A saver wants $100,000 after ten years and believes that it is possible to earn an annual rate of 8 percent on invested funds.

a) What amount must be invested each year to accumulate $100,000 if (1) the payments are made at the beginning of each year or (2) they are made at the end of each year?

b) How much must be invested annually if the expected yield is only 5 percent?

Please show step-by-step how to solve within excel

You have applied for a job with a local bank. As part of its evaluation process, you must take an examination of the time value of money analysis covering the following questions. Please show your work. (Identify N, I/Y, PV, PMT, and FV)

1. What is the present value of a 6-year, $100 ordinary annuity if the annual interest rate is 4%?
2. What is the EAR corresponding to a nominal rate of 8% compounded semiannually? Compounded quarterly? Compounded daily?

Company A offers you an initial salary of $150,000 with annual raises of 10% for the foreseeable future. Company B offers you $180,000 with annual raises of 8% for the foreseeable future.

A.) How many years will it take for the A salary to equal the B salary?

B.) How many years will it take for the total dollars received from A to equal the total dollars received from B?

Please write (type) about: why is Porter's 5 Forces Model useful for firms? with example

) Assume that you have successfully completed the R&D phase of a new product development project; this phase took several years and cost an estimated $14.75 million but resulted in a successful prototype product. You and your company are now ready to start the market development and research phase of your new product development project.  It is estimated that the market development and research phase of this project will take two years and cost $11.5M per year.  There is an eighty percent probability that the market development and research phase will indicate that a viable market exists for your new product.

Before your company can begin the market development and research phase, however, a long-time rival announced that it plans to market a similar product in one year that will directly compete with your newly developed product. Your company feels that there is a 60 percent probability that your new product will be superior to your competitor’s product.  

If your company’s product is superior to your competitor’s product and the market development phase indicates that a viable market exists, you will earn a net profit of $10 million per year for ten years.  If your product is inferior to your competitor’s product, you will terminate the project.  Assuming a discount rate of 14 percent, calculate the expected NPV of your new product assuming that you proceed immediately with the marketing development and research phase.   

In analyzing this problem, you should make the following assumptions.  First, if you learn that your competitor’s product is better than your product after one year of market development, you will terminate the project and not incur the market development cost ($11.5M) for the second year.  Second, assume that all cash flows occur at the end of the year.

Compare your results to the case when you decide to wait for one year (to learn more about your competitor’s product) before proceeding with the market development and research phase.  If you postpone the market development phase by a year, however, and your product is superior to your competitor’s project (and a viable market exists), it will only have a nine year life span.  What do you think is your best strategy?  Why?

Q1.      What additional concerns might a corporate Chief Financial Officer (CFO) face when a company expands into international markets?

(Ref: BMA, 13/e, Ch 1&12)

Answer:

Q2.      Fajer Inc., a retailer in the home improvement industry, currently operates seven retail outlets in Manama and Dubai. Management is contemplating building an eighth retail store across town from its most successful retail outlet. The company already owns the land for this store, which currently has an abandoned warehouse located on it. Last month, the marketing department spent $100,000 on market research to determine the extent of customer demand for the new store. Now Fajer Inc. must decide whether to build and open the new store.

            Which of the following should be included as part of the incremental earnings for the proposed new retail store?

a.   The cost of the land where the store will be located.

b.   The cost of demolishing the abandoned warehouse and clearing the lot.

c.   The loss of sales in the existing retail outlet, if customers who previously drove across town to shop at the existing outlet become customers of the new store instead.

d.   The $100,000 in market research spent to evaluate customer demand.

e.   Construction costs for the new store.

f.    The value of the land if sold.

g.   Interest expense on the debt borrowed to pay the construction costs.

(Ref: BMA, 13/e, Ch 5&6)

Answer:

Q3. Explain the similarities and differences between Net Present Value (NPV), Profitability Index (PI), and Economic Value Added (EVA).

(Ref: BMA, 13/e, Ch 5, 6, &12)

Answer:

Q4.      Which of the following bonds will have the greatest percentage increase in value if all interest rates decrease by 1 percent?

• 10-year zero coupon bond.
• 20-year zero coupon bond.
• 20-year 10 percent coupon bond.
• 20-year 5 percent coupon bond.
• 1-year 10 percent coupon bond.

(Ref: BMA, 13/e, Ch 2)

Answer:

Q5.      The relationship between a bond’s yield to maturity and coupon interest rate can be used to predict its pricing level. For each of the bonds listed below, state whether the price of the bond will be at a premium to par, at par, or at a discount to par.

(Ref: BMA, 13/e, Ch 3)

Answer:

Austrian business cycle theory part 1 What is the Cc/S ratio?

part 2 The CC/S ratio changes from $900/$100 to $700/$300. Graphically show what happens in the loanable funds market as a result.

this is what the article says

The world has billions of consumers, but for now let’s focus on only one. We will assume that this one consumer is representative of other consumers. Let’s say that this representative consumer earns $1,000 a week. Out of the $1,000 he earns each week, he spends $900 on goods and services and saves $100. We can say that he has a current consumption-saving ratio (CC/S ratio) of $900/$100. CC/S = $900/$100 Now ask yourself, what is our representative consumer saving for? People save today so that they can consume more in the future (i.e., more than they would if they didn’t save). For example, a person might save in his working years so that he can consume in his retirement years. What this means is that “saving” (S) is just another name for “future consumption (CF ).” S = CF So instead of talking about a CC/S ratio of $900/$100, we can talk about a CC/CF ratio of $900/$100. CC/CF = $900/$100 The CC/CF ratio that a person has depends upon that person’s rate of time preference. A person’s rate of time preferences is the degree to which a person prefers current (or present) satisfactions to future satisfactions; it is the degree to which a person prefers current consumption to future consumption.

An investor must choose between two bonds:

Bond A pays $85 annual interest and has a market value of $850. It has 10 years to maturity.

Bond B pays $80 annual interest and has a market value of $780. It has five years to maturity.

Assume the par value of the bonds is $1,000.

a. Compute the current yield on both bonds. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)

Bond A. %

Bond B. %

b. Which bond should she select based on your answers to part a?

• Bond B

• Bond A

c. A drawback of current yield is that it does not consider the total life of the bond. For example, the approximate yield to maturity on Bond A is 10.99 percent. What is the approximate yield to maturity on Bond B? The exact yield to maturity? (Use the approximation formula to compute the approximate yield to maturity and use the calculator method to compute the exact yield to maturity. Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)

Approximate yield to maturity. %

Exact yield to maturity. %

d. Has your answer changed between parts b and c of this question in terms of which bond to select?

No?

or

Yes?

• No

• Yes

The variance of return on investment A is 144 percent squared while the variance of return on investment B is 225 percent squared. If the covariance of returns on A and B is 150 percent squared, the correlation coefficient between the returns on A and B is closest to:

• A. 187.5
• B. 0.0046
• C. 1.2
• D. 0.83

You are graduating from college at the end of this semester and have decided to invest ​$4,500 at the end of each year into a Roth​ IRA, which is a retirement investment account that grows tax free and is not taxed when it is​ liquidated, for the next 50 years. If you earn 10 percent compounded annually on your investment of ​$4,500 at the end of each​ year, how much will you have when you retire in 50 ​years? How much will you have if you wait 10 years before beginning to save and only make 40 payments into your retirement​ account? 

When you retire in 50 ​years, you will have ​$__________ ​(Round to the nearest​ dollar.)

Professor,

In trying to apply my knowledge in the real world, I am trying to create a realistic retirement schedule. However, I am running into difficulties using both a financial calculator as well as our equations from class in doing this.

I am trying to do the following: plan a retirement schedule between the ages of 22 and 68, in which I would deposit 25% of my income each year. The income starts at 80,000 with an annual growth rate of 5% and, to be realistic, assuming an interest rate of 2.5%. I will assume for simplicity that I receive my first salary ($80,000) when I turn 22, and my last salary when I turn 68. As soon as I receive a salary, I will save 25% of it.

However, this raises issues, as if I try to use the equation for the present value of a growing annuity with a 5% growth rate and 2.5% discount rate, r-g will yield a negative number. Also, I could not find online how to do this on my HP 10bII+ financial calculator and I don't want to manually enter 47 payments.

Do you know how I could overcome this obstacle?

1. Briefly comment on Jimmy’s concern that “if I try to use the equation for the present value of a growing annuity with a 5% growth rate and 2.5% discount rate, r-g will yield a negative number”. (3 sentences at most)
2. How much will Jimmy have in his retirement account when he turns 68, immediately after the last deposit?
3. What single deposit made on Jimmy’s 22^nd birthday would give the same account balance when he turns 68?

Assume you are considering a portfolio containing two assets, L and M. Asset L will represent 39% of the dollar value of the portfolio, and asset M will account for the other 61%. The projected returns over the next six years, 2018–2023, for each of these assets are summarized in the following table. *huge thumbs up for correct answers*

Projected Return (%)

(Year)  (Asset L)  (Asset M)

(2018) (14%)  (21%)

(2019) (13%)  (19%)

(2020)  (15%)  (16%)

(2021)  (17%) (15%)

(2022)  (18%)  (11%)

(2023)  (20%)  (10%)

a.Use an Excel spreadsheet to calculate the projected portfolio return, rp, for each of the six years.

b. The average expected portfolio​ return, rp, over the 6-year period is (blank) %

c. The standard deviation of expected portfolio returns over the 6-year period is (blank) %

d. How would you characterize the correlation of returns of the two assets L and​ M? (neg. pos. or un-correlated)

e. Discuss any benefits of diversification achieved through creation of the portfolio.  

​ A. By combining these two negatively correlated​ assets, the overall portfolio risk is increased.

B. By combining these two positively correlated​ assets, the overall portfolio risk is reduced.

C. By combining these two negatively correlated​ assets, the overall portfolio risk is reduced.

D.By combining these two negatively correlated​ assets, the overall portfolio risk is eliminated.

The dollar cost of debt for Coval​ Consulting, a U.S. research​ firm, is 7.3%.

The firm faces a tax rate of 37% on all​ income, no matter where it is earned. Managers in the firm need to know its yen cost of debt because they are considering a new bond issue in Tokyo to raise money for a new investment there. The​ risk-free interest rates on dollars and yen are

r Subscript $ Baseline equals r$=5%

and r Subscript yen Baseline equals r¥=1.4%

respectively. Coval Consulting is willing to assume that capital markets are internationally integrated and that its free cash flows are uncorrelated with the​ yen-dollar spot rate. What is Coval​ Consulting's after-tax cost of debt in​ yen? ​(Hint: Start by finding the​ after-tax cost of debt in dollars and then finding the yen​ equivalent.)

The​ after-tax cost of debt in dollars is _____________%. (Round to two decimal​ places.)