1. A five-year bond with a yield of 11% (compounded annually) pays an 8%

   coupon at the end of each year.

   1. (a) What is the bond’s price?

   2. (b) What is the bond’s duration?

   3. (c) Use the duration to calculate the effect on the bond’s price of a 0.2% de-

      crease in its yield.

   4. (d) Recalculate the bond’s price on the basis of a 10.8% per annum yield and

      verify that the result is in agreement with your answer to (c).

What is the loan balance (in dollars) after the third payment, of a 5 year loan of $100,000 with an APR of 10% and annual payments?

Swanson & Hiller, Inc., purchased a new machine on September 1 of the current year at a cost of $170,000. The machine’s estimated useful life at the time of the purchase was five years, and its residual value was $10,000. The company reports on a calendar year basis. Required:

a-1. Prepare a complete depreciation schedule, beginning with the current year, using the straight-line method. (Assume that the half-year convention is used).

a-2. Prepare a complete depreciation schedule, beginning with the current year, using the 200 percent declining-balance method. (Assume that the half-year convention is used).

a-3. Prepare a complete depreciation schedule, beginning with the current year, using the 150 percent declining-balance, switching to straight-line when that maximizes the expense. (Assume that the half-year convention is used).

b. Which of the three methods computed in part a is most common for financial reporting purposes?

c. Assume that Swanson & Hiller sells the machine on December 31 of the fourth year for $31,500 cash. Compute the resulting gain or loss from this sale under each of the depreciation methods used in part a.

A borrower takes out a 20-year mortgage for $500,000 with an interest rate of 6%. The loan requires monthly payments and has a 3% fee if the loan is repaid within 10 years. What is the effective interest rate on the loan if the borrower repays the loan after 72 payments?

The Blackbeard Company Ltd provided the following information in regard to its operations for the year ended 30 June 2014:

Required:

(a) Net cash used in operating activities; (b) Net cash used in investing activities; (c) Net cash from financing activities;

(d) Net increase/(decrease) in cash and cash equivalents.

Please use the following format

Managers of a firm are planning to invest $180,000.00 in a new four-year long project to implement automation in the packaging department. Considering associated risk of the project, the managers are requiring 11% return from this investment. This project is expected to generate future cash flow of $65,000.00 in each year. Find

1. Net present Value
2. Internal Rate of Return
3. Present Value Index
4. Payback period
5. Discounted Payback Period

please show the steps Clear without using financial calculator.

Thanks

g) What is the present value of an ordinary annuity of $1,000 per year for 7 years discounted back to the present at 10 percent? What would be the present value if it were an annuity due?

h) What is the future value of an ordinary annuity of $1,000 per year for 7 years compounded at 10 percent? What would be the future value if it were an annuity due?

i) You have just borrowed $100,000, and you agree to pay it back over the next 25 years in 25 equal end-of-year payments plus 10 percent compound interest on the unpaid balance. What will be the size of these payments?

j) What is the present value of a $1,000 perpetuity discounted back to the present at 8 percent?

k) Muffin Megabucks is considering two different savings plans. The first plan would have her deposit $500 every six months, and she would receive interest at a 7 percent annual rate, compounded semiannually. Under the second plan she would deposit $1,000 every year with a rate of interest of 7.5 percent, compounded annually. The initial deposit with Plan 1 would be made six months from now and, with Plan 2, one year hence.

(a) What is the future (terminal) value of the first plan at the end of 10 years?

(b) What is the future (terminal) value of the second plan at the end of 10 years?

(c) Which plan should Muffin use, assuming that her only concern is with the value of her savings at the end of 10 years?

(d) Would your answer change if the rate of interest on the second plan were 7 percent?

1. What is the price of a 25-year sovereign bond with a 4.5 per cent yield with annual coupons of 3.5 per cent and a £1,000 face value? How do you define a sovereign bond? Take the above bond in and determine what would be the price of this bond if it paid no coupons? How would you define this type of bond? What would be the benefits for a corporation to issue a bond with no coupons?

.

A summary of cash flows for Linda's Design Services for the year ended December 31 is shown below.

Prepare a statement of cash flows for Linda's Design Services for the year ended December 31. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Enter amounts that represent cash outflows as negative numbers using a minus sign.