Problem 3.3: Finding the Yield to Maturity for Different Typesof Debt Instruments (1 of 4)For each of the following situations, write the equation that you would use to calculatethe yield to maturity.a)A simple loan for $500,000 that requires a payment of $700,000 in 4 years.A discount bond with a price of $9,000, which has a face value of $10,000 andmatures in 1 year.b)A corporate bond with a face value of $1,000, a price of $975, a coupon rate of10%, and a maturity of 5 years.c)d)A student loan of $2,500, which requires payments of $315 per year for 25 years.The payments start in 2 years.

The present value is the value of the sum received at time 0 or the current period. It is the value…

Answered: For each of the following situations,…

For each of the following situations, write the equation that you would use to calculate the yield to maturity. a) A simple loan for $500,000 that requires a payment of $700,000 in 4 years.

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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You have an opportunity to make an investment that will pay $ 300 at the end of the first year, $ 100 at the end of the second year, $ 200 at the end of the third year, $ 400 at the end of the fourth year, and $500 at the end of the fifth year. a. Find the present value if the interest rate is 9 percent. (Hint: You can simply bring each cash flow back to the present and then add them up. Another way to work this problem is to either use the =NPV function in Excel or to use your CF key on a financial calculator —but you'll want to check your calculator's manual before you use this key. Keep in mind that with the =NPV function in Excel, there is no initial outlay. That is, all this function does is bring all the future cash flows back to the present. With a financial calculator, you should keep in mind that CF0 is the initial outlay or cash flow at time 0, and, because there is no cash flow at time 0, CF0 =0.) b. What would happen to the…
Provide step by step manula solution, formula, and diagram. An investor have a projected surplus income of P1000 per year which he plans to place in a bank which offers an interest of 18% per annum for time deposit over 5 years. Compute how much shall the investor collect at the end of 13 years
Suppose you invest $210,000 in an annuity that returns 6 annual payments, with the first payment one year from now and each subsequent payment growing by 5%. At an interest rate of 8%, how much is the first annual payment you receive? Equivalent problem structure (as a borrower): Suppose you borrow $210,000 to be paid back over 6 years with the first payment one year from now and each subsequent payment growing by 5%. At an interest rate of 8%, how much is the first annual payment? Please round your answer to the nearest hundredth.
You invest $9000 in an account that pays simple interest of 2% for 13 years. What is the interest you will have at the end of the indicated period?
The formula below tells us how to obtain the maturity value on a simple discount loan if we are given the proceeds, the discount rate, and the term. If a loan's annual simple discount rate is 7.56%, how many years would it take for the debt to double? (This is called the doubling time of a loan). Round your answer to the nearest tenth of a year. Hint: divide both sides of the equation by P. If M is twice as much as P, what should the fraction on the left-hand side equal?
With the following information, compute the net benefit of refinancing: Current loan balance: $200,000 Remaining term: 15 years Interest rate: 6.5% Old loan monthly payment: $1742.22 Expected number of future payments you will make: 72 Interest rate available on a new loan: 4.5% Cost of refinancing:5% of the outstanding balance. what is the resulting net benefit?
1) What is the loanable funds market? 2) Calculate the following: You save $100 and want to see how much you will earn based on the following interest rates Interest Rate Value after 1 month -1% ? 0.5% ? 1% ? 2% ? 3) What supply factors affect the Loanable Funds market? 4) What demand factors affect the Loanable Funds market?
An investment promises to pay $7,000 at the end of each year for the next six years and $3,000 at the end of each year for years 7 through 10. Use Table II and Table IV or a financial calculator to answer the questions. Round your answers to the nearest cent. If you require a 15 percent rate of return on an investment of this sort, what is the maximum amount you would pay for this investment?$ Assuming that the payments are received at the beginning of each year, what is the maximum amount you would pay for this investment, given a 15 percent required rate of return?$
A borrower is purchasing a property for $180,000 and can choose between two possible loan alternatives. The first is a 90% loan for 25 years at 9% interest and the second is a 95% loan for 25 years at 9.25% interest. Assuming the loan will be held to maturity, what is the incremental cost of borrowing the extra money? 18.75% OO 14.34% 13.50% 12.01%
Your property has net operating income of 4,500,000. Assuming you value the property with a cap rate of 6.5%, what is the DSC ratio if the lender will lend up to 75% of value and the rate is 4.5% based on a monthly pay, 30 years, fully amortizing loan? Group of answer choices 1.43 1.35 1.51 1.27
Find the accumulated value of an investment of $15,000 for 5 years at an interest rate of 1.45% if the money is a. compounded semiannually; b. compounded quarterly; c. compounded monthly d. compounded continuously. i Click the icon to view some finance formulas. a. What is the accumulated value if the money is compounded semiannually? (Round to the nearest cent as needed.) b. What is the accumulated value if the money is compounded quarterly? (Round to the nearest cent as needed.) C. What is the accumulated value if the money is compounded monthly? S (Round to the nearest cent as needed.) d. What is the accumulated value if the money is compounded continuously? S (Round to the nearest cent as needed.)

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