the price of a one-year pure discount bond is 96.15 and the price of a two-year pure discount bond is 92.63. what rate on a one year bond, one year from today, could you lick in today?

An FI has purchased a $207 million cap of 9 percent at a premium of 0.60 percent of face value. A $207 million floor of 4.7 percent is also available at a premium of .65 percent of face value.

a. If interest rates rise to 10 percent, what is the amount received by the FI? What are the net savings after deducting the premium?
b. If the FI also purchases a floor, what are the net savings if interest rates rise to 11 percent? What are the net savings if interest rates fall to 3.7 percent? (Negative amounts should be indicated by a minus sign.)
c. If, instead, the FI sells (writes) the floor, what are the net savings if interest rates rise to 11 percent? What if they fall to 3.7 percent? (Negative amounts should be indicated by a minus sign.)

a.Amount received

Net savings

b.Net savings if interest rates rise to 11 percent

Net savings if interest rates fall to 3.7 percent

c.Net savings if interest rates rise to 11 percent

Net savings if they fall to 3.7 percent

A $1,000 face value has a 5% annual coupon rate. The next coupon is due in one year and the bond matures in 26 years. The current YTM on the bond is 4.2%. What is the dollar value of the price change if the bond's YTM increases to 6.3%? Round to the nearest cent. ​[Hint: 1) If the price drops, the change is a negative number. 2) Do not compute duration. You can calculate the precise impact of a yield change on the bond's price by comparing the prices under the two scenarios.]

H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,190,000. The fixed asset falls into the three-year MACRS class (MACRS Table). The project is estimated to generate $2,180,000 in annual sales, with costs of $1,170,000. The project requires an initial investment in net working capital of $153,000, and the fixed asset will have a market value of $178,000 at the end of the project. Assume that the tax rate is 35 percent and the required return on the project is 12 percent.

What is the net cash flow of the project each year? (A negative answer should be indicated by a minus sign. Enter your answers in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

What is the NPV of the project? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV            $

What is liquidity premium theory about interest rate? Can it be used to explain the downward-sloping yield curve?

Your firm is contemplating the purchase of a new $515,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $53,000 at the end of that time. You will be able to reduce working capital by $78,000 (this is a one-time reduction). The tax rate is 21 percent and the required return on the project is 9 percent. If the pretax cost savings are $150,000 per year, what is the NPV of this project?

Bavarian Sausage, Inc. posted the following balance sheet and income statement:

What is Bavarian Sausage, Inc.’s quick ratio?  (Show your work. Four decimal places required. Highlight or bold your answer.)
What is Bavarian Sausage, Inc.’s net profit margin?  (Show your work. Label %. No decimal places required. Highlight or bold your answer.)
What is Bavarian Sausage, Inc.’s debt-equity ratio?  (Show your work. Two decimal places required. Highlight or bold your answer.)
Calculate Bavarian Sausage, Inc.’s return on assets.  (Show your work. Label %. Two decimal places required. Highlight or bold your answer.)
Calculate Bavarian Sausage, Inc.’s inventory turnover.  (Show your work. Two decimal places required. Highlight or bold your answer.)
Calculate Bavarian Sausage, Inc.’s return on equity.  (Show your work. Label %. Two decimal places required. Highlight or bold your answer.)

Quantitative Problem 2: You and your wife are making plans for retirement. You plan on living 30 years after you retire and would like to have $100,000 annually on which to live. Your first withdrawal will be made one year after you retire and you anticipate that your retirement account will earn 10% annually.

1. What amount do you need in your retirement account the day you retire? Do not round intermediate calculations. Round your answer to the nearest cent.

   $   

2. Assume that your first withdrawal will be made the day you retire. Under this assumption, what amount do you now need in your retirement account the day you retire? Do not round intermediate calculations. Round your answer to the nearest cent.

   $   

You do not have to show work. Thanks

2. An investment requires an initial capital outlay of $12,000. The investment is expected to generate future cash flows of $1,000 one year hence, $2000 two years hence, $3,000 three years hence, $4,000 four years hence, $5,000 five years hence. Assume a 10% cost of capital.

This is the homework question but I think its asking for net present value?

FUTURE VALUE OF AN ORDINARY ANNUITY
FVOA= A(FVAF) PVOA=(PVAF)

We will only be concerned with ordinary annuities, where the same payments are made or received at the end of each time period.

Just remember payments can be made at the beginning of the period, called annuities due, the calculation used is slightly different .

1. Piper opens up an IRA and places the maximum contribution of $5,500 in her retirement account at the end of each year for 20 years. She believes the account will earn 11 percent interest per year, compounded annually.   

1. How much will she have in her retirement account in 20 years?

2. What if the interest rate is only 8%? How much will she have in her retirement account in 20 years?

2. Fairview Corp. borrows $4 million by issuing bonds. It plans to set up a sinking fund that will repay the loan at the end of 10 years. Assume a 5 percent interest rate per year. What should the company place into the fund at the end of each year to have $4 million in the account to pay back their bondholders?  

Hint: This is a future value of an ordinary annuity problem. You will solve for “A”

3. You just had a baby and want to get started on a college fund for your child. You figure you will need $120,000 available in 18 years. You believe you can earn an annual rate of 9% on your money. How much would you have to set aside at the end of year to have $120,000 in 18 years?

4. Jorge plans to retire at the age of 65 and believes he will live to be 85. He wants to receive an annual retirement payment of $50,000 at the end of each year. He sets up a retirement account that is estimated to earn 8 percent annually.
   1. How much money must Jorge have in the account when he reaches reach 65 years old?

2. Jorge is currently 30 years of age. How much must he invest in this account at the beginning of each year for the next 35 years to have the amount you just calculated (in 4.a) in his account at age 65?

Hint - This is then a future value of an ordinary annuity and you are solving for “A”.

5. XTRA CREDIT PROBLEM: Calculate the monthly mortgage payment made on a $120,000 mortgage. The mortgage is for fifteen years and the interest rate is 4 percent

XYZ used an investment bank to do IPO. In IPO, XYZ sold 1 million shares at $60 each. The investment bank charged 7% spread. At the end of the 1st day of trading, XYZ stock price closed at $79. Calculate the total cost of IPO. That is, what is the sum of direct and indirect cost?

Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $1,860,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1,950,000 in annual sales, with costs of $1,060,000. The project requires an initial investment in net working capital of $150,000, and the fixed asset will have a market value of $175,000 at the end of the project. Assume that the tax rate is 35 percent and the required return on the project is 14 percent. Requirement 1: What are the net cash flows of the project for the following years? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter your answers in dollars, not millions of dollars (e.g., 1,234,567).) Year Cash Flow 0 $ 1 2 3 Requirement 2: What is the NPV of the project? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567). Round your answer to 2 decimal places (e.g., 32.16).) NPV $

Dewey Corp. is expected to have an EBIT of $2.45 million next year. Depreciation, the increase in net working capital, and capital spending are expected to be $180,000, $85,000, and $185,000, respectively. All are expected to grow at 18 percent per year for four years. The company currently has $13 million in debt and 800,000 shares outstanding. The company’s WACC is 9.1 percent and the tax rate is 21 percent. You decide to calculate the terminal value of the company with the price-sales ratio. You believe that Year 5 sales will be $27.4 million and the appropriate price-sales ratio is 1.9. What is your estimate of the current share price?