An nvestoy plan to invest in a business that willpro duce a continous income stream ovey the next 5 yeans with rate of floxw fCt)= 5+3C thousand dollars Per year. -If the streameanns an interest at 5 compound continously, how much will the inves toy have by the end of the 5 th year

An nvestoy plan to invest in a business that willpro duce a continous income stream ovey the next 5 yeans with rate of floxw fCt)= 5+3C thousand dollars Per year. -If the streameanns an interest at 5 compound continously, how much will the inves toy have by the end of the 5 th year

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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If an investment advisor promises to double your money in 6 years, she's promising an annual return of approximately. % however, you earn an actual annual retum of 7.75%, would take approximately OA 83, 108 years to double your money. OB. 12.0. 155 Oc. 93, 12.0 OD. 120, 9.3
cash price wi00. Find the present value of the given future amount: $57,000 for 8 months at 10% simple interest (yearly). N101. What is the present value of $6,000 to be received at the end of 6 years if the discount rate is 12%? vol 102. Sardor has been offered an investment that will pay him $500 three years from today. If his opportunity cost is 7% compounded annually, what value should he place on this opportunity today? 103. A company has cost of debt of 6% and cost of equity of 15%. In this country, the corporate income tax rate is 20%. If the debt to equity ratio is 0.5, what is the WACC? 104. A company has cost of debt of 6% and cost of equity of 15%. In this country, the corporate income tax rate is 20%. If the company's debt to total capital ratio is 60%, what is the WACC?
a) GCB has offered to grant you GHC50,000 loan with an annual interest of 24% compounded monthly to buy a house. What would be the monthly payment on the loan if the mortgage would be fully amortized in 20 years? b) Find the future and present value of a 5 year GHC1,000.00 annuity if the rate of interest is 12% and the first monthly payment is made now. c) Dividend of a share is forecasted to grow -6% next year, grow super-normally at 30% the next 3 years, and at a constant rate of 7.5% thereafter. What is the value of the stock in question if dividend paid this year is GHC4.50/share and the required return is 13%. d) Calculate the value of a 10-year, 10% $1,000.00 semi-annual coupon bond if the prevailing market interest rate is 8%.
How long will it take for an investment to double at 5% per year (A) simple interest and (B) compound interest respectively? A-B-20 years O A- 14.2 years, B- 20 years O A- 20 years, B-14.2 years O A- 22 vears B-242 years
1. If the interest rate is 8% per year, what decision would you make based on the decision tree diagram in Figure below. (0.6) Introduce New Product $200,000 profit per year for six years, starting at EOY 3 -$1,000,000 at ΕΟΥ 2 (0.4) $280,000 profit per year for six years, starting at ΕΟΥ Year 0 $0 profit/yr. for 8 years Do Nothing
Among the following investment opportunities (A, B, C) which are all maturing at the end of two years and requires a 6% rate of return, what would you choose? Present the solution for each investment.
ATV commercial offers investors a perpetuity that will pay you $200 next year. The payment will then increase by 3.00% every year going forward. You would like a 7.00% on your investment. What is the value of this "offer" if the company can deliver what is promised? $206 $200 $5,000 $2,872
jigo
You have $81,455,75 in a brokerage account, plan to deposit on additional $21,000 and you Dat the end of each future your year until account reaches $500,000, You expect to earn. D9% annually on the account. How long will it take to reach your goal? ΑΑΑΑΑΑΑΑΑΑΑΔΔΑΔ ΔΔΔΔ Δ Δ ΔΔΔΔΔΔΔΔΑ You just received an inheritance worth $200,000. You want to retive in 30 years and you don't plan to make any additional contributions. If you feed $1,000,000 in order to retire, what interest rate must you earn in order to reach your goal? $300 at the end of each of the An investment will раз next 3 years, $150 at the end of Year 4, $500 at the end of Year 5, $100 at the end of Year 6, and 1. require a $400 payment at the end of Year 7. If other investment of equal risk earn 7% annually, what is the present value of the cash flow stream 1 Using the same information from question 5, what is the future value of the cash flow stream?
GCB has offered to grant you GHC50,000 loan with an annual interest of 24% compounded monthly to buy a house, What would be the monthly payment on the loan if the mortgage would be fully amortized in 20 years? b) Find the future and present value of a 5 year GHC1,000.00 annuity if the rate of interest is 12% and the first monthly payment is made now. c) Dividend of a share is forecasted to grow -6% next year, grow super-normally at 30% the next 3 years, and at a constant rate of 7.5% thereafter. What is the value of the stock in question if dividend paid this year is GHC4.50share and the required return is 13%. d) Calkulate the value of a 10-year, 10% S1,00.00 semisannual coupon bond if the prevailing market interest rate is 8%.

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