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Moerdyk corporation's bonds have a 15-year maturity, a 7.25% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 5.10%, based on semiannual compounding. What is the bond's
Your brother has asked you for a loan and has promised to pay back $7,750 at the end of three years. If you normally invest to earn 6 percent per year, how much will you be willing to lend to your
Michael Carter is expecting an inheritance of $1.25 million in four years. If he had the money today, he could earn interest at an annual rate of 7.35 percent. What is the present value of this i
The account pays interest of 5.75 percent compounded on a monthly basis. How much money will Santiago Hernandez have at the end of two years?
Dynamo Corp. is expecting annual payments of $34,225 for the next seven years from a customer. What is the present value of this annuity if the discount rate is 8.5 percent?
Kronka, Inc., is expecting cash inflows of $13,000, $11,500, $12,750, and $9,635 over the next four years. What is the present value of these cash flows if the appropriate discount rate is 8 perc
Pearson Brothers recently reported an EBITDA of $4.5 million and net income of $1.3 million. It had $2.0 million of interest expense, and its corporate tax rate was 35%. What was its charge for depr
Future value with multiple cash flows: Konerko, Inc., expects to earn cash flows of $13,227, $15,611, $18,970, and $19,114 over the next four years.
The risk-free rate is 4.7%, the market risk premium is 6%, and the stock's beta is 1.67. What is the cost of common stock (Ke)?
If he can earn 6.5 percent annually, how much does your grandfather need to invest to produce the desired cash flow?
You are purchasing a 20-year, zero coupon bond. The yield to maturity is 8.68 percent and the face value is 1000. What is the current market price?
If the company uses a discount rate of 15 percent on its investments, what is the present value of this investment?
Future value of an ordinary annuity: Cecelia Thomas is a sales executive at a Baltimore firm. If the IRA investment will earn 9.75 percent annually, how much will she have in 40 years, when she tur
A project has an expected risky cash flow of $300, in year 3. The risk-free rate is 5%, the market risk premium is 8% and the project's beta is 1.25. Calculate the certainty equivalent cash flow fo
No change innet working capital is expected. Marginal profits will be taxed at a 35 percent rate. If the project's operating cash flow is $1 million, what is the project's depreciation expense? Its
Robert Hobbes plans to invest $25,000 a year at the end of each year for the next seven years in an investment that will pay him a rate of return of 11.4 percent. How much money will Robert have
The amounts of $1,225, $1,350, $1,500, $1,600, and $1,600 over the next five years. If the friend normally discounts investment cash flows at 8 percent annually, how much did Jeremy borrow?
Plush Pilots, Inc., has balance sheet equity of $6.0 million. At the same time, the income statement shows net income of $906,000. The company paid dividends of $480,180 and has 200,000 shares of st
At the same time, the income statement shows net income of $783,000. The company paid dividends of $438,480 and has 100,000 shares of stock outstanding. If the benchmark PE ratio is 18, what is the
If the appropriate discount rate is 10.875 percent, what is the cost in today"s dollars of the equipment Saul purchased today?
If his investment in a mutual fund will earn him 10.3 percent annually, how much will he have saved in eight years when he buys his house?
An investor is long a short-term at-the-money put option on an underlying portfolio of equities with a notional value of USD 100,000. If the 95% VAR of the underlying portfolio is 10.4%, which of th
A rate of 17.5 percent for a seven-year period. The loan calls for a payment of $1,540,862.19 each year beginning today. How much did Grant borrow?
A large, international bank has a trading book whose size depends on the opportunities perceived by its traders. The market risk manager estimates the one-day VAR, at the 95% confidence level, to be
In late 1993, MGRM reported losses of about $1.3 billion in connection with the implementation of a hedging strategy in the oil futures market.