The City of Allentown is issuing a 30-year bond with a face value of $80,000,000 and a stated annual interest rate of 5 percent. The town will make interest payments twice a year.

1. Calculate the semiannual interest payment.

2. Calculate how much Allentown will receive from the bond offering under the following conditions:

a. Market interest rates remain unchanged at the time of the offering.

b. Market interest rates increase to 6 percent at the time of the offering

Decision #1:   Which set of Cash Flows is worth more now?

Assume that your grandmother wants to give you generous gift. She wants you to choose which one of the following sets of cash flows you would like to receive:

Option A: Receive a one-time gift of $ 10,000 today.   

Option B: Receive a $1500 gift each year for the next 10 years. The first $1400 would be

     received 1 year from today.            

Option C: Receive a one-time gift of $18,000 10 years from today.

Compute the Present Value of each of these options if you expect the interest rate to be 3% annually for the next 10 years.    Which of these options does financial theory suggest you should choose?

       Option A would be worth $__________ today.

      Option B would be worth $__________ today.

       Option C would be worth $__________ today.

       Financial theory supports choosing Option _______

Compute the Present Value of each of these options if you expect the interest rate to be 6% annually for the next 10 years. Which of these options does financial theory suggest you should choose?

       Option A would be worth $__________ today.

       Option B would be worth $__________ today.

       Option C would be worth $__________ today.

      Financial theory supports choosing Option _______

Compute the Present Value of each of these options if you expect to be able to earn 9% annually for the next 10 years. Which of these options does financial theory suggest you should choose?

       Option A would be worth $__________ today.

       Option B would be worth $__________ today.

       Option C would be worth $__________ today.

       Financial theory supports choosing Option _______

You are buying a car for $20,000 with financing at 5%. No payments are due for 6 months from today. After that payment, you must make 15 more payments of the same amount. If your down payment is $4,000. What would the recurring monthly payments be?

How is the inflation premium and risk premiums determined? I understand that the liquidity risk and maturity risk make up the risk premium, but how are these things determined, and who decides them?  

On the third tab build the full amortization table for a 30 year Constant Payment Mortgage (CPM) Loan with a 4.5% interest rate compounded monthly. The initial loan amount should be $2,500,000. in excel

On the second tab build the full amortization table for a 15 year Constant Amortizing Mortgage (CAM) Loan with a 6% interest rate compounded monthly. The initial loan amount should be $7,500,000. in excel

On the first tab build the full amortization table for a 30 year Interest Only (IO) Loan with a 5.5% interest rate compounded monthly. The initial loan amount should be $5,000,000. In Excel

Heller is introducing a new product with sales of $10,000,000 per year and a Cost of Goods Sold (COGS) of $7,500,000 per year. They expect sale to grow at 5% per year for four years, then shrink at 30% per year for two years (7 years total), and then sales will stop. The 75% Cost of sales assumptions is expected to remain constant. The Heller Corporation has the following net operating working capital investment expectations for the beginning of each year of the project. At the end of the project the Net Operating Working Capital Investment will no longer be required.

Receivables: 46 days Next Year’s Sales

Inventory: 98 days COGS

Payables: 35 days COGS

(Net Operating Working Capital Analysis)

8. Calculate the annual cash flow required for the resulting Net Operating Working Capital investment. I recommend you complete this analysis in Excel.

9. If the Opportunity Cost of Capital is 9% what is the impact of the required Net Operating Working Capital Investment on the NPV of the project?

10. How much value (measured by the impact on NPV) could they create by reducing the Inventory they hold to 60 days assuming that sales are unchanged.

Can you describe bank Fed Funds Bought and bank Fed Funds Sold? These are actual balance sheet accounts on bank financial statements. Terrible name for balance sheet accounts!!

Maria is the sole proprietor of an antique store that is located in a rented warehouse. The business has a          $ 200,000 outstanding loan with the local bank but no other debt obligations. Last week, the loan, which has a monthly payment of $ 1,500, was not paid. There are no specific assets pledged as security for the loan. Due to a sudden and unexpected downturn in the economy, the store is just unable to generate sufficient funds to pay the over-due loan payment as well as the payments due over the next two months.

Maria is considering selling all of the lighting fixtures in her building which will raise enough funds to make three loan payments. The bank has suggested to Maria that she sell off all her inventory. And it appears that the bank has withdrawn at least one loan payment from Maria’s personal bank account.

1) Can you suggest a strategy to help Maria with the sale of the lighting fixtures?

2) What is the impact of her selling off all her inventory?

3) Has the bank acted improperly by withdrawing the missed loan payment from Maria’s personal account given that this loan was made to her business ?

(CO A) Describe any two of the three major characteristics of the fifth merger wave of the 1990s.

Discuss the advantages and disadvantages of offering student loan repayment benefits. How can the benefit be improved for the companies offering student loan repayment and for their employees? What changes you would like to see in the practice?