6. A few years ago, you got married and bought a house with an adjustable rate mortgage with the following terms:

           Loan:               $240,000

            Term:              20 years

           Initial Rate:      4%

           Margin:          2% over the Index Rate

           Lifetime Max: 4.5%

The index rate was 2% in year 1, 1.5% in year 2, 4% in year 3, 1% in year 4, and 1% in year 5.

1. What is your loan balance at year 5?

2. What is the effective interest rate is paid off after year 5?

Consider the following data for the country below.

Real GDP per Capita$60,000, Year 1 Population 300 ,Year 1 and Year 2(Millions) Inflation Rate(%) 3 Growth Rate Real GDP (%),Year 1 to Year 2 8

Instructions: In part a, enter your answer as a whole number. In part b, round your answer to 2 decimal places.

a. What is real GDP per capita in year 2? $

b. What is real GDP in year 2? $ trillion

Find the future values of these ordinary annuities. Compounding occurs once a year. Round your answers to the nearest cent.

$900 per year for 16 years at 16%.

$450 per year for 8 years at 8%.

$400 per year for 6 years at 0%.

Rework previous parts assuming that they are annuities due. Round your answers to the nearest cent.

$900 per year for 16 years at 16%.

$450 per year for 8 years at 8%.

$400 per year for 6 years at 0%.

Suppose a stock will pay $12 per share dividend in one year's time. The dividend is projected to grow at 8% the following year, and then 4% per year indefinitely after that.

To clarify, dividend at beginning of year 1 (that is, one year from today) is:

$12

Beginning of year 2 (2 years from today) is:

$12 * 1.08

Beginning of year 3 (3 years from today) is:

$12 * 1.08 * 1.04

and a 4% rate of growth every year after that.

The required return is 8%. What is the stock’s price today?

Fey Fashions expects the following dividend pattern over the next seven​ years. The company will then have a constant dividend of ​$2.30 forever. What is the​ stock's price today if an investor wants to earn (table)

a)  What is the​ stock's price today if an investor wants to earn 14%

b)  What is the​ stock's price today if an investor wants to earn 22%

Problem D. Take 3 semi-annual coupon paying bonds with face values of $100. They carry D1 percent, D2 percent and D3 percent coupons, mature in ½ year, 1 year, and 1 ½ year, with current market prices of D4, D5, and D6, respectively. Find the “crude” (which does not use regression) term structure of discount factor, spot interest rate and forward interest rate. Assume semi-annual compounding and write your answers for:

23. Half-year discount factor.
24. One-year discount factor.
25. One and half-year discount factor.
26. Half-year spot rate.
27. One-year spot rate.
28. One and half-year spot rate.
29. Forward rate for period (0.5 – 1.0) year.
30. Forward rate for period (1.0 – 1.5) year.
31. What is the current fair price of a 1.5 year bond with face value 100, carrying an annual coupon of 10 percent, paid two times per year?
32. What is the current fair price of a 1 year zero coupon bond with face value 100?
33. What is the current fair price of a 6-month strip with face value 100?

D1 = 11
D2 =14
D3 = 9
D4 = 103
D5 = 107
D6 = 107

Please show work.

Profitability Ratios

East Point Retail, Inc., sells professional women's apparel through company-owned retail stores. Recent financial information for East Point is provided below (all numbers in thousands).

Fiscal Year 3Fiscal Year 2

Net income$150,000 $77,300  

Interest expense3,100 11,500  

Fiscal Year 3Fiscal Year 2Fiscal Year 1

Total assets (at end of fiscal year)$2,120,642 $2,017,196 $1,761,528

Total stockholders' equity (at end of fiscal year)1,089,928 1,068,346 794,304

Assume the apparel industry average return on total assets is 8.0%, and the average return on stockholders’ equity is 15.0% for the year ended April 2, Year 3.

a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round to one decimal place.

Fiscal Year 3 %

Fiscal Year 2 %

b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round to one decimal place.

Fiscal Year 3 %

Fiscal Year 2 %

c. The return on stockholders' equity is   the return on total assets due to the   use of leverage.

d.   During fiscal Year 3, East Point’s results were   compared to the industry average. The return on total assets for East Point was   than the industry average. The return on stockholders’ equity was   than the industry average. These relationships suggest that East Point has   leverage than the industry, on average.