The table below shows current and expected future one-year interest rates, as well as current interest rates on multiyear bonds. Use the table to calculate the liquidity premium for each multiyear bond.One-Year BondRate2.00%3.00%6.00%7.00%8.00%31 =141 =151 =The liquidity premiums for each year are given as: (Enter your responses rounded to two decimal places.)11 = 0%¹21 =%1%1%Year12%345Multiyear Bond Rate2.00%4.00%6.00%9.00%12.00%

The objective of the question is to calculate the liquidity premium for each multiyear bond using…

Answered: The table below shows current and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. ABC Corporation issued today a bond in favor of Mr. Barboncito and the bond has a face value of P1,000,000.00. Barboncito expects to earn at a bond rate of 7% and such bond matures six (6) years from today. If interest, i, equals 12% compounded yearly, a. What is the present value of the bond? b. The President of the corporation is bent on paying the yearly obligations to Barboncito, in addition to the yearly fund that the corporation has to set aside in anticipation of the maturity of the bond. How much then is the total yearly amount that the corporation has to prepare to meet its obligations?
Question at position 7 Consider an investment with upfront cost of $13,258. The net revenue associated with it during the first year of operation is $-4,925. The net revenue associated with it during the second year of operation is $16,521. The net revenue associated with it during the third year of operation is $26,583. What is the net present value of this investment if the nominal discount rate is 0.07?
Bond A pays $8,000 in 28 years. Bond B pays $8,000 in 14 years. (To keep things simple, assume these are zero-coupon bonds, which means the $8,000 is the only payment the bondholder receives.) Suppose the interest rate is 5 percent. Using the rule of 70, the value of Bond A is approximately Now suppose the interest rate increases to 10 percent. Using the rule of 70, the value of Bond A is now approximately I The value of a bond rate. and the value of Bond B is approximately and the value of Bond B is approximately Comparing each bond's value at 5 percent versus 10 percent, Bond A's value decreases by a when the interest rate increases, and bonds with a longer time to maturity are percentage than Bond B's value. sensitive to changes in the interest
The table below shows current and expected future one-year interest rates, as well as current interest rates on multiyear bonds. Use the table to calculate the liquidity premium for each multiyear bond. One-Year Bond Year Rate 1 2.00% 2 4.00% 3 5.00% 4 8.00% 5 11.00% Multiyear Bond Rate 2.00% 5.00% 7.00% 9.00% 10.00% The liquidity premiums for each year are given as: (Enter your responses rounded to two decimal places.) 11 = 0% 21 = 131 = 55 141 = = % do do do do % % %
You are the CEO of a manufactory firm based in the Country of Eldorado. Suppose the corporate tax rate in Eldorado is 30%, your company Earnings before Interest and Taxes (EBIT) is £450million in 2018 and you have interest expenses of £125million. a. What is your firm's 2018 net income? b. What is the sum of your firm's 2018 net income and interest payments? c. Assume now your firm had no interest expenses, what would its 2018 net income be? Compare the result with your answer in part b. d. Calculate your firm's interest tax shield in 2018. e. "The total value of the unlevered firm exceeds the value of the firm with leverage due to the present value of the tax savings from debt." Is this statement true or false? Explain.
The price of Tesla Inc is approximately $776 billion as of 10/04/21. [The price Tesla = the number of Tesla shares outstanding (1 billion shares) * the share price of $776 = Tesla’s market capitalization.] What is your estimate of the value of Tesla Inc.? Please explain how you would estimate it and show your calculation.
Millon National Bank has 8 million British pounds (£) in one-year assets and £6 million in one- е. year liabilities. In addition, it has one-year liabilities of 3.5 million euros (€). Assets are earning 8 percent and both liabilities are being paid at a rate of 7 percent. All interest and principal will be paid at the end of the year. What is the net interest income in dollars if the spot prices at the end of the year for US $ to British £ are $1.30/£ and for Euro to US $ are €1.25/$
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Suppose the current annual interest rate on a one-year government bond is 8% and the expected annual interest rate on a one-year bond one year from now is 8.5%, and a one- year bond two years from now is 9%. Based on this information, the current annual interest rate on a three-year government bond is approximately, A. 8.0% B. 9.0% 8.5% D. 8.2% 10% ABCDE C. E.
The demand D (in billions of £) for a bond with coupon rate 5% and face value FV = 1000, and two years to maturity as a function of its price P is D = 4000 − 2P. The supply in (billions of £)as a function of the price of the bond is S = 2P + 400. b) Suppose that the yield to maturity of the bond is i = 0.05. What is the quantity demanded/supplied at this interest rate? What happens to the demand/supply of the bond as the interest rate increases? Explain why. c) What is the equilibrium interest rate? d) Suppose that the bond trades at premium. Is there excess demand or supply? Explain. e) There is a business cycle contraction, so both supply and demand shifts. After the shift, the new demand curve is given by: D = 4000 + X − 2P , whereas the new supply curve is S = 2P + 200. For which values of X will the interest increase/decrease? Which values of X are in line with empirical data?
The Philippine debt as of today amounts to 12 trillion. This balloons with an interest rate of 0.16% yearly. Suppose the government requires every earning individual to pay the debt by 2030, how much each of us would need to pay monthly (annual payment amortized in 12 equal payments), assuming that inflation is 3%, the interest rate is 5.6%compounded daily, and we will start the payment by the end of 2022? The Philippines is estimated to have 110million people, with the work force of around 20%.
Please help me solve this. Please show every so I can understand. Question: A quinceañera fund is established by making four (4) identical deposits: Upon the birth of a baby girl, Upon the girl's 1st birthday, Upon the girl's 2nd birthday, and Upon the girl's 3rd birthday. Suppose that the fund that pays 4% interest compounded annually, and that the full balance of 10,527 dollars is withdrawn upon the girl's 15th birthday. How much is the amount of each deposit? Round your answer to the nearest whole number. Do not use currency signs such as "$."

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