2. Sharon Smith will receive $1 million in 30 years. As an alternative, she can receive...

2. Sharon Smith will receive $1 million in 30 years. As an alternative, she can receive $90,000 today. If we use a discount rate of 8%, which should she choose?

3. Yesterday Google issued 20 Year bonds with a 5% Interest Rate/Coupon when the required rate of return or yield to maturity was 5%. Today, investors are requiring an 8% return or yield to maturity. What will be the new market price of the bond?

Expert Solution

2

Calculator
Inputs:
FV	1,000,000.00
PMT	-
Rate (I/Y)	8.000%
Term N	30.00

Output:
PV	99,377.33

Present value of 1million is 99,377.33

Choose 1 million in 30 years

2



Calculator
Inputs:
FV	1,000.00
PMT	50.00
Rate (I/Y)	8.000%
Term N	20.00

Output:
PV	705.46

Price of bonds is:

705.46

jeff jeffy answered 2 years ago

4) Sharon Goodwill has worked for five years for the Pennsylvania Department of Revenue. She is...

4) Sharon Goodwill has worked for five years for the Pennsylvania Department of Revenue. She is an adequate employee with no substantial problems or commendations in her employment file. Recently, however, Sharon has experienced some personal problems including a divorce and a child custody battle. She has missed a substantial amount of days and has begun to make major mistakes on the job. She has been diagnosed as suffering from clinical depression. a) If you were Sharon’s immediate supervisor,...

Stacy would like to have $1,000,000 available when she retires in 30 years. If she can...

Stacy would like to have $1,000,000 available when she retires in 30 years. If she can get an 11% return, what does she have to invest each month to achieve this goal? Ronnie wants to give his grandson $10,000 on his 18th birthday. How much does he need to invest (5%) at the time his grandson is born to reach this amount?

Rita Gonzales won the $65 million lottery. She is to receive $3 million a year for...

Rita Gonzales won the $65 million lottery. She is to receive $3 million a year for the next 20 years plus an additional lump sum payment of $5 million after 20 years. The discount rate is 6 percent. What is the current value of her winnings? Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.(Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Rita Gonzales won the $38 million lottery. She is to receive $1.1 million a year for...

Rita Gonzales won the $38 million lottery. She is to receive $1.1 million a year for the next 25 years plus an additional lump sum payment of $10.5 million after 25 years. The discount rate is 12 percent. What is the current value of her winnings?

Rita Gonzales won the $62 million lottery. She is to receive $1.9 million a year for...

Rita Gonzales won the $62 million lottery. She is to receive $1.9 million a year for the next 25 years plus an additional lump sum payment of $14.5 million after 25 years. The discount rate is 13 percent. What is the current value of her winnings? Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.(Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Rita Gonzales won the $44 million lottery. She is to receive $1.3 million a year for...

Rita Gonzales won the $44 million lottery. She is to receive $1.3 million a year for the next 25 years plus an additional lump sum payment of $11.5 million after 25 years. The discount rate is 18 percent.

The owner of Automobile Mart determines that she needs $2 million for retirement in 45 years...

The owner of Automobile Mart determines that she needs $2 million for retirement in 45 years (this figure is irrelevant of her selling the business or transferring ownership). How much of her salary does she need to save each year if her investment earns the S&P statistical annual average of 9.4%? N= I = PV = PMT = FV = P/Y =

FCAU will receive 1 million rand in six months. FCAU can hedge their exposure to the...

FCAU will receive 1 million rand in six months. FCAU can hedge their exposure to the rand by buying rand in the forward market. True or False?

Problem 1 (Hedging) A US exporter expects to receive £1 million in 2 months for her...

Problem 1 (Hedging) A US exporter expects to receive £1 million in 2 months for her exports to the UK. The current exchange rate is US$2.30/£. She is worried that the pound might depreciate over the next 2 months and wants protection against its decline but she also want to benefit from a possible rise in £ over the next 2 months. Put options and call options on the £, with 2-month maturity are available. What should she do? Suppose...

The firm will receive cash inflow of $30 million on June 20 which needs to be...

The firm will receive cash inflow of $30 million on June 20 which needs to be parked for a period of 3 months ending on sep 19. The CFO believes the interest rates will start falling and wishes to hedge against this. She notes that the june euro dollar futures (expiring on june 20) is at 96 a. Write down the position that she should take on the euro dollar contracts. The final closing price on June 20 was 95...

Question