The state​ lottery's million-dollar payout provides for ​$33 ​million(s) to be paid over 1919 years in 2020 payments of $ 150 comma 000$150,000. The first $ 150 comma 000$150,000 payment is made​ immediately, and the 1919 remaining $ 150 comma 000$150,000 payments occur at the end of each of the next 1919 years. If 1212 percent is the appropriate discount​ rate, what is the present value of this stream of cash​ flows? If 2424 percent is the appropriate discount​ rate, what is the present value of the cash​ flows?

Consider the following information of Petronas Bond

a) Assuming annual interest rate is 6.00% on the bond, calculate the value of the bond.
b) Illustrate the discounting cash flows using the Macaulay Duration Schedule.

c) Compute

i. Modified duration.
ii. Convexity
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QUESTION 2 [35 MARKS]
Consider the following information of Petronas Bond
Description
Petronas Bond
Face value
RM1,000
Maturity
5 Years
Coupon rate
9.00% per annum
Compounding (m)
Semiannually
a) Assuming annual interest rate is 6.00% on the bond, calculate the value of the bond.

b) Illustrate the discounting cash flows using the Macaulay Duration Schedule.

c) Compute
i. Modified duration.

1. In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period.

Find the accumulated amount of the annuity. (Round your answer to the nearest cent.)

$1000 monthly at 6.3% for 20 years.

2. In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period.

Find the required payment for the sinking fund. (Round your answer to the nearest cent.)

Monthly deposits earning 5% to accumulate $6000 after 10 years.

3. In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period.

Find the required payment for the sinking fund. (Round your answer to the nearest cent.)

Yearly deposits earning 12.2% to accumulate $5500 after 12 years.

4. In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period.

Find the amount of time needed for the sinking fund to reach the given accumulated amount. (Round your answer to two decimal places.)

$265 monthly at 5.8% to accumulate $25,000.

You have been asked by the president of the Farr Construction Company to evaluate the proposed acquisition of a new earth mover. The mover’s basic price is $200,000, and it would cost another $30,000 to modify it for special use. Assume that the mover falls into the MACRS 5-year class, it would be sold after 4 years for $60,000, and it would require an increase in net operating working capital (spare parts inventory) of $10,000. The earth mover would have no effect on revenues, but it is expected to save the firm $50,000 per year in before-tax operating costs, mainly labor. The firm’s marginal federal-plus-state tax rate is 40 percent and the project’s cost of capital is 10 percent. Evaluate the project using the NPV rule and the IRR rule. Evaluating a Cost Saving Project Year 0 Year 1 Year 2 Year 3 Year 4 Acquisition - 5 Year Life Earth Mover ?? Installation Costs ?? Total Initial Investment $ - Savings in Costs ?? ?? ?? ?? Depreciation Rate (5 Year) ?? ?? ?? ?? Total Depreciation Costs ?? ?? ?? ?? Earnings Before Income Tax (EBIT) ?? ?? ?? ?? Tax Rate ?? ?? ?? ?? Total Taxes ?? ?? ?? ?? Net Operating Profits (NOPAT) ?? ?? ?? ?? Add Back Depreciation ?? ?? ?? ?? Operating Cash Flow ?? ?? ?? ?? Net Operating Working Capital ?? ?? ?? ?? ?? Increase in NOWC ?? ?? ?? ?? ?? Total Annual Project Cash Flow ?? ?? ?? ?? ?? Terminal Year Cash Flow Machine Sale ?? Less: Book Value of Machine ?? Profit on Sale ?? Tax on Profit (40%) ?? Net Salvage Value on Equipment ?? Free Cash Flow ?? ?? ?? ?? ?? Required Rate of Return (WACC) ?? NPV ?? IRR ??

Use the bond term's below to answer the question
Maturity 7 years
Coupon Rate 4%
Face value $1,000
Annual Coupons
YTM 3% (interest rate)

Assuming the YTM remains constant throughout the bond's life, what is the bond's price in year 4?

A) $1,062.30 B) $1,028.29 C) $1,083.55 D)$1,008.12

George, the automotive manufacturer, had a beta of 1.05 in 1995. It had $13 billion in debt outstanding in that year and 355 million shares trading at $50 per share. The marginal tax was 36%

1. Estimate the unlevered beta of the firm

2. Suppose the firm paid out a special dividend of $5 billion, what is the new beta for George after the special dividend? Hint: dividend reduces equity

3. How does the dividend payout affect the cost of equity and cost of debt for George?

Briefly describe how analysts typically forecast each of the following items: Sales, Cost of Sales, Inventory, and Tax expense.

The stock of Arbor Pet Trees (APT) is priced based on the given systematic risk factors. Estimated sensitivities to these risk factors are given by the betas of the regression

R_APT – R_rf = β_creditR_credit + β_value R_value + α + ε

If the actual return is 9.7%, what is the value of alpha?

Compare and contrast the corporate form of organization with sole proprietorships and partnerships. (must be typed out, not in a Chart).

The expected return and standard deviation of a portfolio that is 40 percent invested in 3 Doors, Inc., and 60 percent invested in Down Co. are the following:

What is the standard deviation if the correlation is +1? 0? −1? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. )

You are required to produce an amortisation table for a home loan and a diagram demonstrating the link between loan repayments and principal outstanding. Please see slide 34 from Topic 2 (or p146 from textbook) for an example of the layout of the table.

The home loan is for $250,000 and is to be amortised over a time period of 15 years requiring annual payments. All calculations should be executed in excel. From your table produce a diagram that demonstrates the relationship between the outstanding principal and the number of years into the loan.

The interest rate to be used is 8% Assume that interest rates do not change over the life of the loan.

The Duo Growth Company just paid a dividend of $1 per share. The dividend is expected to grow at a rate of 25% per year for the next three years and then level off to 5% per year forever. You think the appropriate market capitalization rate is 20% per year.

a. What is your estimate of the intrinsic value of a share of stock?

b. If the market price of a share is equal to the intrinsic value, what is the expected dividend yield?

c. What do you expect its price to be one year from now?

d. Is the implied capital gain consistent with your estimate of the dividend yield and the market capitalization rate?