Investor X has 7,000 to spend on the following three projects. Use the AW method to determine which of these independent investments are financially acceptable at 6% per year compounded monthly interest rate.

Lifelong period. Use CC=AW/i to get present worth

See Below Answer. How do you get this answer?

Rust Bucket Motor Credit Corporation (RBMCC), a subsidiary of Rust Bucket Motor, offered some securities for sale to the public on March 28, 2,008. Under the terms of the deal, RBMCC promised to repay the owner of one of these securities $82,927 on March 28, 2,031, but investors would receive nothing until then. Investors paid RBMCC $21,165 for each of these securities; so they gave up $21,165 on March 28, 2,008, for the promise of a $82,927 payment in 2,031.

Suppose that, on March 28, 2,017, this security’s price is $45,942. If an investor had purchased it for $21,165 at the offering and sold it on this day, what annual rate of return would she have earned?

1. A $1,000 face value corporate bond with a 6.5 percent coupon (paid semiannually) has 15 years left to maturity. It has had a credit rating of BBB and a yield to maturity of 7.2 percent. The firm has recently gotten into some trouble and the rating agency is downgrading the bonds to BB. The new appropriate discount rate will be 8.5 percent. What will be the change in the bond's price in dollars and percentage terms? (LG 6-2)

17. A $1,000 face value corporate bond with a 6.75 percent coupon (paid semiannually) has 10 years left to maturity. It has had a credit rating of BB and a yield to maturity of 8.2 percent. The firm recently became more financially stable and the rating agency is upgrading the bonds to BBB. The new appropriate discount rate will be 7.1 percent. What will be the change in the bond's price in dollars and percentage terms? (LG 6-2)

refer to the table

economic state probability return on stock j return on stock k

bear 0.25 -0.02 0.034

normal 0.60 0.138 0.062

bull 0.15 0.218 0.092

1. calculate the expected return of each stock

2. if a portfolio was created with from 30% of stock j and 70% of stock k, what is the expected return of the portfolio?

3. calculate the standard deviation of each stock

4. calculate the covariance between the two stocks

5. calculate the correlation coefficient between the two stocks

6. what is the portfolio standard deviation?

please show all workings... thats the only questions given

Your company will receive USD10,000,000 in 3 months' time and will keep the funds for a 3-month period to cover a payable 6 months from today. Your analysts think that interest rates may fall from their current level at 6.1% and you want to protect the return you will get until you need the funds. BNP-Paribas, a French bank, offers a FRA with an interest rate of 6% to cover the extra funds for the 3-month period 3 months from today. Your company decides to take the FRA offer from BNP-Paribas.

What will happen to both parties if interest rates 3 months from now are at the following rates?

1. 6.1%
2. 5.2%
3. 6.0%

Show all calculations leading to your conclusions on any amounts that might need to be exchanged.

Assume that 25 years ago your dad invested $340,000, plus $25,000 in years 2 through 5, and $49,000 per year from year 6 on.

At a very good interest rate of 14% per year

A) determine the CC value.

B) The annual retirement amount the he can withdraw forever starting next year (year 26), if no additional investments are made.

6. Jim has an annual income of $180,000. Jim is looking to buy a house with monthly property taxes of $140 and monthly homeowner’s insurance of $70.

Jim has $178 in monthly student loan payments.

Apple bank has a maximum front end DTI limit of 28% and a maximum back end DTI limit of 36%. Both limits must be satisfied.

Apple bank is offering a fully amortizing 30 year FRM at an annual rate of 4.5%, with monthly payments, compounded monthly. What is the biggest loan Jim can get?

A T-bill that is 180 days from maturity with a face value of $100,000 is selling for $98,850.

(A) Calculate the discount yield, bond equivalent yield, and EAR on the T-bill.

(B) Calculate the discount yield, bond equivalent yield, and EAR on the T-bill if it matures in 150 days.

Rust Bucket Motor Credit Corporation (RBMCC), a subsidiary of Rust Bucket Motor, offered some securities for sale to the public on March 28, 2,001. Under the terms of the deal, RBMCC promised to repay the owner of one of these securities $95,763 on March 28, 2,042, but investors would receive nothing until then. Investors paid RBMCC $24,163 for each of these securities; so they gave up $24,163 on March 28, 2,001, for the promise of a $95,763 payment in 2,042.

Suppose that, on March 28, 2,029, this security’s price is $40,474. If an investor had purchased the security at market on March 28, 2,029, and held it until it matured, what annual rate of return would she have earned?

1. Davis Industries must choose between a gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate, it will cost $22,000, whereas the gas-powered truck will cost $12,500. The cost of capital that applies to both investments is 11%. The life cycle for both types of truck is estimated to be 6 years, during which time the net cash flows for the electric-powered truck will be $6,200 per year and those for the gas-powered truck will be $3,500 per year. Annual net cash flows include depreciation expenses. Calculate the NPV and IRR for each type of truck and decide which to recommend.

On January 1, Boston Company completed the following transactions (use a 7% annual interest rate for all transactions): (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

1. Promised to pay a fixed amount of $6,500 at the end of each year for eight years and a one-time payment of $116,000 at the end of the 8th year.
2. Established a plant remodeling fund of $490,750 to be available at the end of Year 9. A single sum that will grow to $490,750 will be deposited on January 1 of this year.
3. Agreed to pay a severance package to a discharged employee. The company will pay $75,500 at the end of the first year, $113,000 at the end of the second year, and $150,500 at the end of the third year.
4. Purchased a $172,500 machine on January 1 of this year for $34,500 cash. A five-year note is signed for the balance. The note will be paid in five equal year-end payments starting on December 31 of this year.

1. In transaction (a), determine the present value of the debt. (Round your answer to nearest whole dollar.)

Present vaule _______

2-a. In transaction (b), what single sum amount must the company deposit on January 1 of this year? (Round your answer to nearest whole dollar.)

Amount to deposit _____

2-b. What is the total amount of interest revenue that will be earned? (Round your answer to nearest whole dollar.)

Intrest revenue________

3. In transaction (c), determine the present value of this obligation. (Round your answer to nearest whole dollar.)

Present vaule________

You plan to retire 34 years from now. You expect that you will live 26 years after retiring. You want to have enough money upon reaching retirement age to withdraw $120,000 from the account at the beginning of each year you expect to live, and yet still have $2,200,000 left in the account at the time of your expected death (60 years from now). You plan to accumulate the retirement fund by making equal annual deposits at the end of each year for the next 34 years. You expect that you will be able to earn 13% per year on your deposits. However, you only expect to earn 8% per year on your investment after you retire since you will choose to place the money in less risky investments. What equal annual deposits must you make each year to reach your retirement goal?

Columbia Sportswear is an outdoor and active lifestyle apparel and footwear company. Assume that last year Columbia reported cost of goods sold of $941 million. This year, cost of goods sold was $1,146 million. Accounts payable was $174 million at the end of last year and $214 million at the end of this year.

Required:

1. For this year, compute the average number of days that Columbia's accounts payable are outstanding. (Assume 365 days in a year. Do not round intermediate calculations. Round your final answer to nearest whole number.)

Number of days______

You are a financial analyst for Loch Motor Company and have been asked to determine the impact of alternative depreciation methods. For your analysis, you have been asked to compare methods based on a machine that cost $206,000. The estimated useful life is 12 years, and the estimated residual value is $46,160. The machine has an estimated useful life in productive output of 222,000 units. Actual output was 31,000 in year 1 and 27,000 in year 2.

Required:

1. For years 1 and 2 only, prepare separate depreciation schedules assuming: (Do not round intermediate calculations and round your final answers to the nearest dollar amount.)

a. Straight-line method.

b. Units-of-production method.

c. Double-declining-balance method.