
What is the Board of Governors? How many members does it have, and who appoints them?- What is the Federal Open Market Committee? Who are its members?
Tony and Franzi, after graduating from the DMBA program, decide to launch a venture "Likable Lunches." To do this, Franzi would need to invest $1,000 at t=0 for the ingredients and menu development for these lunches. There's a 50-50 chance of strong ..
Assume that your capital is constrained, so that you only have $500,000 available to invest in projects. If you invest in the optimal combination of projects given your capital constraint, then the total net present value (NPV) for all the projects y..
It has been argued that if one could perfectly synchronize a firm's cash inflows and outflows, short-term financial planning would be unnecessary. Do you agree? What actions can the firm's financial decision-makers take to reduce the degree of synchr..
Show that portfolio Beta is the weighted sum of the asset beta, where weights are the portfolio (fractional) holding in each asset.
Merton Enterprises has bonds on the market making annual payments, with 12 years to maturity, and selling for $963. At this price, the bonds yield 7.5 percent. What must the coupon rate be on Merton’s bonds?
Mark's house was damaged when lightning struck his roof. The cost to fix the home will be $30,000. He carries an HO-3 policy with a $500 deductible. If the home is insured for $200,000 and the replacement value is $180,000, how much will Jim's reimbu..
Ford Motor Company, Inc. Is the company maximizing the wealth of its shareholders? If not, what can they do to achieve this result? Review calculations and discussion of the following 6 ratios and financial measures: Current Ratio, Debt/Equity Ratio,..
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