A salt mine friend inherited will certainly pay friend $25,000 every year for 25 years, through the very first payment being made today. If girlfriend think a fair return ~ above the mine is 7.5%, exactly how much need to you ask for it if you decision to market it?$284,595 $346,795 $314,553 $330,281$299,574
Cyberhost Corporation"s sales to be $225 million critical year. If sales grow at 6% per year, how large (in millions) will certainly they it is in 5 years later?Group of answer choices$316.16$286.05$301.10$331.96 $271.74
How much would $100, cultivation at 5% every year, be precious after 75 years?Group of answer choices$3,883.27$3,689.11 $4,077.43 $4,281.30 $4,495.37
Suppose you just won the state lottery, and also you have actually a an option between receiving $2,550,000 this day or a 20-year annuity the $250,000, v the an initial payment comes one year from today. What rate of return is constructed into the annuity? neglect taxes.7.49% 7.87% 8.26% 7.12% 8.67%
$11,262.88#5) What is the PV of one annuity due through 5 payment of $2,500 in ~ an interest rate of 5.5%?Group of prize choices$13,038.19 $11,826.02 $12,417.32 $13,690.10
What is the PV of an plain annuity v 10 payments of $2,700 if the suitable interest price is 5.5%?$19,334$20,352$18,367 $16,576 $17,449
Which of the complying with statements is CORRECT?If you have actually a series of cash flows, and CF0 is an unfavorable but each of the adhering to CFs is positive, you have the right to solve because that I, but only if the amount of the undiscounted cash flows exceeds the cost.To deal with for I, one must recognize the worth of i that reasons the PV that the optimistic CFs to equal theabsolute worth of the FV of the an adverse CFs. It is impossible to uncover the worth of ns without acomputer or jae won calculator.if CF0 is positive and also all the various other CFs space negative, climate you deserve to still fix for I.If you fix for I and also get a an unfavorable number, then you must have made a mistake.If you have actually a collection of cash flows, every of i m sorry is positive, you deserve to solve for I, whereby thesolution worth of I reasons the PV of the cash flows to equal the cash flow at Time 0.

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To resolve for I, one must identify the worth of i that causes the PV the the optimistic CFs to same theabsolute worth of the FV the the an adverse CFs. It is difficult to uncover the value of i without acomputer or gaue won calculator.
Which the the adhering to statements about a 15-year (180-month) $225,000, fixed-rate mortgage is CORRECT? (Ignore taxes and also transactions costs.)The exceptional balance decreases at a faster rate in the later on years the the loan"s life.The ratio of the monthly payment that goes towards repayment of principal will be reduced 10 year from currently than it will be the very first year.Interest payment on the mortgage will increase steadily over time, but the full amount of every payment will remain constant.Because the outstanding balance declines over time, the monthly payments will also decrease overtime.The remaining balance after three years will be $125,000 less one 3rd of the attention paid duringthe first three years.
You arrangement to analyze the value of a potential invest by calculating the sum of the current values of its intended cash flows. Which of the complying with would boost the calculated value of the investment?The cash flows space in the form of a deferred annuity, and also they full to $100,000. You learn that the annuity lasts for 10 years rather than 5 years, therefore that every payment is because that $10,000 quite than because that $20,000.The discount rate increases.The discount rate decreases.The complete amount that cash flows stays the same, but more of the cash flows are got in thelater years and less are received in the earlier years.The riskiness of the investment"s cash flows increases.
You want to buy new kitchen appliances 2 year from now, and also you arrangement to save $8,200 per year, beginning one year native today. You will certainly deposit your savings in one account that pays 6.2% interest. Exactly how much will you have actually just after ~ you make the 2nd deposit, 2 year from now?$16,908$17,754 $18,642 $15,260 $16,063
Because temporary interest rates are much more volatile than long-term rates, friend would, in the realworld, normally be subject to much more interest price price threat if girlfriend purchased a 30-day bond 보다 if girlfriend bought a 30-year bond.
Field Industries" exceptional bonds have actually a 25-year maturity and also $1,000 par value. Their nominal yieldto maturity is 9.25%, lock pay attention semiannually, and also they offer at a price the $850. What is the bond"s nominal (annual) coupon attention rate?
Kessen Inc."s bond mature in 7 years, have actually a par value of $1,000, and make an annual coupon payment that $70. The sector interest rate for the bond is 8.5%. What is the bond"s price?
You have funds that you want to invest in bonds, and you just noticed in the gaue won pages the the local newspaper the you have the right to buy a $1,000 par value bond because that $800. The coupon price is 10% (with yearly payments), and there are 10 years prior to the bond will mature and also pay turn off its $1,000 par value. You need to buy the bond if your required return on bonds v this threat is 12%.
A contact provision provides bondholders the appropriate to demand, or "call for," repayment the a bond. Typically,calls are exercised if interest rates rise, due to the fact that when rates rise the bondholder can acquire the principalamount earlier and reinvest it elsewhere at greater rates.
"Restrictive covenants" room designed generally to safeguard bondholders by constraining the actions ofmanagers. Such covenants are spelled the end in shortcut indentures.
An 8-year Treasury bond has a 10% coupon, and also a 10-year Treasury bond has actually an 8% coupon. Bothbonds have the very same yield to maturity. If the productivity to maturity that both bonds increases by the sameamount, which of the adhering to statements would certainly be CORRECT?
Both bond would decline in price, however the 10-year link would have the greater percentage decrease in price.
If 10-year T-bonds have actually a yield of 6.2%, 10-year that company bonds yield 8.5%, the maturity threat premium on all 10-year bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium because that T-bonds, what is the default hazard premium on the corporate bond?
Junk bonds are high risk, high yield blame instruments. They are regularly used come finance leveragedbuyouts and also mergers, and to administer financing to companies of questionable jae won strength.
there is an train station relationship between bonds" quality ratings and also their required rates the return. Thus, the required return is lowest because that AAA-rated bonds, and also required returns increase as the ratings get lower
Burke Tires simply paid a dividend the D0 = $1.32. Analysts expect the company"s dividend come growby 30% this year, by 10% in Year 2, and also at a constant rate the 5% in Year 3 and thereafter. Therequired return top top this low-risk share is 9.00%. What is the ideal estimate the the stock"s currentmarket value?
If D0 = $1.75, g (which is constant) = 3.6%, and P0 = $32.00, what is the stock"s supposed totalreturn because that the comes year?
Kinkead Inc. Forecasts that its totally free cash circulation in the coming year, i.e., in ~ t = 1, will certainly be −$10million, but its FCF at t = 2 will certainly be $20 million. After Year 2, FCF is meant to thrive at aconstant price of 4% forever. If the weight average price of capital is 14%, what is the firm"svalue of operations, in millions?
Lance Inc."s totally free cash circulation was simply $1.00 million. If the meant long-run expansion rate because that thiscompany is 5.4%, if the weight average price of funding is 11.4%, Lance has actually $4 million in short-term investments and $3 million in debt, and also 1 million share outstanding, what is the intrinsicstock price?
The constant growth dividend model used to evaluate the prices of usual stocks isconceptually comparable to the design used to find the price of perpetual desired stock or otherperpetuities.
the Jameson company just payment a dividend the $0.75 per share, and also that dividend is intended togrow at a consistent rate of 5.50% per year in the future. The company"s beta is 1.15, the marketrisk premium is 5.00%, and also the risk-free price is 4.00%. What is Jameson"s current stock price, P0?
The critical dividend paid by Wilden Corporation to be $1.55. The dividend development rate is supposed to be constant at 1.5% because that 2 years, after which dividends room expected to grow at a price of 8.0%forever. The firm"s forced return (rs) is 12.0%. What is the finest estimate of the present stock price?
Which the the following statements is CORRECT?Two firms through the same expected cost-free cash flows and also growth prices must likewise have the very same value the operations.It is suitable to use the consistent growth version to estimate a stock"s value even if its growth rate is never ever expected to become constant.If a company has a weighted average cost of capital WACC = 12%, and also if its free cash flows space expected to thrive at a continuous rate the 5%, this means that the stock"s dividend yield is also 5%.The worth of work is the existing value the all expected future cost-free cash flows, discounted at the cost-free cash flow growth rate.The constant growth version takes into factor to consider the resources gains investors intend to earn on astock.
The continuous growth design takes into consideration the capital gains investors intend to knife on astock.

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You, in analyzing a stock, find that its intended return above its compelled return. This argues that friend thinkthe stock must be sold.the stock is a great buy.management is probably not trying come maximize the price per share. Dividends are not likely to be declared.the share is experiencing supernormal growth.
Young & Liu Inc."s totally free cash flow during the just-ended year (t = 0) was $100 million, and also FCF is supposed to prosper at a consistent rate that 5% in the future. If the weighted average cost of funding is 15%, what is the firm"s value of operations, in millions?
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Principles that Macroeconomics5th EditionN. Gregory Mankiw
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