Assume that you are considering the purchase of a 14-year, noncallable bond with an annual coupon rate of 8.4%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 7.2% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond? To calculate the maximum price you would pay for this bond, this problem requires solving for:
1. Group of answer choices :
Payment (in dollars)
Present Value (in dollars)
Future Value (in dollars)
The Par Value (in dollars)
2. Once calculated, the annual payment must be:
Group of answer choices
Multiplied by 2
Divided by 3
Divided by 2
Multiplied by 3
3. Ravenstar Corporation's bonds make an annual coupon interest payment of 4.60%. The bonds have a par value of $1,000, a current price of $880, and mature in 16 years. What is the yield to maturity on these bonds?
The annual payment will be calculated as:
Group of answer choices
Coupon rate x current price
Current rate x current price
Coupon rate x par value
Coupon rate/par value
In: Finance
An investor buys a property for $687,000 with a 25-year mortgage and monthly payments at 6.3% APR. After 18 months the investor resells the property for $749,484. How much cash will the investor have made from the sale, once the mortgage is paid off?
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You are considering to borrow Rs 100,000 from SBI for a period of one year and have the following options to choose from: Option A: SBI offering interest rate of 10% p.a. Option B: HDFC Bank is offering to give guarantee to SBI on your behalf subject to your paying a fee of 1% flat. Based on this guarantee, SBI is willing to reduce the interest rate to 9.5% p.a. Which option will you choose? Select one:
a. Option B
b. Option A
c. Both options are equally attractive
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You are set to receive an annual payment of 1330$ per year for ever. Assume the interest rate is 15%. What is the future value of this amount?
a) 1156.52
b)1130.50
c)1564.71
d)1529.50
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After paying a dividend of $1.90 last year, a company does not expect to pay a dividend for the next year. After that it plans to pay a dividend of 6.66 in year 2 and then increase the dividend at a rate of 4 percent per annum in years 3 to 6. What is the expected dividend to be paid in year 4? (to nearest cent; don't include $ sign)
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A company is forecasted to generate free cash flows of $21 million next year and $24 million the year after. After that, cash flows are projected to grow at a stable rate in perpetuity. The company's cost of capital is 8.1%. The company has $48 million in debt, $17 million of cash, and 28 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 14, what's your estimate of the company's stock price?
a. 30.8
b. 26.8
c. 14.9
d. 10.6
e. 18.0
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A 2n-year annuity has deposits of X made at the end of each of the first n years and deposits of 2X made at the end of each of the next n years. The accumulated value of this annuity at the end of 2n years is 6000. Suppose that the annual effective rate of interest is i, where i > 0. You are given X i = 1500. Find the present value of this annuity at time t = 0.
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