QUESTION
Problem 5.17
Your finance text book sold 55,000 copies in its first year.
The publishing company expects the sales to grow at a rate of 20.0 percent for
the next three years, and by 13.0 percent in the fourth year. Calculate the
total number of copies that the publisher expects to sell in year 3 and 4. (If
you solve this problem with algebra round intermediate calculations to 6
decimal places, in all cases round your final answers to the nearest whole
number.)
Number of copies sold after 3
years?
Number of copies sold in the fourth year?
Problem 5.21
Find the present value of $3,300 under each of the following
rates and periods.
(If you solve this problem with algebra round intermediate
calculations to 6 decimal places, in all cases round your final answer to the
nearest penny.)
a. 8.9 percent compounded monthly for five years.
Present value $
b. 6.6 percent compounded quarterly for eight years.
Present value $
c. 4.3 percent compounded daily for four years.
Present value $
d. 5.7 percent compounded continuously for three years.
Present value $
Problem 6.19
Trigen Corp.
management will invest cash flows of $528,605, $523,683, $759,897, $818,400,
$1,239,644, and $1,617,848 in research and development over the next six years.
If the appropriate interest rate is 6.21 percent, what is the future value of
these investment cash flows six years from today? (Round answer to 2 decimal
places, e.g. 15.25.)
Future value $
Problem 6.27
You wrote a piece of software that does a better job of
allowing computers to network than any other program designed for this purpose.
A large networking company wants to incorporate your software into their
systems and is offering to pay you $486,000 today, plus $486,000 at the end of
each of the following six years for permission to do this. If the appropriate
interest rate is 7 percent, what is the present value of the cash flow stream
that the company is offering you? (Round answer to the nearest whole dollar,
e.g. 5,275.)
Present value $
Problem 7.16
Barbara is considering investing in a stock and is aware
that the return on that investment is particularly sensitive to how the economy
is performing. Her analysis suggests that four states of the economy can affect
the return on the investment. Using the table of returns and probabilities
below, find
Probability Return
Boom 0.4 25.00%
Good 0.3 15.00%
Level 0.1 10.00%
Slump 0.2 -5.00%
What is the expected return on Barbaraâs investment? (Round
answer to 3 decimal places, e.g. 0.076.)
Expected return.
Problem 8.24
Trevor Price bought 10-year bonds issued by Harvest Foods
five years ago for $935.11. The bonds make semiannual coupon payments at a rate
of 8.4 percent. If the current price of the bonds is $1,045.86, what is the
yield that Trevor would earn by selling the bonds today? (Round intermediate
calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal
places, e.g. 15.25%.)
Effective annual yield %
Problem 9.15
The First Bank of Ellicott City has issued perpetual preferred
stock with a $100 par value. The bank pays a quarterly dividend of $1.65 on
this stock. What is the current price of this preferred stock given a required
rate of return of 10.0 percent? (Round answer to 2 decimal places, e.g. 15.25.)
Current price $
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