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In: Finance

A movie is expected to produce cash flows of 26,600 dollars per month with the first...

A movie is expected to produce cash flows of 26,600 dollars per month with the first monthly cash flow expected later today and the last monthly cash flow expected in 5 months from today. The cost of capital for the movie is 22.44 percent per year. What is the value of the movie?

Holly just borrowed 137,598 dollars from the bank. She plans to repay this loan by making equal quarterly payments for 10 years. If the interest rate on the loan is 7.8 percent per year and she makes her first quarterly payment in 3 months from today, then how much must Holly pay to the bank each quarter?

Kaka just borrowed $4,630 from the bank. He plans to repay this loan by making equal semi-annual payments for 24 half years. If the interest rate on the loan is 5.46 percent per year and he makes his first semi-annual payment later today, then how much must Kaka pay to the bank each half year?

Yu-Na must borrow $657 from the bank to pay her phone bill. She plans to repay this loan by making monthly payments to the bank of $31 per month. If the annual interest rate on the loan is 10.68 percent and she makes her first $31 payment in 1 month from today, then how many payments must Yu-Na make? Round your answer to 2 decimal places (for example, 2.89, 14.70, or 6.00).

Solutions

Expert Solution

Pmt Cash Flow per month $26,600
Nper Number of periodic cash flows 6
Rate Monthly interest =(22.44/12)% 0.0187
Type Payments At Beginning of month 1
PV Present Value(PV) of cash flows $152,452.48 (Using PV function ofv excel with Rate=0.0187,Nper=6, Pmt=-26600,Type=1)
ALTERNATIVE METHOD:
N CF PV=CF/(1.0187^N)
Month Cash flow PV of cash flow
0 $26,600 $26,600.00
1 $26,600 $26,111.71
2 $26,600 $25,632.39
3 $26,600 $25,161.86
4 $26,600 $24,699.97
5 $26,600 $24,246.56
$152,452.48
VALUE OF MOVIE $152,452.48
Pv Amount Borrowed $137,598
Nper Number of quarterly payments 40 (10*4)
Rate Quarterly interest rate=(7.8/4)% (7.8/4)%
PMT Payment tobe made each quarter $4,986.00 (Using PMT function ofv excelwith Rate=(7.8/4)%,Nper=40, Pv=-137598)
Pv Amount Borrowed $4,630
Nper Number of Semi annual payments 48 (24*2) 2.73
Rate Semi annual interest rate=(5.46/2)% 2.73%
Type Payments At Beginning of month 1
PMT Payment tobe made each quarter $169.59 (Using PMT function ofv excelwith Rate=2.73%,Nper=48, Pv=-4630, Type=1)
Pv Amount Borrowed $657
Pmt Amount of Monthly payments $31
Rate Monthlyl interest rate=(10.68/12)% 0.89%
NPER Number of months of payment               23.59 (Using NPER function ofv excelwith Rate=0.89%,Pmt=31, Pv=-657, )
Number of payments 24 (Last payment less than $31)

jeff jeffy answered 1 year ago
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