Consider the streams of income given in the following​ table:

Income Stream  
End of Year A B
1 $5,000   $2,000
2 $4,000   $3,000
3 $3,000   $4,000
4 $2,000   $5,000
Total $14,000   $14,000

a.Find the present value of each income​ stream, using a discount rate of 1%,then repeat those calculations using a discount rate of 8 %

b. Compare the calculated present values and discuss them in light of the fact that the undiscounted total income amounts to $14,000 in each case.

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Time: 0 1 2 3 4 5 6 Cash flow: –$5,000 $1,200 $2,400 $1,600 $1,600 $1,400 $1,200 Use the NPV decision rule to evaluate this project

- explain why we say that "Compounding" is a key component of growing money?

- explain Net Worth and then define it.

New Orleans Shipping. If the share price of​ Emaline, a New​ Orleans-based shipping​ firm, rises from $12.13 to $15.96 over a​ one-year period, calculate the rate of return to the shareholder given each of the​ following:

a. The company paid no dividends.

b. The company paid a dividend of $1.01 per share.

c. The company paid the dividend and the total return to the shareholder is separated into the dividend yield and the capital gain.

Consider the following​ bonds:

a. What is the percentage change in the price of each bond if its yield to maturity falls from 7​% to 6​%?

b. Which of the bonds A−D is most sensitive to a​ 1% drop in interest rates from 7​% to 6​% and​ why? Which bond is least​ sensitive? Provide an intuitive explanation for your answer.

Note​: Assume annual compounding.

The local government is running a flu vaccination program. Are the following costs fixed, variable, or step costs?(

a) Costs of occupancy

(b) Costs of management

(c) Costs of part-time employee salaries based on service volume

(d) Costs of vaccine consumed

2. Clifftown’s Parks and Recreation Department is introducing a new summer program for children in elementary school. Programming runs from 8:00 a.m. to 5:00 p.m., Monday through Friday. The proposed camp is 10 weeks long and is planned for 50 children. Fixed costs, which include equipment and facilities costs, are estimated at $5,000 for 10 weeks. The facilities and equipment can accommodate up to 100 children per week, which is the maximum the depart-ment is willing to enroll in any given session. There will be 5 camp counselors each week for the 50 children, at a total cost of $2,000 per week for the 5 counselors. The department is comfort-able with each counselor being responsible for 11 children. Any more than that and an additional counselor will need to be hired. The camp will serve lunch and snacks on each weekday, at a weekly cost of $15.

(a) Identify the fixed, step, and variable costs.

(b) What would be the cost of the program for 50 children?

(c) What would be the cost of the program for 75 children?

3. Desert Vista Homeless Campus provides shelter and breakfast to individuals in need. Local governments and several nonprofit organizations provide financial assistance to the shelter and require weekly reporting. Desert Vista’s current facility can hold a maximum of 300 people. The base weekly cost to run the shelter is $1,500. The shelter also needs 3 cooks per 75 residents to prepare a sufficient amount of food for breakfast. Cooks are paid a flat fee of $50 for each meal prepared. Breakfast costs an average of $2 per meal to prepare, excluding staff costs.

(a) Identify the fixed, step, and variable costs.

(b) What is the cost incurred by the campus for 150 people over a 1-week period?

(c) What is the cost incurred by the campus for 200 people over a 1-week period?

HMK Enterprises would like to raise $10 million to invest in capital expenditures. The company plans to issue five-year bonds with a face value of $1000 and a coupon rate of 6.5% (annual payments). The following table summarizes the yield to maturity for five-year (annual-pay) coupon corporate bonds of various ratings:

Halcyon Lines is considering the purchase of a new bulk carrier for $8 million. The
forecasted revenues are $5 million a year and operating costs are $4 million. A major
refit costing $2 million will be required after both the fifth and tenth years. After 15
years, the ship is expected to be sold for scrap at $1.5 million. If the discount rate is 8%,
what is the ship’s NPV?

Recalculate the NPV of the previous problem at interest rates of 5, 10, and 15%. Plot the points on a
graph with NPV on the vertical axis and the discount rates on the horizontal axis. At what discount rate
(approximately) would the project have zero NPV? Please explain how you can check your answer.

At the time of his death Jason had the following assets:

•     Home owned jointly with rights of survivorship with his wife Sally, valued at $500,000.

•     Stock account in his individual name, valued at $250,000.

•     Life estate received from his mother, Judy, in a family vacation home. The home is worth $1,000,000. Jason’s sister Toby is the remainder beneficiary.

•     IRA worth $750,000. His wife Sally is the primary beneficiary.

Who will receive the family vacation home?

For this part you will need to use your calculator.

1. What is the Monthly Mortgage Payment on a $125,000 Home with an 80% LTV with a 5% Interest Rate, 30-Year Fixed Rate Mortgage (Constant Payment Mortgage)?

$536.82

2. What is the Monthly Mortgage Payment on a $125,000 Home with an 80% LTV with a 6% Interest Rate, 30-Year Fixed Rate Mortgage (Constant Payment Mortgage)?

$599.55

3. How much more with the person with the mortgage in question #8 pay over the person with the mortgage in question #7 if neither of the borrowers refinance over the course of the 30-Year term?

$215,838.19 - $193,255.78 = $22,582.41

4. How much less can the borrower with a 6% mortgage borrow to keep the same monthly mortgage payment as the borrower with a 5% if both borrowers have a 30-Year Fixed Rate Mortgage without refinancing over the mortgage term?

I need help with the last question please.

Problem 2-12
Free Cash Flows

Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)

Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)

Using Rhodes Corporation's financial statements (shown above), answer the following questions.

1. What is the net operating profit after taxes (NOPAT) for 2016? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to one decimal place.
   $   million______
2. What are the amounts of net operating working capital for both years? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place.
   2016 $   million________
   2015 $   million________
   
3. What are the amounts of total net operating capital for both years? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place.
   2016 $   million_______
   2015 $   million_______
   
4. What is the free cash flow for 2016? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to one decimal place.
   $   million_______
   
5. What is the ROIC for 2016? Round your answer to two decimal places.
   %_______
   
6. How much of the FCF did Rhodes use for each of the following purposes: after-tax interest, net debt repayments, dividends, net stock repurchases, and net purchases of short-term investments? (Hint: Remember that a net use can be negative.) Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place.

   After-tax interest payment	$   million
   Reduction (increase) in debt	$   million
   Payment of dividends	$   million
   Repurchase (Issue) stock	$   million
   Purchase (Sale) of short-term investments	$   million

Kansas Corp., an American company, has a payment of €6.2 million due to Tuscany Corp. one year from today. At the prevailing spot rate of 0.90 €/$, this would cost Kansas $6,888,889, but Kansas faces the risk that the €/$ rate will fall in the coming year, so that it will end up paying a higher amount in dollar terms. To hedge this risk, Kansas has two possible strategies. Strategy 1 is to buy €6.2 million forward today at a one-year forward rate of 0.89 €/$. Strategy 2 is to pay a premium of $112,000 for a one-year call option on €6.2 million at an exchange rate of 0.88 €/$.

a. Suppose that in one year the spot exchange rate is 0.85 €/$. What would be Kansas’s net dollar cost for the payable under each strategy? (Round your answer to the nearest whole dollar amount.)

Strategy 1:_____

Strategy 2:______

b. Suppose that in one year the spot exchange rate is 0.95 €/$. What would be Kansas’s net dollar cost for the payable under each strategy? (Round your answer to the nearest whole dollar amount.)

Strategy 1:________

Strategy 2:________

​(Nonannual compounding using a calculator​) Should we have bet the​ kids' college fund at the dog​ track? Let's look at one specific case of a college professor​ (let's call him Prof.​ ME) with two young children. Three years​ ago, Prof. ME invested ​$170 000 hoping to have ​$440 000 available 14 years later when his first child started college.​ However, the​ account's balance is now only ​$150 000. ​Let's figure out what is needed to get Prof.​ ME's college savings plan back on track. a. What was the original annual rate of return needed to reach Prof.​ ME's goal when he started the fund 3 years​ ago? b. Now with only ​$150 000 in the fund and 11 years remaining until his first child starts​ college, what APR would the fund have to earn to reach Prof.​ ME's ​$440,000 goal if he adds nothing to the​ account? c. Shocked by his experience of the past 3 ​years, Prof. ME feels the college mutual fund has invested too much in stocks. He wants a​ low-risk fund in order to ensure he has the necessary ​$440 000 in 11 ​years, and he is willing to make​ end-of-the-month deposits to the fund as well. He later finds a fund that promises to pay a guaranteed APR of 4.5 percent compounded monthly. Prof. ME decides to transfer the ​$150 000 to this new fund and make the necessary monthly deposits. How large of a monthly deposit must Prof. ME make into this new fund to meet his ​$440 000 ​goal?

d. Now Prof. ME gets sticker shock from the necessary monthly deposit he has to make into the guaranteed fund in the preceding question. He decides to invest the ​$150 000 today and ​$450 at the end of each month for the next 11 years into a fund consisting of 50 percent stock and 50 percent​ bonds, and hope for the best. What APR would the fund have to earn for Prof. ME to reach his ​$440 000 ​goal?