1. A automobile was purchased on a 60-month installment plan with a $10,000 monthly payment. Calculate the car's cash price if interest is compounded annually at 12.03%.
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- suppose that you invest $100 today in a risk-free investment and let the 4 percent annual intrest rate compound. Rounded to the full dollars, what will be the value of your investment 4 years from now?Which of the following investment options willmaximize your future wealth at the end of 18 years?Assume any funds that remain invested will earn anominal rate of 12% compounded monthly.(a) Deposit $8,000 now.(b) Deposit $120 at the end of each month for thefirst 12 years.(c) Deposit $105 at the end of each month for 18years.(d) Deposit a lump sum in the amount of $35,000 atthe end of year 12.Suppose a bank grants a loan to one customer for a term of five years. The customer promises the bank an annual interest payment of 10 percent. The face (par) value of the loan is $1,000 which is also the current market value as the loan’s current YTM is 10 percent. What is the loan’s duration?
- You plan to open a retirement account. Your employer will match 50% of your deposits up to a limit on the match of $2,500 per year. You believe the fund will earn 12% over the next 30 years, and you will make 30 deposits of $5,000, plus 50% employer matching, totaling $7,500 per year. a. How much money will be in the account immediately after the last deposit? b. How much total money will you put into the fund?Benjamin receives an annual bonus of $1,000 and wants to invest it in an account that earns interest for the next 3 years. Below are the two options that he is considering putting his money into. Which of the following statements is true? NEED ASAP PLS.As a manager of your company, you are considering to go for a project, with an initial outlay of $200,000. The project has a life of three years and yields (year-end) cash inflows of $ 100,000 in year-1, $150,000 in year-2 and $200,000 in year 3. What is the net present value of the project if the interest rate is 10 percent? Show your steps. Should you recommend to go for the project? Explain in details.
- The manager of Automated Products is contemplating the purchase of a new machine that will cost$300,000 and has a useful life of five years. The machine will yield (year-end) cost reductions toAutomated Products of $50,000 in year 1, $60,000 in year 2, $75,000 in year 3, and $90,000 in years4 and 5. What is the present value of the cost savings of the machine if the interest rate is 8 percent?Suppose that you, on 1st of January 2023, enter a long position in a 10-year forward contract on a non-dividend-paying stock. The stock price is $50 and the risk-free rate of interest is 5% per annum with yearly compounding (as per 1st of January 2023). a) What are the forward price and the initial value of the forward contract? Five years later, 1st of January 2028, the price of the stock is $60 and the risk-free interest is still 5%. b) On 1st of January 2028, what are the forward price and the value of the forward contract that you entered into on 1st of January 2023? Explain. c) Suppose that you on 1st of January 2028 enter a short position in a forward contract on the same underlying stock and with expiration date in 5 years. What is the value of your total position? (I.e. what is the total value of the long position in the forward contract in a) and your short position). What is the payoff of your total position at maturity? d) On 1st of January 2028, what is the value…An entrepreneur recently learned about a new hotel business that requires an initial investment of $12M and annual cash flow of $2M in perpetuity. The appropriate discount rate is 20%. Now, consider a pretty similar scenario: an Initial investment $12M. Now, in good state, $6M annual cash flows. In a bad state, -$2M annual cash flows. Furthermore, assume that the entrepreneur wants to own at most, 1 hotel (no option to expand). - But things change when we consider the abandonment option. At date 1, the entrepreneur will know which forecast has come true. If the world is in the good state, he will keep the project alive. If bad state, he will abandon the hotel after period 1. - Now, what is the NPV of the project? - What is the value of the option to abandon?
- Suppose you purchased a corporate bond with a 10-year maturity, a $1,000 par value, a 9% coupon rate ($45 interest payment every six months), and semiannual interest payments. Five years after the bonds were purchased, the going rate of interest on new bonds fell to 6% (or 6% compounded semiannually). What is the current market value (P) of the bond (five years after the purchase)?(a) P = $890(b) p = $1,223(c) P = $1,090(d) p = $1,128▼ Cash Flow Present Discounted Value Interest Rate is based on the notion that a dollar paid in the future is less valuable than a dollar paid today. Part 2 The present value of a loan in which $3000 is to be paid out a year from today with the interest rate equal to 3% is $enter your response here. (Round your response to the neareast two decimal place) Part 3 If a loan is paid after two years, and the amount $3000 is to be paid then with a corresponding 1% interest rate, the present value of the loan is $enter your response here. (Round your response to the neareast two decimal place)q/ The present value of the following cash flow stream is $5,933.86 when discounted at 11 percent annually. What is the value of the missing cash flow? year cash flow1 20002 ?3 17504 1250 1. $1,500 2. $1,750 3. $2,000 4. $2,250 5. $2,500