ary Joy rery year, she decided to give her contribution of P9 000 every quarter. How much surance company pay her if she bought a 25-year term plan? Michael wants to buy a car worth P850 000 in 5 years. How much must he pay annu 5 Vears starting today of money is worth 5% compounded monthly?

Q: Two years ago Sam bought a newly issued three- year US government bond (a risk-free asset) with a pr...

A: In the above question the following information is given, Coupon Rate = 5% No. of Year = 1 year Spot...

Q: Which of the following statements is true regarding the optimal risky portfolio: It is designated by...

A: Optimal risky portfolio: Optimal risky portfolio is the portfolio which has balance between the risk...

Q: QUESTION 7 Select from the following a factor that does not relate to the reduction of agency costs....

A: Agency cost refers to a payment made to the agent who is acting on behalf principal. this cost is tr...

Q: What happens when N (d2) of the Black Scholes Morten Model is in the negative figure? What does this...

A: Following a lengthy search by financial economists for a viable option-pricing model. A formula for ...

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A: A portfolio is a collection of different kinds of stock. A well diversified portfolio should be chos...

Q: We are interested in making a bid for Privately Held Automotive Group (PAG). PAG is an up-and- oming...

A: Unlevered or asset beta When a company has only equity and no debt, its beta is known as unlevered o...

Q: Beaver, a city in the United States, is attempting to attract a professional soccer team. Beaver is ...

A: First cost (F) = $360 million Annual upkeep (A) = $730000 Turf replacement every 9 years (T) = $9400...

Q: he following data was reported by Saturday Corporation: Authorized shares: 30,000 Issued shares: 25...

A: Authorized shares are the number of shares that a company is legally allowed to issue.

Q: You want to save the down payment required to purchase a vacation home at the end of five years. If ...

A: Down payment required = $25,000 Interest = 5% Time period = 4 years 

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A: The cost of capital is the minimum return estimated by the analyst and potential investors. The comp...

Q: Suppose you want to have $400,000 for retirement in 35 years. Your account earns 10% interest. How m...

A: We can use the concept of time value of money. Here the monthly deposit is in the form of annuity an...

Q: what is an example of a discounted payback period? which is one of the six models of a capital budge...

A: Before investing in new assets or projects, feasibility of the project is evaluated by using various...

Q: Question 29, P1-10 (similar to) Part 1 of 2 Interest versus dividend expense Michaels Corporation ex...

A: Earnings before tax = Earnings before Interest and tax - Interest expense  

Q: Bon Chance, Inc., has an odd dividend policy. The company has just paid a dividend of $9.50 per shar...

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Q: Time Value of Money You have been hired as a financial advisor to Mr Sam. He has received two offer...

A:

Q: You are buying a $10,000 second hand car with a down-payment of $3,000 and you finance the remaining...

A: Solution:- When a loan is taken, generally equal periodic installments are paid inclusive of interes...

Q: Premier Baking Ltd has recently appointed a new CEO to run its bakery business, which supplies to su...

A: Agency cost In a corporation, shareholders are the owners of the company while the management team a...

Q: Consider a $30,000 loan to be repaid in equal installments at the end of each of the next 5 years. T...

A: Frist we need to use excel to calculate yealy payment of loan. The formula is   =PMT(RATE,NPER,-PV)

Q: Consider a portfolio consisting of the below securities with the below characteristics: Securit...

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Q: Which ONE of the following is not a valid difference between executive and non-executive directors? ...

A: 9. Executive directors are involved in the management of the company, whereas non-executive director...

Q: ABC stock price after 30 days = $80 ABC stock price after 45 days = $95 ABC stock price after 60 day...

A: Put option gives right to sell the stock on the date of expiration but no obligation to sell the sto...

Q: How much will be paid every three months for a loan that amounts to P1 400 500.00 if money is worth ...

A: The loan which is discharged by making installment payments consist of two components as interest mo...

Q: Swing Co. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bo...

A: YTM “yield to maturity” is an important concept for the debt market, basically, it expressed total e...

Q: You purchase a newly issued bond from Apple. The bond has a face value (F) of $1,000; coupon interes...

A: A bond is a debt instrument issued by a company that allows them to borrow a sum of money with the p...

Q: 7.6 Suppose you observe the following par coupon bond yields: 0.03000 (1-year), 0.03491 (2-year), 0....

A: Price of zero coupon bond Zero coupon bond is normally compounded semiannually with par value of $1,...

Q: 1- Consider a project of the Pearson Company. The timing and size of the incremental after-tax cash ...

A: Net Present Value is referred as the method, which are majorly used for the financial analysis for t...

Q: Consider the following three bond quotes: a Treasury note quoted at 97.844, a corporate bond quoted ...

A: A government bond is known as a Treasury bond and a corporate bond is issued by a private institutio...

Q: Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 8.8 percent, a YT...

A: we can calculate the price of the bond by applying the required formula

Q: Assume that your father is now 50 years old, plans to retire in 10 years, and expects to live for 25...

A: Given: Particulars   Current age 50 Plans to retire in 10 Expects to live for 25 Retireme...

Q: Find the amount Amy has at the end of 8 years.

A: Amount/Future Value: It represents the worth of the present amount after over a period of years. It...

Q: An electrical engineer who is anticipating paying for his daughter’s college education plans to star...

A: Calculate the future value of the deposits by using the EXCEL FV function as follows: Working: Thu...

Q: Smiling Elephant, Inc., has an issue of preferred stock outstanding that pays a $4.70 dividend every...

A: Preferred Shareholders are entitled to a predetermined dividend rate. Although there is no legal nee...

Q: A series of cash flows starts at $1,000 at the end of the first year and increases each year for the...

A: Future value of cash flow includes the deposit and plus interest accumulated over the period of time...

Q: Redan, Inc., is expected to maintain a constant 6.05 percent growth rate in its dividends, indefinit...

A: Required return of company = Growth rate of dividend + Dividend yield

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A: Present Value  The present value is the value of cash flow stream or the fixed lump sum amount at ti...

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A: Given: Years =30 Loan = $200,000 Rate caps = 3/2/6 Start rate = 3.50%  

Q: A project requires an immediate investment of $10,000 for the purchase and installation of equipment...

A: A discount rate at which the net present worth of an investment is equal to zero is term as an inter...

Q: Determine by how much an ABC share/ or the ABC firm is over/(undervalued).

A: Solution: We know, Price- earnings ratio = Market value per share / Earnings per share It shows that...

Q: RUE or FALSE: Managers recognize that being socially responsible is not inconsistent with maximizin...

A: For a long time managers only focused on maximizing shareholder value through a relentless focus on ...

Q: 10. Inflation and Nominal Returns Suppose the real rate is 1.8 percent and the inflation rate is 3.7...

A: Real Rate:  It is the rate which the investor would receive by investing the money. The real rate of...

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A: A dividend is a distribution of profits by a company. The company pays dividends to its shareholders...

Q: MEGAFRAME COMPUTER COMPANY   Balance Sheet   As of December 31   ASSETS     Cash $ 50,000...

A: Return on equity(ROE) denotes the return generated by shareholders from invested capital. Net profit...

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Q: he firm is contemplating the following (base case): Vehicle acquisition cost                       ...

A: The enterprise value can be calculated by adding the value of equity and value of debt together. If ...

Q: What yield to maturity is the bond offering?

A: Yield To Maturity: It is the rate of return earned by the bondholder when all the payments of inter...

Q: 3. Pielago is eyeing for another company to invest her excess funds. She is interested in a publicly...

A: Constant Growth Model: Under this model, it is assumed that  dividends paid by the company go up at ...

Q: he firm is contemplating the following (base case): Vehicle acquisition cost                       ...

A: ROE that is return on equity shows the profit available for common stockholders of the corporations ...

Q: Asa has invested money from the settlement of an insurance claim. She plans to withdraw $1,920 from ...

A: Fist we need to calculate present value of all withdrawals by using present value of ordinary annuit...

Q: You plan to borrow P10,000 from your bank, which offers to lend you the money at a 7.5% nominal rate...

A: Borrowed amount is P10,000 Nominal interest rate is 7.5%   To Find: Effective interest rate on a di...

Q: or something to satisfy the medium-of-exchange function of money, it must be  readily exchangeable ...

A: Medium of exchange means that money should be used as an intermediary between a buyer and seller. Su...

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.