FIN 325 Assignment 2 Name ___________________________________
1. Assume you deposit $100 today in an account paying 10%. In one year you will deposit another $100 at the same rate. What is the account worth at the end of the second year?
a. $225
b. $227
c. $229
d. $231
2. You will deposit $5,000 at the end of each year for the next three years in a bank account paying 10%. You currently have $5,000 in the account. How much will you have in 3 years?
a. $24,305
b. $23,144
c. $23,205
d. $22,987
3. At the end of each year over the next three years, you will receive the following - $1,000 year 1, $2,000 year 2, and $3,000 year 3. What is the net present value of the income stream that you will receive given a 9% present value rate?
a. $4,150
b. $4,443
c. $4,865
d. $4,917
4. If you deposit $200 in one year, $300 in year two, and $500 in year three, how much will you have in three years? How much will you have in five years if you assume you do not add any additional amounts? Assume an 8% interest rate throughout.
a. $1,332
b. $1,359
c. $1,378
d. $1,392
Solution:
Value in three years $1,142
5. Suppose you need $1,500 in one year and $2,000 more in year two. If you earn 10% on your money, how much do you need to put up today to exactly cover these amounts in the future?
a. $2,511
b. $2,562
c. $2,639
d. $2,671
Solution:
None of the answer is accurate, the correct answer is $3,017
6. You are offered an investment that will pay you $300 in one year, $500 the next year, $600 the next year, and $1,000 at the end of the next year. You can earn 10% in similar investments. What is the most you should pay for this investment?
a. $2,872
b. $2,019
c. $1,995
d. $1,820
7. You can receive $600 at the end of each year for the next six years. If you want to earn 9% on your money, how much would you pay for this annuity?
a. $2,692
b. $1,987
c. $3,016
d. $2,144
8. You take out a $10,000 loan that is due in seven years. The interest rate on the loan is 9%. What are your annual loan payments?
a. $2,216
b. $1,895
c. $2,011
d. $1,987
9. Assume on the loan in #8, you can afford to make payments of $2,500 per year. How long would it take you to pay off your loan?
a. 5.0 years
b. 5.2 years
c. 5.3 years
d. 5.4 years
10. You take out a $10,000 loan that amortizes over 15 years. The interest rate on the loan is 10%. What is your principal balance at the end of the third year?
a. $8,765
b. $8,958
c. $7,478
d. $9,123
11. You are looking at purchasing a corporate bond that matures in 8 years and pays $80 in interest per year. At maturity, the bond pays $1,000 face amount. The current interest rate in the market is 9%. How much are you willing to pay for the bond?
a. $922
b. $1,070
c. $945
d. $899
12. Assume in #11, that the current interest rate in the market is 7%. How much are you willing to pay for the bond?
a. $990
b. $1,211
c. $897
d. $1,060
13. Assume you purchase a $1,000 bond that matures in 10 years and has a 10% interest rate. The bond is currently selling for $950. What is the current yield on the bond?
a. 10.8%
b. 11.2%
c. 9.7%
d. 10.3%
14. You can purchase a zero coupon bond for $550 and at maturity it pays $1,000 in 10 years. What is the bond yield to maturity rate of return?
a. 5.3%
b. 7.1%
c. 8.8%
d. 6.2%
15. You are thinking about purchasing a $1,000 ten-year bond that has a floating rate of interest. The rate is 3% over LIBOR. If the current LIBOR is currently 2%, what is the annual interest on the bond?
a. $40
b. $45
c. $50
d. $55
16. You can purchase a 10-year $1,000 convertible bond with a 10% coupon. The bond is convertible into 100 shares of common stock anytime prior to maturity. The stock is currently selling at $8 per share. How much does the stock price need to go up before you are at a breakeven?
a. $1.5
b. $3.0
c. $2.5
d. $2.0
End of Assignment
CLICK HERE TO GET THE ANSWER !!!!
Wednesday 20 March 2013
FIN 325 Assignment 2 Name ___________________________________
1. Assume you deposit $100 today in an account paying 10%. In one year you will deposit another $100 at the same rate. What is the account worth at the end of the second year?
a. $225
b. $227
c. $229
d. $231
2. You will deposit $5,000 at the end of each year for the next three years in a bank account paying 10%. You currently have $5,000 in the account. How much will you have in 3 years?
a. $24,305
b. $23,144
c. $23,205
d. $22,987
3. At the end of each year over the next three years, you will receive the following - $1,000 year 1, $2,000 year 2, and $3,000 year 3. What is the net present value of the income stream that you will receive given a 9% present value rate?
a. $4,150
b. $4,443
c. $4,865
d. $4,917
4. If you deposit $200 in one year, $300 in year two, and $500 in year three, how much will you have in three years? How much will you have in five years if you assume you do not add any additional amounts? Assume an 8% interest rate throughout.
a. $1,332
b. $1,359
c. $1,378
d. $1,392
Solution:
Value in three years $1,142
5. Suppose you need $1,500 in one year and $2,000 more in year two. If you earn 10% on your money, how much do you need to put up today to exactly cover these amounts in the future?
a. $2,511
b. $2,562
c. $2,639
d. $2,671
Solution:
None of the answer is accurate, the correct answer is $3,017
6. You are offered an investment that will pay you $300 in one year, $500 the next year, $600 the next year, and $1,000 at the end of the next year. You can earn 10% in similar investments. What is the most you should pay for this investment?
a. $2,872
b. $2,019
c. $1,995
d. $1,820
7. You can receive $600 at the end of each year for the next six years. If you want to earn 9% on your money, how much would you pay for this annuity?
a. $2,692
b. $1,987
c. $3,016
d. $2,144
8. You take out a $10,000 loan that is due in seven years. The interest rate on the loan is 9%. What are your annual loan payments?
a. $2,216
b. $1,895
c. $2,011
d. $1,987
9. Assume on the loan in #8, you can afford to make payments of $2,500 per year. How long would it take you to pay off your loan?
a. 5.0 years
b. 5.2 years
c. 5.3 years
d. 5.4 years
10. You take out a $10,000 loan that amortizes over 15 years. The interest rate on the loan is 10%. What is your principal balance at the end of the third year?
a. $8,765
b. $8,958
c. $7,478
d. $9,123
11. You are looking at purchasing a corporate bond that matures in 8 years and pays $80 in interest per year. At maturity, the bond pays $1,000 face amount. The current interest rate in the market is 9%. How much are you willing to pay for the bond?
a. $922
b. $1,070
c. $945
d. $899
12. Assume in #11, that the current interest rate in the market is 7%. How much are you willing to pay for the bond?
a. $990
b. $1,211
c. $897
d. $1,060
13. Assume you purchase a $1,000 bond that matures in 10 years and has a 10% interest rate. The bond is currently selling for $950. What is the current yield on the bond?
a. 10.8%
b. 11.2%
c. 9.7%
d. 10.3%
14. You can purchase a zero coupon bond for $550 and at maturity it pays $1,000 in 10 years. What is the bond yield to maturity rate of return?
a. 5.3%
b. 7.1%
c. 8.8%
d. 6.2%
15. You are thinking about purchasing a $1,000 ten-year bond that has a floating rate of interest. The rate is 3% over LIBOR. If the current LIBOR is currently 2%, what is the annual interest on the bond?
a. $40
b. $45
c. $50
d. $55
16. You can purchase a 10-year $1,000 convertible bond with a 10% coupon. The bond is convertible into 100 shares of common stock anytime prior to maturity. The stock is currently selling at $8 per share. How much does the stock price need to go up before you are at a breakeven?
a. $1.5
b. $3.0
c. $2.5
d. $2.0
End of Assignment
CLICK HERE TO GET THE ANSWER !!!! FIN 325 Assignment 2 Name ___________________________________ 1. Assume you deposit $100 today in an account paying 10%. In one year you will deposit another $100 at the same rate. What is the account worth at the end of the second year? a. $225 b. $227 c. $229 d. $231 2. You will deposit $5,000 at the end of each year for the next three years in a bank account paying 10%. You currently have $5,000 in the account. How much will you have in 3 years? a. $24,305 b. $23,144 c. $23,205 d. $22,987 3. At the end of each year over the next three years, you will receive the following - $1,000 year 1, $2,000 year 2, and $3,000 year 3. What is the net present value of the income stream that you will receive given a 9% present value rate? a. $4,150 b. $4,443 c. $4,865 d. $4,917 4. If you deposit $200 in one year, $300 in year two, and $500 in year three, how much will you have in three years? How much will you have in five years if you assume you do not add any additional amounts? Assume an 8% interest rate throughout. a. $1,332 b. $1,359 c. $1,378 d. $1,392 Solution: Value in three years $1,142 5. Suppose you need $1,500 in one year and $2,000 more in year two. If you earn 10% on your money, how much do you need to put up today to exactly cover these amounts in the future? a. $2,511 b. $2,562 c. $2,639 d. $2,671 Solution: None of the answer is accurate, the correct answer is $3,017 6. You are offered an investment that will pay you $300 in one year, $500 the next year, $600 the next year, and $1,000 at the end of the next year. You can earn 10% in similar investments. What is the most you should pay for this investment? a. $2,872 b. $2,019 c. $1,995 d. $1,820 7. You can receive $600 at the end of each year for the next six years. If you want to earn 9% on your money, how much would you pay for this annuity? a. $2,692 b. $1,987 c. $3,016 d. $2,144 8. You take out a $10,000 loan that is due in seven years. The interest rate on the loan is 9%. What are your annual loan payments? a. $2,216 b. $1,895 c. $2,011 d. $1,987 9. Assume on the loan in #8, you can afford to make payments of $2,500 per year. How long would it take you to pay off your loan? a. 5.0 years b. 5.2 years c. 5.3 years d. 5.4 years 10. You take out a $10,000 loan that amortizes over 15 years. The interest rate on the loan is 10%. What is your principal balance at the end of the third year? a. $8,765 b. $8,958 c. $7,478 d. $9,123 11. You are looking at purchasing a corporate bond that matures in 8 years and pays $80 in interest per year. At maturity, the bond pays $1,000 face amount. The current interest rate in the market is 9%. How much are you willing to pay for the bond? a. $922 b. $1,070 c. $945 d. $899 12. Assume in #11, that the current interest rate in the market is 7%. How much are you willing to pay for the bond? a. $990 b. $1,211 c. $897 d. $1,060 13. Assume you purchase a $1,000 bond that matures in 10 years and has a 10% interest rate. The bond is currently selling for $950. What is the current yield on the bond? a. 10.8% b. 11.2% c. 9.7% d. 10.3% 14. You can purchase a zero coupon bond for $550 and at maturity it pays $1,000 in 10 years. What is the bond yield to maturity rate of return? a. 5.3% b. 7.1% c. 8.8% d. 6.2% 15. You are thinking about purchasing a $1,000 ten-year bond that has a floating rate of interest. The rate is 3% over LIBOR. If the current LIBOR is currently 2%, what is the annual interest on the bond? a. $40 b. $45 c. $50 d. $55 16. You can purchase a 10-year $1,000 convertible bond with a 10% coupon. The bond is convertible into 100 shares of common stock anytime prior to maturity. The stock is currently selling at $8 per share. How much does the stock price need to go up before you are at a breakeven? a. $1.5 b. $3.0 c. $2.5 d. $2.0 End of Assignment CLICK HERE TO GET THE ANSWER !!!!
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