(A) Adequate information: Tuition fee obligation-$10000 Interest rate- 8% To calculate: The present value of obligation and duration of obligation Introduction: The present value of obligation refers to the sum of all cash flow at a given interest rate received/paid after n years.

Question

Want to see the full answer?

Answer 1

Question

Chapter 16, Problem 12PS

Summary Introduction

(A)

Adequate information:

Tuition fee obligation-$10000
Interest rate- 8%

To calculate:

The present value of obligation and duration of obligation

Introduction:

The present value of obligation refers to the sum of all cash flow at a given interest rate received/paid after n years.

Summary Introduction

(B)

To calculate:

The time period at which zero coupon bond will immunize the tuition fee obligation.

Introduction:

The time to immunize zero Coupon bond is that which has the maturity matching with investor's time horizon.

Summary Introduction

(B)

To calculate:

The net position of Zero Coupon Bond when interest factor increases to 9%

Introduction:

The Net position refers to the difference between present value of tution fee obligation due to change in interest rate and present value of bond

Summary Introduction

(D)

To calculate:

the net position if the rate decreases to 7%

Introduction:

The Net position refers to the difference between present values of tuition fee obligation due to change in interest rate and present value of bond

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Class 3 5 7 10 15 20 Depreciation Year n 200% 200% 200% 200% 150% 150% rate 1 33.33 20.00 14.29 10.00 5.00 3.750 2 44.45 32.00 24.49 18.00 9.50 7.219 3 14.81* 19.20 17.49 14.40 8.55 6.677 4 7.41 11.52* 12.49 11.52 7.70 6.177 5 11.52 8.93 9.22 6.93 5.713 6 5.76 8.92 7.37 6.23 5.285 7 8.93 6.55* 5.90* 4.888 8 4.46 6.55 5.90 4.522 9 6.56 5.91 4.462* 10 6.55 5.90 4.461 11 3.28 5.91 4.462 12 5.90 4.461

Unite Assissment 02 : New City Band Part 02: Base & Flexible Budget Base Budget Flexible Budget Fixed or Variable Revenue City Contributions Fixed Annual Contribution F Per Concert Contributions V Public Contributions V Endowment Earnings F Total Revenue Expenses Conductors Stipend F Musicians Stipend V Insurance Fixed Insurance Premium F Per-Concert Insurance Premium V Music Costs Music Acquisitions F Performance Rights V Total Expenses Surplus/(Deficit)

Sonja Jensen is considering the purchase of a fast-food franchise. Sonja will be operating on a lot that is to be converted into a parking lot in six years, but that may be rented in the interim for $700 per month. The franchise and necessary equipment will have a total initial cost of $68,000 and a salvage value of $9,000 (in today's dollars) after six years. Sonja is told that the future annual general inflation rate will be 5%. The projected operating revenues and expenses (in actual dollars) other than rent and depreciation for the business are given in the table below. Assume that the initial investment will be depreciated under the five-year MACRS and that Sonja's tax rate will be 30%. Sonja can invest her money at a rate of at least 14% in other investment activities during this inflation-ridden period. Click the icon to view the projected operating revenues and expenses. Click the icon to view the MACRS depreciation schedules. (a) Determine the cash flows associated with the…

Answer 2

Question

Chapter 16, Problem 12PS

Summary Introduction

(A)

Adequate information:

Tuition fee obligation-$10000
Interest rate- 8%

To calculate:

The present value of obligation and duration of obligation

Introduction:

The present value of obligation refers to the sum of all cash flow at a given interest rate received/paid after n years.

Summary Introduction

(B)

To calculate:

The time period at which zero coupon bond will immunize the tuition fee obligation.

Introduction:

The time to immunize zero Coupon bond is that which has the maturity matching with investor's time horizon.

Summary Introduction

(B)

To calculate:

The net position of Zero Coupon Bond when interest factor increases to 9%

Introduction:

The Net position refers to the difference between present value of tution fee obligation due to change in interest rate and present value of bond

Summary Introduction

(D)

To calculate:

the net position if the rate decreases to 7%

Introduction:

The Net position refers to the difference between present values of tuition fee obligation due to change in interest rate and present value of bond

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 16, Problem 12PS

Summary Introduction

(A)

Adequate information:

Tuition fee obligation-$10000
Interest rate- 8%

To calculate:

The present value of obligation and duration of obligation

Introduction:

The present value of obligation refers to the sum of all cash flow at a given interest rate received/paid after n years.

Summary Introduction

(B)

To calculate:

The time period at which zero coupon bond will immunize the tuition fee obligation.

Introduction:

The time to immunize zero Coupon bond is that which has the maturity matching with investor's time horizon.

Summary Introduction

(B)

To calculate:

The net position of Zero Coupon Bond when interest factor increases to 9%

Introduction:

The Net position refers to the difference between present value of tution fee obligation due to change in interest rate and present value of bond

Summary Introduction

(D)

To calculate:

the net position if the rate decreases to 7%

Introduction:

The Net position refers to the difference between present values of tuition fee obligation due to change in interest rate and present value of bond

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 16, Problem 12PS

Summary Introduction

(A)

Adequate information:

Tuition fee obligation-$10000
Interest rate- 8%

To calculate:

The present value of obligation and duration of obligation

Introduction:

The present value of obligation refers to the sum of all cash flow at a given interest rate received/paid after n years.

Summary Introduction

(B)

To calculate:

The time period at which zero coupon bond will immunize the tuition fee obligation.

Introduction:

The time to immunize zero Coupon bond is that which has the maturity matching with investor's time horizon.

Summary Introduction

(B)

To calculate:

The net position of Zero Coupon Bond when interest factor increases to 9%

Introduction:

The Net position refers to the difference between present value of tution fee obligation due to change in interest rate and present value of bond

Summary Introduction

(D)

To calculate:

the net position if the rate decreases to 7%

Introduction:

The Net position refers to the difference between present values of tuition fee obligation due to change in interest rate and present value of bond

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 16, Problem 12PS

Summary Introduction

(A)

Adequate information:

Tuition fee obligation-$10000
Interest rate- 8%

To calculate:

The present value of obligation and duration of obligation

Introduction:

The present value of obligation refers to the sum of all cash flow at a given interest rate received/paid after n years.

Summary Introduction

(B)

To calculate:

The time period at which zero coupon bond will immunize the tuition fee obligation.

Introduction:

The time to immunize zero Coupon bond is that which has the maturity matching with investor's time horizon.

Summary Introduction

(B)

To calculate:

The net position of Zero Coupon Bond when interest factor increases to 9%

Introduction:

The Net position refers to the difference between present value of tution fee obligation due to change in interest rate and present value of bond

Summary Introduction

(D)

To calculate:

the net position if the rate decreases to 7%

Introduction:

The Net position refers to the difference between present values of tuition fee obligation due to change in interest rate and present value of bond

Answer 6

Chapter 16, Problem 12PS

Summary Introduction

(A)

Adequate information:

Tuition fee obligation-$10000
Interest rate- 8%

To calculate:

The present value of obligation and duration of obligation

Introduction:

The present value of obligation refers to the sum of all cash flow at a given interest rate received/paid after n years.

Answer 7

Chapter 16, Problem 12PS

Summary Introduction

(A)

Adequate information:

Tuition fee obligation-$10000
Interest rate- 8%

To calculate:

The present value of obligation and duration of obligation

Introduction:

The present value of obligation refers to the sum of all cash flow at a given interest rate received/paid after n years.

Answer 8

Summary Introduction

(B)

To calculate:

The time period at which zero coupon bond will immunize the tuition fee obligation.

Introduction:

The time to immunize zero Coupon bond is that which has the maturity matching with investor's time horizon.

Answer 9

Summary Introduction

(B)

To calculate:

The time period at which zero coupon bond will immunize the tuition fee obligation.

Introduction:

The time to immunize zero Coupon bond is that which has the maturity matching with investor's time horizon.

Answer 10

Summary Introduction

(B)

To calculate:

The net position of Zero Coupon Bond when interest factor increases to 9%

Introduction:

The Net position refers to the difference between present value of tution fee obligation due to change in interest rate and present value of bond

Answer 11

Summary Introduction

(B)

To calculate:

The net position of Zero Coupon Bond when interest factor increases to 9%

Introduction:

The Net position refers to the difference between present value of tution fee obligation due to change in interest rate and present value of bond

Answer 12

Summary Introduction

(D)

To calculate:

the net position if the rate decreases to 7%

Introduction:

The Net position refers to the difference between present values of tuition fee obligation due to change in interest rate and present value of bond

Answer 13

Summary Introduction

(D)

To calculate:

the net position if the rate decreases to 7%

Introduction:

The Net position refers to the difference between present values of tuition fee obligation due to change in interest rate and present value of bond

Answer 14

Expert Solution & Answer

Answer 15

Expert Solution & Answer

Answer 16

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 17

Ch. 16 - Prob. 1PS Ch. 16 - Prob. 2PS Ch. 16 - Prob. 3PS Ch. 16 - Prob. 4PS Ch. 16 - Prob. 5PS Ch. 16 - Prob. 6PS Ch. 16 - Prob. 7PS Ch. 16 - Prob. 8PS Ch. 16 - Prob. 9PS Ch. 16 - Prob. 10PS

(A) Adequate information: Tuition fee obligation-$10000 Interest rate- 8% To calculate: The present value of obligation and duration of obligation Introduction: The present value of obligation refers to the sum of all cash flow at a given interest rate received/paid after n years.

Solution Summary: The author explains the present value of obligation and duration of tuition fee obligation. The time period at which zero coupon bonds immunize is 1.49 years.

Videos

(A)

Adequate information:

Tuition fee obligation-$10000
Interest rate- 8%

To calculate:

The present value of obligation and duration of obligation

Introduction:

The present value of obligation refers to the sum of all cash flow at a given interest rate received/paid after n years.

(B)

To calculate:

The time period at which zero coupon bond will immunize the tuition fee obligation.

Introduction:

The time to immunize zero Coupon bond is that which has the maturity matching with investor's time horizon.

(B)

To calculate:

The net position of Zero Coupon Bond when interest factor increases to 9%

Introduction:

The Net position refers to the difference between present value of tution fee obligation due to change in interest rate and present value of bond

(D)

To calculate:

the net position if the rate decreases to 7%

Introduction:

The Net position refers to the difference between present values of tuition fee obligation due to change in interest rate and present value of bond

Want to see the full answer?

Chapter 16 Solutions

(A) Adequate information: Tuition fee obligation-$10000 Interest rate- 8% To calculate: The present value of obligation and duration of obligation Introduction: The present value of obligation refers to the sum of all cash flow at a given interest rate received/paid after n years.

Solution Summary: The author explains the present value of obligation and duration of tuition fee obligation. The time period at which zero coupon bonds immunize is 1.49 years.

Videos

(A) Adequate information: Tuition fee obligation-$10000 Interest rate- 8% To calculate: The present value of obligation and duration of obligation Introduction: The present value of obligation refers to the sum of all cash flow at a given interest rate received/paid after n years.

(B) To calculate: The time period at which zero coupon bond will immunize the tuition fee obligation. Introduction: The time to immunize zero Coupon bond is that which has the maturity matching with investor's time horizon.

(B) To calculate: The net position of Zero Coupon Bond when interest factor increases to 9% Introduction: The Net position refers to the difference between present value of tution fee obligation due to change in interest rate and present value of bond

(D) To calculate: the net position if the rate decreases to 7% Introduction: The Net position refers to the difference between present values of tuition fee obligation due to change in interest rate and present value of bond

Want to see the full answer?

Chapter 16 Solutions

(A)

Adequate information:

Tuition fee obligation-$10000
Interest rate- 8%

To calculate:

The present value of obligation and duration of obligation

Introduction:

The present value of obligation refers to the sum of all cash flow at a given interest rate received/paid after n years.

(B)

To calculate:

The time period at which zero coupon bond will immunize the tuition fee obligation.

Introduction:

The time to immunize zero Coupon bond is that which has the maturity matching with investor's time horizon.

(B)

To calculate:

The net position of Zero Coupon Bond when interest factor increases to 9%

Introduction:

The Net position refers to the difference between present value of tution fee obligation due to change in interest rate and present value of bond

(D)

To calculate:

the net position if the rate decreases to 7%

Introduction:

The Net position refers to the difference between present values of tuition fee obligation due to change in interest rate and present value of bond