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## Finance MBA Assignment

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Please provide me the answers with formula and procedure in solving the problem

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Name: Date:

1. How long does it take a present value amount to triple if the expected return is 9%? a. 8.00 periods b. 8.04 periods c. 12.00 periods d. 12.75 periods e. insufficient information to compute

2. What is the PV of a 5-year annuity due (payments at beginning of period, aka annuity in advance) of \$550 if the required return is 6.5% a. 2286 b. 2434 c. 2750 d. 2582 e. insufficient information to compute

3. You have just taken out a 30-year, \$120,000 mortgage on your new home. This mortgage is to be repaid in 360 equal monthly installments. If the stated (nominal) annual interest rate is 14.75 percent, what is the amount of the INTEREST portion of the FIRST monthly installment? a. \$1,475 b. \$1,472 c. \$1,493 d. \$17,700 e. insufficient information to compute

4. What is the EAR for a 9.5% APR with continuous compounding? a. 7.48% b. 9.5% c. 9.97% d. 10.99% e. insufficient information to compute

5. Williams Inc. is expected to pay a \$3 dividend next year and that dividend is expected to grow at 4% every year thereafter. If the discount rate is 10%, what would be the present value of the expected dividend stream (aka the expected price of the firm’s stock)? a. 50.00 b. 30.00 c. 0.50 d 75.00 e. 55.00

6. You are offered the opportunitY to buy a note for \$10,000. The note is certain to pay \$2000 at the end of each of the next 10 years. If you buy the note, what rate of interest will you receive on this investment (to nearest %) a. 15% b. 100% e. 20% d. 16% insufficient information to compute

7. Next year you will begin receiving 5 dollars per year in perpetuity from your grandparent’s family mist fund (first payment is exactly 1 year from today). You consider these payments essentially risk free and have decided to discount them at a constant risk free rate of 6.5%. What is the present value today of these future cash flows? (Hint: draw a time line to illustrate exactly the cash flows for this problem.)

a. 1353 b. 2385 c. 1270 d. 146

8. In 10 years you will begin receiving SI55 dollars per year in perpetuity from your grandparent’s family trust fund (East payment is exactly 10 years from today). You consider these payments essentially risk free and have decided to discount them at a constant risk free rate of 6.5%. What is the present value today of these future cash flows? (Hint: draw a time line to illustrate exactly the cash flows for this problem.)

a. 1353 b. 2385 C. 1270 d. 146

9. A credit card firm charges 18% interest, compounded monthly. What is the effective annual rate associated with these credit terms?

10. Indicate on this graph FV as a function of periods (years, if you like) (label each axis) for 3 general interest rates, A, B, and 0Yo, where A>B>C. (i.e. plot 3 general curves that show the relationship between FV and periods (years) for the interest rates A, B, and C%).

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