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- Provide cash-flow diagram if applicable. The PH debt as of today amounts to 12 trillion. This balloons with an interest rate of 0.16% yearly. Suppose thegovernment requires every earning individual to pay the debt by 2030, how much each of us would need to paymonthly (annual payment amortized in 12 equal payments), assuming that inflation is 3%, the interest rate is 5.6%compounded daily, and we will start the payment by the end of 2022? The Philippines is estimated to have 110million people, with the work force of around 20%.Housing PricesConsider a 1,500 square foot house, which rents monthly for $0.75 per square foot. Prevailing interest ratesare 5 percent, and remain constant(a) Assuming the rent is constant, and that you cannot resell the home, what is the most you’d be willingto pay for it?(b) Now suppose you could sell the house after 4 years, what is the most you’d be willing to pay for it?(c) Suppose that the house requires a constant annual maintenance cost of $500 to last forever, how muchare you willing to pay for it today?(d) If rent is not constant, but grows at a rate of 0.5 percent per year, how much would you pay for thehouse? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sureTwo oil wells are for sale. The first will yield payments of $11,400 at the end of each of the next 11 years, while the second will yield $6,100 at the end of each of the next 24 years. Interest rates are assumed to hold steady at 7.9% per year over the next 24 years. Which has the higher present value? the first oil wellthe second oil well they are the samecannot be determined
- 2. The municipality of Trento has arranged to borrow P30 million in order to implement several publicprojects (flood control, drainage system, etc.). The interest rate will be 3% per year, payable at theend of each year. This P30 million debt will be retired by making principal payments of P5 million atthe end of each year. The SB Members is concerned that it will take too long to pay off this debt. Howmany years will it take to fully pay the P30 million debt and its associated interest payments? (5 pts)(Show the Cash flow diagram and your solutions).The Turners have 10 years to save a lump-sum amount for their child’s college education. Today a four-year college education costs $75,000, and this is expected to increase by10%per year into the foreseeable future. a. If the Turners can earn 6% per year on a conservative investment in a highly rated taxfree municipal bond, how much money must they save each year for the next 10 years to afford to send their child to college? b. If a certain college will “freeze” the cost of education in 10 years for a lump-sum of current value $150,000, is this a good deal?a) Suppose you put $350 into a bank account today. Interest is paid annually and the annual interest rate is 6 percent. What is the future value of the $350 after 4 years? b) Suppose you are deciding whether to buy a particular bond from your local municipality. If you buy the bond and hold it for 4 years, then at that time you will receive a payment of $10,000. Assume the interest rateis6percent. Underwhatcircumstanceswillyoubuythebond?Meaninguptowhatpriceareyou willing to pay.
- Find the present worth today in real value corresponding to the cur- rent values shown below for a 4 percent ination rate and a 4 percent interest rate. a. $400 three years from now b. $400 three years ago c. $10 next year d. $350 983 in 10 years from now e. £1 one thousand years ago the answer is 292 f. $1 000 000 000 three hundred years from nowLewis’s management has been considering movingto a new downtown location, and they are concerned that these plans may come to fruition priorto the equipment lease’s expiration. If the moveoccurs then Lewis would buy or lease an entirelynew set of equipment, so management wouldlike to include a cancellation clause in the leasecontract. What effect would such a clause haveon the riskiness of the lease from Lewis’s standpoint? From the lessor’s standpoint? If you werethe lessor, would you insist on changing any ofthe other lease terms if a cancellation clause wereadded? Should the cancellation clause containprovisions similar to call premiums or any restrictive covenants and/or penalties of the type contained in bond indentures? Explain your answer.Gabe purchases a $500 bond that has 6 remaining semi-annual 6% coupon payments for $450. What would be his return per half year period? Round entry to 1 decimal place. The tolerance is ±0.4.
- ▼ 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 $.(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 $.(Round your response to the neareast two decimal place)▼ 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 $.(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 $.(Round your response to the neareast two decimal place)A bank is in the processing of rescheduling a $10 million loan paying 14% interest. If liquidated, it expects to receive $8.4 million. The rescheduling terms are as follows: Amount $10,000,000 in year 0 New maturity in years 5 Interest rate 8% Principal payments in millions $5,000,000 each in years 4 and 5 Upfront-fee 1.00% Cost of capital after rescheduling 14.00% Should the bank reschedule the loan? A Yes, reschedule the loan because the NPV is greater than liquidation value B No, do not reschedule the loan because the liquidation value is lower than the NPV C Reschedule the loan only if the cost of capital after rescheduling is 12% D Reschedule the loan only if the cost of capital after rescheduling is 15%