1.
Your finance text book sold 47,500 copies in its first year. The publishing
company expects the sales to grow at a rate of 15.0 percent for the next three
years, and by 14.0 percent in the fourth year. Calculate the total number of
copies that the publisher expects to sell in year 3 and 4. (If you solve this
problem with algebra round intermediate calculations to 6 decimal places, in
all cases round your final answers to the nearest whole number.)
Number
of copies sold after 3 years
Number
of copies sold in the fourth year
2.
Find the present value of $4,700 under each of the following rates and periods.
(If
you solve this problem with algebra round intermediate calculations to 6
decimal places, in all cases round your final answer to the nearest penny.)
a.
8.9 percent compounded monthly for five years.
Present
value $
b.
6.6 percent compounded quarterly for eight years.
Present
value $
c.
4.3 percent compounded daily for four years.
Present
value $
Present
value $
3.
Trigen Corp. management will invest cash flows of $1,450,345, $788,231,
$1,062,745, $818,400, $1,239,644, and $1,617,848 in research and development
over the next six years. If the appropriate interest rate is 9.44 percent, what
is the future value of these investment cash flows six years from today? (Round
answer to 2 decimal places, e.g. 15.25.)
Future
value $
4.
You wrote a piece of software that does a better job of allowing computers to
network than any other program designed for this purpose. A large networking
company wants to incorporate your software into their systems and is offering
to pay you $481,000 today, plus $481,000 at the end of each of the following six
years for permission to do this. If the appropriate interest rate is 8 percent,
what is the present value of the cash flow stream that the company is offering
you? (Round answer to the nearest whole dollar, e.g. 5,275.)
Present
value $
Present
value $
5.
Barbara is considering investing in a stock and is aware that the return on
that investment is particularly sensitive to how the economy is performing. Her
analysis suggests that four states of the economy can affect the return on the
investment. Using the table of returns and probabilities below, find
Probability
Return
Boom
0.5 25.00%
Good
0.1 15.00%
Level
0.1 10.00%
Slump
0.3 -5.00%
What
is the expected return on Barbara’s investment? (Round answer to 3 decimal
places, e.g. 0.076.)
Expected
return
What
is the standard deviation of the return on Barbara's investment? (Round
intermediate calculations and answer to 5 decimal places, e.g. 0.07680.)
Standard
deviation
6.
Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for
$943.49. The bonds make semiannual coupon payments at a rate of 8.4 percent. If
the current price of the bonds is $1,015.89, what is the yield that Trevor
would earn by selling the bonds today? (Round intermediate calculations to 4
decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)
Effective
annual yield %
7.
The First Bank of Ellicott City has issued perpetual preferred stock with a
$100 par value. The bank pays a quarterly dividend of $1.65 on this stock. What
is the current price of this preferred stock given a required rate of return of
14.0 percent? (Round answer to 2 decimal places, e.g. 15.25.)
TUTORIAL
PREVIEW
4.
You wrote a piece of software that does a better job of allowing computers to
network than any other program designed for this purpose.
Rate =
|
8%
|
year
|
cash flow
|
|||||
Nper =
|
7
|
(includes paid today plus 6 payments each period)
|
0
|
481000
|
$481,000.00
|
|||
PMT =
|
-481000
|
or
|
1
|
481000
|
$445,370.37
|
|||
File name: 1.-Your-finance-text-book.xls File
type: XLS Price: $25
