Discuss how and why bond values fluctuate. What is meant by interest rate risk and why is it related to a bond's maturity? What factors influence a bond's YTM?

Q: a. Compute the net present value of each project. Which project should be adopted based on the net p...

A: Net present value is the result arrived at by subtracting the total outflows in year 0 (or initial i...

Q: firm considering the installation of an automatic data processing unit to handle some of its account...

A: The equipment can be purchased by cash payment but may be leased also by payment of lease which give...

Q: Purple Corporation just purchased a call option for 10,000 Red Corp. ordinary shares at a strike pri...

A: Market value per share us P534 Volatility is 10% Risk free rate is 3% Strikr price is P489 Time peri...

Q: A car can be purchased with monthly installments of 8,500 and a down-payment of 115,000 for 48 month...

A: Monthly installment (M) = 8500 Down payment (D) = 115000 n = 48 months r = 12% per annum = 1% per mo...

Q: An asset used in a four-year project falls in the five-year MACRS class (MACRS Table) for tax purpos...

A: To calculate the BV at the end of four years, we must first calculate the accumulated depreciation f...

Q: Question: based on the above information, calculate the Motorway CO's leading price to earnings (P/E...

A: The relation between a company's current share price and earnings per share is known as the price ea...

Q: Bond P is a premium bond with a coupon of 7.8 percent, a YTM of 6.55 percent, and 15 years to maturi...

A: Bonds are the highly secured debt securities for which the company pays interest to the bondholder. ...

Q: Please explain the reasoning behind this formula. Expected inflation rate=10Year T bill rate−10 Yea...

A: Inflation is the steady loss of a currency's buying value. The rate at which an economy's purchasing...

Q: 3. Peter Parker and MJ decide to buy a one-bedroom condo in Manhattan. Determine the monthly payment...

A: Since you have asked multiple questions, we will solve the first question for you. If you want any s...

Q: 13) Your company bought a piece of machinery for $80,000, and depreciated it using a 5-year MACRS ap...

A: Depreciation is defined as any fall in the value of an asset due to its usage and time spent on it. ...

Q: A certian stock pays dividends continuously at a rate of 6 per year. The current price of the stock ...

A: Current stock price = S Dividend yield rate = δ r = Risk free rate F = Forward price n = Duration

Q: If Maria wants to be a millionaire ($1,000,000) by the time she retires (45 years from now), how muc...

A: Future value (FV) = $1,000,000 Interest rate = 8% Semi annual interest rate (r) = 8%/2 = 4% Period =...

Q: THIS IS A MANDATORY SUBMISSION An ordinary annuity has payments of $1000 made semi-annually with a n...

A: Time value of money (TVM) is used to measure the value of money at different point of time in the fu...

Q: Every three years, D will pay Mr. J 5,000 at 8% rate to settle his loan. Mr. D will use which formul...

A: An Annuity:- An annuity is a fixed amount of perodic payment that an individual receive or pay for a...

Q: Studies concluded that college graduation is a very good investment. Suppose a college graduate make...

A: Expected value of college graduation can be found using the earnings average and percentage given. S...

Q: Emily Dao, 27, just received a promotion at work that increased her annual salary to $37,000. She is...

A: Since you have posted a multiple question, therefore, we will be solving the first question only as ...

Q: Which of the following statements is false?     A.   Historical VaR simulation involves using pa...

A: The financial term Value at Risk (VaR) estimates the risk of an investment. VaR is a statistical tec...

Q: Consider a bond with a coupon of 5.8 percent, eleven years to maturity, and a current price of $1,06...

A: Given: Particulars Amount Face value(FV) $1,000 Coupon 5.80% Current price(PV) $1,060.10 ...

Q: Tom plans to save $2,000 for each of the next ten years, starting tonight when he will write his fin...

A: The account value at end of 10 years can be calculated with the help of future value of annuity due ...

Q: What is the future value of $2000 per year for 5 years invested at 10%?

A: Annual value (A) = $2000 n = 5 years r = 10% We need to find the future value of annuity.  

Q: A salesman earns P2,500 on the 1st month, P2,800 on the 2nd month, P3,100 on the 3rd month and so on...

A: Since you have posted a multiple question then we will be solving the first question only as per the...

Q: Tridel company is purchasing a land parcel to accommodate 25 lots for its new townhouse project. Tri...

A: Gross margin per lot = Gross sale price per lot * profit % = $725000*10% = $72500

Q: Dorpac Corporation has a dividend yield of 1.2%. Its equity cost of capital is 7.5%, and its dividen...

A: Using Gordon’s growth model, the price of a share is calculated using the expected dividend, cost of...

Q: Ben incurs a debt of $2500 with an annual interest of 24%. This is a monthly rate of 24/12 = 2%. Eac...

A: The interest on loan is directly charged as simple interest is charged. Generally, the interest is c...

Q: Analyzing the quality of firm​ earnings)  ​Kabutell, Inc. had net income of ​,$ 800,000 cash flow fr...

A: a) Quality of Earning Ratio=Cashflow from operations/ Net income =500,000/800,000=0.625= 62.5% hence...

Q: Adjustable Rate Payment Loan: $250,000.00 Term: 30 Years Pymt 1: Pymt 2: Pymt 3: 1st Year Rate: 3.00...

A: Loan Amount is $250,000 Term of loan is 30 years 1st year rate is 3.00% 2nd year rate is 4% 3rd yeae...

Q: Find the periodic payment R required to amortize a loan of P dollars over t years with interest char...

A: The periodic amount will be found using excel’s PMT function. It is the minimum amount that must be ...

Q: Assume you are the CIO (chief investment officer) for Dragon Industries, LLP (LLP stands for Limited...

A: Expected Return: The expected return is the minimum required rate of return which an investor requir...

Q: What single payment at the end of year 5 is equivalent to an equal annual series of payments of $800...

A: Here, Annuity Payment is $800 Annuity payment started in year 3 and ending in year 12 Interest Rate ...

Q: Daryl Kearns saved $240,000 during the 30 years that he worked for a major corporation. Now he has r...

A: Net present value is the sum of the present value of net of all cash outflows and inflows discounted...

Q: a. What price would you be willing to pay for a share of Acap stock today. you planned to hold the s...

A: Dividend discount model refers to a stock valuation model which is used by the company for estimatin...

Q: 15. Zoom has Quick ratio of 2x, sales of $120,000, in addition it has current assets of $170,000 and...

A: Quick ratio = 2x Current assets = $170,000 Current liabilities = $50,000 Inventory = Current assets-...

Q: Which arrangement of the different modes of financing appropriately reflects the related cost of cap...

A: Highest cost capital modes of fiannacing is cost of equity.  

Q: The following statements relate to long-term financing. Which is true? a. The risk on any type of e...

A: Long term financing Long term financing is a financing that has the maturity more than a year.

Q: What is the owner's equity for the BlueDragon company for accounting period 2020? note: write the nu...

A: Solution:- Owner’s equity means the amount of funds contributed by the owners of the entity. In case...

Q: 31. Flyers plc operates public transport services in major cities in the United Kingdom (UK). The co...

A: Capital budgeting decisions are investment appraisal decisions that are taken to attain the profitab...

Q: A college plans to build a new dormitory building. A group of alumni volunteered to donate enough fu...

A: Interest rate is 12% Compounded annually Maintenance cost for first 20 years is $35,000 Maintaince c...

Q: Bob has been investing $4,000 in stock at the end of every year for the past 8 years. If the account...

A: Future value of an annuity is calculated by multiplying the regular payment by Annuity factor which ...

Q: average price-earnings ratios of the small firms in textile industry is 12.50. On the other hand, Ep...

A: P/E ratio is most widely used as ratio for comparison between the value of shares with industry aver...

Q: How is risk defined and measured? How might the magnitude of the market risk premium impact someone’...

A: In financial terms, the risk is referred to as the possibility that an outcome's actual gains will d...

Q: On January 1, Year 1, you are considering the purchase of Niko Enterprises' common stock. Based on y...

A: The purchase price can be found using the Gordon Model. As per Gordon Model, the price of stock toda...

Q: 3. You have the option of investing money in a bond that will help to grow your money. Bond A offers...

A: Effective annual rate is the interest actually earned on the investment or paid on the loan, as a re...

Q: What is the present value of a $90 annual annuity for 10 years with an additional $1000 received at ...

A: Present value of annuity Annuity is a series of equal payments at equal interval till a specified pe...

Q: 11. In 2019, LSP company reported a net income of $57,000. They had reported earnings before interes...

A: Net income (EAT) = $57000 EBIT = $150,000 Tax rate = 40%

Q: 4. When an organization underwrites and distributes new investment securities to helps businesses ob...

A: Business raises finance from various sources such as equity , bonds loans etc to meet its business o...

Q: Not use of the excel Q)A car loan of $36601 is to be repaid by making payments each month for 3 yea...

A: Loans are paid by the monthly payment that carry the interest payment and payment for the principal ...

Q: A stock costs $80 and pays a $2 annual dividend. If you expect to sell the stock after four years fo...

A: The required return on the stock represents the total return earned on the stock. This return is con...

Q: You put 280,000 dollars in a bank which gives you 0.75% interest compounded daily. If you leave that...

A: The amount of interest earned can be computed with the help of future value function

Q: An amount of 100,000 was borrowed and was to be repaid in 10 instalments at the end of every quarter...

A: Here, Borrowed amount (PV) is 100,000 No. of Quarterly Payment (n) is 10 Uniform Gradient Amount (G)...

Q: Nigel is considering an investment in split shares of SPL Corp. The company has been in business for...

A: Types of shares and their characteristics: A company can issue two types of shares. They are: Commo...