Calculate I/YR with:  PV = $1,750.22 FV = $1,000 N = 5 PMT = $80

Solve it using formulas, no tables correct answers: i) i^2 0.059126 > 0.0341 iii) P(wd) £73.34 per £100 nominal iv) using i* > 6% pa --> NPV(6%)= 2.78020 and NPV(6.5%) = 1.59578 therefore i= 6.32% pa and f=2.5% --> i'= 3.72% pa A fixed interest security pays coupons of 5% per annum convertible half-yearly in arrears. The security is redeemable at 110% at the option of the borrower on any anniversary date between 15 and 25 years after the date of issue. An investor, who is liable to tax on income at a rate of 25% and on capital gains at a rate of 30%, intends to buy the product exactly two months after issue for a price that gives a net effective yield of at least 6% per annum. (i) Determine whether the investor would make a capital gain if the bond is held until redemption. (ii) In what way does your answer to part (i) affect the assumptions made for calculating the issue price? Explain in general terms the reasoning behind your chosen pricing approach. (iii) Calculate the maximum…

Suppose A=D+E, E=$350,000 and E/A=0.7. Solve for D.

j.   Find the PV and the FV of an investment that makes the following end-of-year payments.  The              interest rate is 8%. Year 1 $100, Year 2 $200, Year 3 $400           Year   Payment       1   100       2   200       3   400                     Rate 8%                   To find the PV, use the NPV function: Pv= $581.59                   Year Payment x (1+ I)^(N- t) = FV 1 100         2 200         3 400