FinanceQuestions - Part 1

I need answer of this question solution general finance

The amount of money originally put into an investment is known as the present value P of the investment. For example, if you buy a $50 U.S. Savings Bond that matures in 10 years, the present value of the investment is the amount of money you have to pay for the bond today. The value of the investment at some future time is known as the future value F. Thus, if you buy the savings bond mentioned above, its future value is $50.     If the investment pays an interest rate of r (as a decimal) compounded yearly, and if we know the future value F for t years in the future, then the present value P = P(F, r, t), the amount we have to pay today, can be calculated using the formula below. P = F ×  1 (1 + r)t   We measure F and P in dollars. The term  1/(1 + r)t  is known as the present value factor, or the discount rate, so the formula above can also be written as the following. P = F × discount rate (a) Explain what information the function P(F, r, t) gives you. The function…

An investor is considering the purchase of a financial instrument that promises to make the following payments: Promised Payment by Issuer $100 $100 $100 $100 $1,100 Years from Now 1 2 3 4 5 This financial instrument is selling for $1,243.83. Assume that the investor wants a 6.25% annual interest rate on this investment. Should the investor purchase this investment? OA. Yes, the financial instrument is attractive O B. No, the financial instrument is unattractive. C. Can't be answered. More information is needed to answer the question D. Indifferent.

An investor is considering the purchase of a financial instrument that promises to make the following payments: Years from Now 1 2 3 4 5 Promised Payment by Issuer $100 $100 $100 $100 $1,100 This financial instrument is selling for $1,243.83. Assume that the investor wants a 6.25% annual interest rate on this investment. Should the investor purchase this investment? A. Yes, the financial instrument is attractive B. No, the financial instrument is unattractive. C. Can't be answered. More information is needed to answer the question D. Indifferent.

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(Solving for i​) You are considering investing in a security that will pay you ​$5,000 in 31 years.  a. If the appropriate discount rate is 11 percent,​ what is the present value of this investment? ​(Round to the nearest​ cent.) b. Assume these investments sell for ​$1,680 in return for which you receive ​$5,000 in 31 years. What is the rate of return investors earn on this investment if they buy it for ​$1,680​?

Which of the following investments has a higher present value, assuming the same (strictly positive) interest rate applies to both investments? Investment X Investment Y $5,000 $7,000 $9,000 $11,000 Year 1 $11,000 $9,000 $7,000 $5,000 2 3 4 Select one: a. Investment X has a higher present value. b. Investment Y has a higher present value. c. Investment X and Investment Y have the same present value, since the total of the cash flows is the same for both d. No comparison can be made-we need to know the interest rate to calculate the present value

Topic 2: Return measures2. Which of the following investments do you prefer?(a) Purchase a zero-coupon bond, which pays $1000 in ten years, for a price of $550.(b) Invest $550 for ten years in a bank savings account at a guaranteed annual interestrate of 5.5%.1

Answer? ? Financial accounting question

What is the value of this investment on these financial accounting question?

You are considering investing in a security that will pay you $4,000 in 29 years. If the appropriate discount rate is 11 percent, what is the present value of this investment? b. а. Assume these investments sell for $791 in return for which you receive $4,000 in 29 years. What is the rate of return investors earn on this investment if they buy it for $791? If the appropriate discount rate is 11 percent, the present value of this investment is $___-_(Round to the nearest cent.) а.

​(Related to Checkpoint​ 5.6) ​ (Solving for i​) You are considering investing in a security that will pay you ​$1,000 in 27 years.   a.  If the appropriate discount rate is 12 percent​, what is the present value of this​ investment? b.  Assume these investments sell for ​$515 in return for which you receive ​$1,000 in 27 years. What is the rate of return investors earn on this investment if they buy it for ​$515​? a.  If the appropriate discount rate is 12 ​percent, the present value of this investment is ​$nothing. ​(Round to the nearest​ cent.)

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(Related to Checkpoint​ 5.6) ​ (Solving for i​) You are considering investing in a security that will pay you ​$1,000 in 25 years.   a.  If the appropriate discount rate is 11 percent​, what is the present value of this​ investment? b.  Assume these investments sell for ​$259 in return for which you receive ​$1,000 in 25 years. What is the rate of return investors earn on this investment if they buy it for ​$259​? a.  If the appropriate discount rate is 11 ​percent, the present value of this investment is ​$nothing. ​(Round to the nearest​ cent.)

Which of the following statements is CORRECT? Question 2 options: a) The proportion of the payment that goes toward interest on a fully amortized loan increases over time. b) An investment that has a nomiral rate of 6% with semiannual payments will have an effective rate that is smaller than 6%. c) If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different. d) The present value of a 3-year, $150 ordinary annuity will exceed the present value of a 3-year, $150 annuity due. e) if a loan has a nominal annual rate of 7%, then the effective rate will never be less than 7%.

Question 5 Suppose that discount bond prices are as follows: see picture a. A customer of your bank wants a forward contract to borrow $20M in three years from now for one year. What would be your quote to the customer? b. How would you confirm the rate? c. If customer accepts your offer, how would you lock-in the cash flows. Is there an arbitrage opportunity available? Show the entire cashflows chart.

What would be the proper key strokes on the BA II Plus Financial Calculator by Texas Instrument for the below response?

(Related to Checkpoint 5.6) (Solving for ) You are considering investing in a security that will pay you $4,000 in 28 years a. If the appropriate discount rate is 12 percent, what is the present value of this investment? b. Assume these investments sell for $2,229 in return for which you receive $4,000 in 28 years. What is the rate of return investors earn on this investment if they buy it for $2,229?

(Related to Checkpoint 5.6) (Solving for ) You are considering investing in a security that will pay you $3,000 in 34 years. a. If the appropriate discount rate is 8 percent, what is the present value of this investment? b. Assume these investments sell for $773 in return for which you receive $3,000 in 34 years. What is the rate of return investors earn on this investment if they buy it for $773? a. If the appropriate discount rate is 8 percent, the present value of this investment is $ 219.13. (Round to the nearest cent.) b. The rate of return investors can earn on this investment if they buy it for $773 is %. (Round to two decimal places.)

Subject:- finance

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Time value of money practice problems.  How would you solve these using a financial calculator?   What values would you enter for N, I/YR, PV, PMT, and FV ? *assume coporate bonds pay 2x annually and have a FV on $1000 b) What is the PV of a 20-year corporate bond issued 5 years ago paying a 5% interest rate when similar bonds today pay 4.5%?