Financial Manage

Topics: Bond, Yield, Finance Pages: 2 (396 words) Published: November 18, 2014
Financial Management
Assignment #3 (Due on 11/19)

1. An investment offers $6,100 per year for 15 years, with the first payment occurring one year from now. If the required return is 6 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever? A: 15期年金之PV=(1-1/(1.06)^15)/0.06*6100=59,244.719

40期年金之PV=(1-1/(1.06)^40)/0.06*6100=91,782.411
75期年金之PV=(1-1/(1.06)^75)/0.06*6100=100,380.673
永續年金之PV=6100/6%=101,666.667

2. You want to have $75,000 in your savings account 12 years from now, and you’re prepared to make equal annual deposits into the account at the end of each year. If the account pays 6.8 percent interest, what amount must you deposit each year? A: 75000=C*[(1+6.8%)^12-1]/6.8%

C=75000*6.8%/[(1+6.8%)^12-1]= 4,242.253 per year

3. You want to buy a new sports coupe for $83,500, and the finance office at the dealership has quoted you a 6.5 percent APR loan for 60 months to buy the car. What will your monthly payments be? What is the effective annual rate on this loan? A: r=6.5%/12= 0.0054167

83500= C*[1-1/(1+6.5%/12)^60]/(6.5%/12)
C= 1,633.773
EAR=(1+6.5%/12)^12-1=0.067

4. One of you customers is delinquent on his accounts payable balance. You’ve mutually agreed to a repayment schedule of $500 per month. You will charge 1.7 percent per month interest on the overdue balance. If the current balance is $16,000, how long will it take for the account to be paid off? A: 16000 = 500({1 – [1/(1 + 1.7%)t]} / 1.7% )

(1.017)^t=2.193
t= 46.584 (月)

5. Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of $1,000, 25 years to maturity, and a coupon rate of 6.4 percent paid annually. If the yield to maturity is 7.5 percent, what is the current price of the bond? A: C=1000*6.4%= 64...
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