To borrow $500, you are offered an add-on interest loan at 8 percent. Two loan payments are to be made, one at six months and the other at the end of the year. Compute the two equal payments.

Suppose a 2 year 5% (annual coupon) bonds are selling at par (that is, for $100 of face value, the price is equal to $100) and 1 year zero coupon bonds has a yield to maturity of 7%.

(a) What are the 1-year and 2-year interest rates, r1 and r2, respectively?
(b) What should be the price of a two year 8% coupon bond with a face value of $100?

(c) What are the Durations of 5% coupon bonds and 8% coupon bonds? Which one has longer duration? What is the implication about interest rate risk?

(Please give the specific numbers of part c.)

Problem 4-21 Future Value

As part of a competitive analysis, your group has just completed a small survey of (what you hope and assume are) randomly selected individuals from the population of potential customers you would like to learn about. You are particularly interested in their engagement with competitors, as this might represent a business opportunity for your firm. Results include reported time spent during the past week using competitors’ products as listed here in minutes:

              Time

                  70

                  94

                  10

                182

                100

                130

                    0

                160

                190

                  50

                270

                  93

                  10

a.   Find the average and the standard error of the average. Interpret this standard error.

b.   Find the 95% confidence interval for the population mean time.

c.   The marketing group has concluded that this population would be worth pursuing more actively if engagement with competitors’ products in the population exceeds 30 minutes per week on average. Please report the results of the relevant two-sided test as indicated:

                              Significant?

d.   If your result in part c is significant, please state the one-sided conclusion to a significant two-sided test using numbers for the sample average and for the reference value. Otherwise (if not significant) please state the conclusion by indicating which hypothesis was accepted.

Your company owns a piece of manufacturing equipment that requires a lot of maintenance. You estimate that the maintenance costs will be​ $750 next year​ (Year 1), and will increase by​ $250 each year until Year​ 8, at which point you will discard the equipment​ (after paying the maintenance costs for that year​ - there is a cash flow in Year​ 8). You want to know how much money you should put aside now to pay for this maintenance​ (the present value of the cash flows at Year​ 0), assuming an interest rate of​ 5% per year.

a. To solve for the present value in Year​ 0, you need to split the cash flows into two pieces. What are these​ pieces?

b. How much money do you need to put aside now to pay for the​ maintenance?

c. If you converted the maintenance costs into an equivalent uniform annual cost​ (an annuity) over the 8​ years, what would that annual cost​ be?

a. To solve for the present value in Year​ 0, you need to split the cash flows into two pieces. What are these​ pieces?

Piece​ 1:

A.

An annuity of​ $750 for 8 years

B.

An annuity of​ $500 for 8 years

C.

An annuity of​ $750 for 7 years

D.

An annuity of​ $700 for 7 years

Piece​ 2:

A.

A uniform gradient of​ $250 for 7 years

B.

A uniform gradient of​ $750 for 8 years

C.

A uniform gradient of​ $750 for 7 years

D.

A uniform gradient of​ $250 for 8 years

The following data (in thousands of dollars) have been taken from the accounting records of Larop Corporation for the just completed at the year Sales ................................................................................ Purchases of raw materials ............................................. Direct labor ..................................................................... Manufacturing overhead ................................................. Administrative expenses ................................................. Selling expenses.............................................................. ended of 31 March 2018 $870 $190 $200 $230 $150 $140 Raw material Work in process Finished goods Required: Inventory at Inventory at 31.3.2017 31.3.2018 $$ 10 40 20 50 90 130 a. Prepare a Schedule of Cost of Goods Manufactured in b. Compute the Cost of Goods Sold. c. Using data from your answers above as needed, prepare an Income Statement in good form

71) Prior to closing the accounts at the end of the most recent fiscal year, the Town of Sonora reports the following amounts (in thousands):

Required:

Applying the criteria specified in GASB 34, determine which of the above funds should be classified as major funds for reporting purposes.

Problem 14-8 Calculating Cost of Debt [LO2]

a) total book value?

b) total market value?

c) cost of debt?

please help

Teddy Bridge has invented a new phone called Enola, and trademarked it. They intend on investing in marketing and warehouses for a total of $2 million. If there is a good market acceptance (65% chance), cash flows would be $420,000/yr starting in Yr. 1 and will last 8 years. If there is no good acceptance (35%), cash flows will be $75000 per year and last only two years. Calculate: ENPV of project and the standard deviation of the projects NPV. Discount rate: 10%.