Multinational Financial Management by Alan Shapiro: Currency Futures and Options Markets

What is the effective annual rate on a 1-year loan with an interest rate quoted on a discount basis of 22.25%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

23. Ivy has preferred stock selling for 98 percent of par that pays a 7 percent annual coupon. What would Ivy’s component cost of preferred stock ?

51. (LO2) Assume that on January 1, year 1, ABC Inc. issued 5,000 stock options with an estimated value of $10

c) The present value of $500 to be received in one year when the opportunity cost rate is 8 percent (discounting):

9. You want to purchase a business with the following cash flows. How much would you pay for this business today assuming you needed a 14% return to make this deal?

7. A company pays $600,000 for 30% of the common stock of X, Inc. In the first year, X,

5. (TCO B) You sold a car and accepted a note with the following cash flow stream as your payment. What was the effective price you received for the car assuming an interest rate of 6.0%?

2. An 8 percent semiannual coupon bond is priced at $1,204.60. The bond has a

Burnes, Inc. is a mature firm that is growing at a constant rate of 5.5 percent per year. The firm’s last dividend was $1.50. If the required rate of return is 12 percent, what is the market value of this stock assuming dividend growth equals the growth rate of the firm?

b. Compute the future value if the CD pays 3.2 percent; if it pays 16.8 percent. Overall,

Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods.

3. Assume that 11% is the market rate of interest in on January 1, 1975. Compute the present value at January 1, 1975 of all payments that will be made on

Call value C= S N (d1) – X e-rt N (d2) = 83.1 x 0.93275 – 45.6 x e (-0.0803 x 6) x 0.60714 = 60.46

First we need to get the present value of the annuity for the 1,500 semiannual PMTs at year 14

Assume that the annual payments in the sixth year is equal to the rental payment in the fifth year ( 112.9 and 86.0) and the remainder of the lump sum values (54.6 and 17.8) is due in the seventh year. With a discount rate of 5.4%, the present values of the rental payments for the years 2006 and 2007 are as follows: