Calculating the Time Value of Money
I need the answers to these 4 questions.
1. What is the present value of:
A. $7,900 in 10 years at 11 percent?
B. $16,600 in 5 years at 9 percent?
C. $26,000 in 14 years at 6 percent?
2. What is the present value of:
A. $7,900 in 10 years at 11 percent?
B. $16,600 in 5 years at 9 percent?
C. $26,000 in 14 years at 6 percent?
3. Exodus Limousine Company has $1,000 par value bonds outstanding at 10 per- cent interest. The bonds will mature in 50 years. Compute the current price of the bonds if the percent yield to maturity is:
A. 5 percent.
B. 15 percent
4. Based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 11 percent to 8 percent:
a. What is the bond price at 11 percent?
b. What is the bond price at 8 percent?
c. What would be your percentage return on investment if you bought when rates were 11 percent and sold when rates were 8 percent?