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Business Finance
/in Questions Uploads /by Hannah WanguiQuestion
Hello I need help with the following 3 questions please.
Chapter 5 – Hello I need
help with the following Business Finance Questions.
Q1.) Your wealthy uncle established a bank account with $1,500 for you when you were born. For the first 9 years of your life, the interest rate earned on the account was 4%. Since then, rates have been only 2%. Now you are 23 years old and ready to cash in. How much is in your account? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Amount________________?
Q2.) A factory costs $510,000. You forecast that it will produce cash inflows of $155,000 in year 1, $215,000 in year 2, and $370,000 in year 3. The discount rate is 11%.
a. What is the value of the factory? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Value of the Factory____________?
Q3.)
a. If you borrow $2,700 and agree to repay the loan in four equal annual payments at an interest rate of 10%, what will your payment be? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Amount of Payment___________
b. What will your payment be if you make the first payment on the loan immediately instead of at the end of the first year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Amount of Payment____________
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Business Finance.
/in Questions Uploads /by Hannah WanguiQuestion
Hi I have 2 Questions I need help on.
Chapter 5 – Hello I need help with the
following 4 questions on Business Finance.
Q1.) A General Power bond carries a coupon rate of 8.7%, has 9 years until maturity, and sells at a yield to maturity of 7.7%. (Assume annual interest payments.)
a. What interest payments do bondholders receive each year?
b. At what price does the bond sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Price: ?
c. What will happen to the bond price if the yield to maturity falls to 6.7%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Price will ___?____ by _____?_______
Q2.) Consider three bonds with 5.90% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 years.
a. What will be the price of the 4-year bond if its yield increases to 6.90%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Bond Price: ?
b. What will be the price of the 8-year bond if its yield increases to 6.90%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Bond Price: ?
c. What will be the price of the 30-year bond if its yield increases to 6.90%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Bond Price: ?
d. What will be the price of the 4-year bond if its yield decreases to 4.90%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Bond Price: ?
e. What will be the price of the 8-year bond if its yield decreases to 4.90%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Bond Price: ?
f. What will be the price of the 30-year bond if its yield decreases to 4.90%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Bond Price: ?
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the firm’s target markets
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