2. Present Value and Multiple Cash Flows [ LO1 ] Investment X offers to pay you $ 4,700 per year for eight years, whereas Investment Y offers to pay you $ 6,700 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent? 20. Calculating Loan Payments [ LO2, 4 ] You want to buy a new sports coupe for $ 79,500, and the finance office at the dealership has quoted you an APR of 5.8 percent for a 60-month loan to buy the car. What will your monthly payments be? What is the effective annual rate on this loan?
• Ch. 7: Questions 3 & 11( Questions and Problems section) 3. Valuing Bonds [ LO2 ] 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, 23 years to maturity, and a coupon rate of 5.8 percent paid annually. If the yield to maturity is 4.7 percent, what is the current price of the bond? Excel Sheet
11. Valuing Bonds [ LO2 ] Union Local School District has a bond outstanding with a coupon rate of 3.7 percent paid semiannually and 16 years to maturity. The yield to maturity on this bond is 3.9 percent, and the bond has a par value of $ 5,000. What is the price of the bond?
• Ch. 8: Questions 1 & 6( Questions and Problems section): Microsoft ® Excel ® template provided for Problem 6
1. Stock Values [ LO1 ] The Jackson – Timberlake Wardrobe Co. just paid a dividend of $ 1.95 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. If investors require a return of 10.5 percent on The Jackson – Timberlake Wardrobe Co. stock, what is the current price? What will the price be in three years? In 15 years?