Fundamentals of Corporate Finance - Calculations - Accounting and Finance Assignment Help

Assignment Task:

Task:

Question 1:
I now have $12,000 in the bank earning interest of 0.50% per month. I need $22,000 to make a down payment on a house. I can save an additional $100 per month. How long will it take me to accumulate the $22,000?
Question 2
A couple will retire in 50 years; they plan to spend about $32,000 a year in retirement, which should last about 25 years. They believe that they can earn 9% interest on retirement savings.
a) If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b) How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $62,000 on their child’s college education? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Question 3
Banks sometimes quote interest rates in the form of “add-on interest.” In this case, if a 1-year loan is quoted with an interest rate of 8.0% and you borrow $1,000, then you pay back $1,080. But you make these payments in monthly installments of $108 each.
a) What is the true APR on this loan? (Do not round intermediate calculations. Enter your answer
as a percent rounded to 2 decimal places. Use a financial calculator or Excel.)
b) What is the effective annual rate on the loan? (Do not round intermediate calculations. Enter
your answer as a percent rounded to 2 decimal places.)
Question 4
A 30-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 8%.(Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places.)
a) What is the yield to maturity if the bond is selling for $900?
b) What is the yield to maturity if the bond is selling for $1,000?
c) What is the yield to maturity if the bond is selling for $1,100?

Question 5
A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 9%, and sells for $1,100. Interest is paid annually. (Assume a face value of $1,000 and annual coupon payments.)
a) If the bond has a yield to maturity of 9% 1 year from now, what will its price be at that time? (Do not round intermediate calculations.)
b) What will be the rate of return on the bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)
c) If the inflation rate during the year is 3%, what is the real rate of return on the bond? (Assume annual interest payments.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)

Question 6
Integrated Potato Chips just paid a $2.7 per share dividend. You expect the dividend to grow steadily at a rate of 6% per year.
a) What is the expected dividend in each of the next 3 years?
b) If the discount rate for the stock is 10%, at what price will the stock sell today?
c) What is the expected stock price 3 years from now?
d) If you buy the stock and plan to sell it 3 years from now, what are your expected cash flows in (i) year 1; (ii) year 2; (iii) year 3?
e) What is the present value of the stream of payments you found in part (d)?
Question 7
Web Cites Research projects a rate of return of 20% on new projects. Management plans to plow back 20% of all earnings into the firm. Earnings this year will be $6 per share, and investors expect a rate of return of 12% on stocks facing the same risks as Web Cites.
a) What is the sustainable growth rate?
b) What is the stock price?
c) What is the present value of growth opportunities (PVGO)?
d) What is the P/E ratio?
e) What would the price and P/E ratio be if the firm paid out all earnings as dividends?

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