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1) Suppose you own two assets with the following payouts. (1) $550 at the end of every year starting 1 year from now. The annual cost of capital for these cash flows is 9%. (2) $350 one year from now and a cash flow that is 2% larger than the prior cash flow every year thereafter. The annual cost of capital for these cash flows is 7%. What is the weighted average cost of capital of this two asset portfolio? (enter your answer as a percent, e.g. 2.51. Do not include the "%" sign).
2) Suppose that you will need to save $1950000 over the next twenty years to retire comfortably. What constant annual payment (20 payments) will you need to make to save this amount if the you can earn 10% annually?
3) Suppose that you take out a loan for $300000 to purchase a house. You are required to make monthly payments, and the APR is 6%. How much interest will you end up paying over the life of the loan (30 year mortgage)?
4) Suppose that you are evaluating the following investment opportunity. At the end of the the next five years you estimate that you will receive the following cash flows, $250, $700, $400, $850, and $800. At the end of every year following year five you will receive a cash flow that is 3% larger than the prior cash flow. If the cost of capital is 10% how much should you be willing to invest in this opportunity?
Your firm is contemplating the purchase of a new $620,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $68,000 at the end of that time.
Over the past four years, a stock produced returns of 13 percent, -9 percent, 8 percent, and 14 percent, respectively. Based on these four years, what range of returns would you expect to see 99 percent of the time? (A)-32.39 percent to 48.56 percent..
Preissle Company, wants to sell some 20-year, annual interest, $1,000 par value bonds. Its stock sells for $42 per share, and each bond would have 25 warrants attached to it, each exercisable into one share of stock at an exercise price of $47. The f..
Assume that the risk-free rate is 4.5% and the market risk premium is 5%. What is the expected return for the overall stock market? What is the required rate of return on a stock with a beta of 2.1?
Compute each of the ratios for 2013 and 2014 and indicate whether each ratio was getting "better" or "worse" from 2013 to 2014 and whether the 2014 ratio was "good" or "bad" compared to the Industry Avg (round all numbers to 2 digits past the deci..
After an intensive research and development effort, two methods for producing playing cards have been identified by the Turner Company. One method involves using a machine having a fixed cost of $10,000 and variable costs of $1.00 per deck of cards.
Generous Dynamics stock currently sells for 73.0 dollars per share. Consider the following portfolio of options on Generous Dynamics stock: -- short one call option with strike price 72.0 and price 7.2615 -- short two put options with a strike price ..
You are considering the following two mutually exclusive projects. The required rate of return is 14.5% for project A and 13.7% for project B. Which project should you accept and why?
You want to either replace or refurbish the elevator system in an office. Referbishing: Refurbishing the elevators will cost $55,000 and extend the life of the elevators another 20 years. Replacing the elevator system will cost $140,000, with an expe..
In 350-400 words explain why investors expect a higher rate of return from stocks with a variable return rate. Include once source reference.
Consider a 10-year, fixed-rate mortgage of $500,000 that has an interest rate of 12 percent. - Determine the amortization schedule.
If my gross salary is $36,000 annually and her after-tax income is $28,800. What is my maximum recommended monthly consumer credit payment? How do you figure this out?
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