PRIN.OF CORPORATE FINANCE >BI<
12th Edition
ISBN: 9781260431230
Author: BREALEY
Publisher: MCG CUSTOM
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Chapter 2, Problem 29PS
Compounding intervals A leasing contract calls for an immediate payment of $100,000 and nine subsequent $100,000 semiannual payments at six-month intervals. What is the PV of these payments if the annual discount rate is 8%?
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A leasing contract calls for an immediate payment of $101,000 and nine subsequent $101,000 semiannual payments at six-month intervals. What is the PV of these payments if the annual discount rate is 9%? (Hint: First find the semiannual rate that is equivalent to the annual rate.)
A leasing contract calls for an immediate payment of $118,000 and nine subsequent $118,000 semiannual payments at six-month intervals. What is the PV of these payments if the annual discount rate is 12%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
A leasing contract calls for an immediate payment of $100,000 and nine subsequent $100,000semiannual payments at six month intervals. What is the PV of these payments if the annual discount rateis 8 percent?
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Chapter 2 Solutions
PRIN.OF CORPORATE FINANCE >BI<
Ch. 2 - (FV) In 1880, five aboriginal trackers were each...Ch. 2 - Prob. 2SQCh. 2 - (PV) Your company can lease a truck for 10,000 a...Ch. 2 - (RATE) Ford Motor stock was one of the victims of...Ch. 2 - Prob. 5SQCh. 2 - Prob. 6SQCh. 2 - Prob. 8SQCh. 2 - (NOMINAL) What monthly compounded interest rate...Ch. 2 - Future values If you invest 100 at an interest...Ch. 2 - Discount factors If the PV of 139 is 125, what is...
Ch. 2 - Prob. 3PSCh. 2 - Prob. 4PSCh. 2 - Opportunity cost of capital Which of the following...Ch. 2 - Perpetuities An investment costs 1,548 and pays...Ch. 2 - Growing perpetuities A common stock will pay a...Ch. 2 - Prob. 8PSCh. 2 - Present values What is the PV of 100 received in:...Ch. 2 - Continuous compounding The continuously compounded...Ch. 2 - Compounding intervals You are quoted an interest...Ch. 2 - Future values and annuities a. The cost of a new...Ch. 2 - Prob. 13PSCh. 2 - Present values A factory costs 800,000. You reckon...Ch. 2 - Present values A machine costs 380,000 and is...Ch. 2 - Opportunity cost of capital Explain why we refer...Ch. 2 - Present values A factory costs 400,000. It will...Ch. 2 - Present values and opportunity cost of capital...Ch. 2 - Prob. 19PSCh. 2 - Prob. 20PSCh. 2 - Annuities David and Helen Zhang are saving to buy...Ch. 2 - Annuities Kangaroo Autos is offering free credit...Ch. 2 - Present values Recalculate the NPV of the office...Ch. 2 - Prob. 24PSCh. 2 - Prob. 25PSCh. 2 - Continuous compounding How much will you have at...Ch. 2 - Perpetuities You have just read an advertisement...Ch. 2 - Compounding intervals Which would you prefer? a....Ch. 2 - Compounding intervals A leasing contract calls for...Ch. 2 - Annuities Several years ago, The Wall Street...Ch. 2 - Prob. 31PSCh. 2 - Prob. 32PSCh. 2 - Prob. 33PSCh. 2 - Prob. 34PSCh. 2 - Prob. 35PSCh. 2 - Amortizing loans Suppose that you take out a...Ch. 2 - Prob. 37PSCh. 2 - Annuities Use Excel to construct your own set of...Ch. 2 - Declining perpetuities and annuities You own an...
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- Calculating single-payment loan amount due at maturity. Stanley Price plans to borrow 8,000 for five years. The loan will be repaid with a single payment after five years, and the interest on the loan will be computed using the simple interest method at an annual rate of 6 percent. How much will Stanley have to pay in five years? How much will he have to pay at maturity if hes required to make annual interest payments at the end of each year?arrow_forwardCost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?arrow_forwardCalculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five years at 7 percent. Payments, which are made on a monthly basis, are determined using the add-on method. a. How much total interest will Eli pay on the loan if it is held for the full five-year term? b. What are Elis monthly payments? c. How much higher are the monthly payments under the add-on method than under the simple interest method?arrow_forward
- 14. A leasing contract calls for an immediate payment of $100,000 and nine subsequent $100,000semiannual payments at six month intervals. What is the PV of these payments if the annual discount rateis 8 percent?arrow_forward160000 TL loan is being repaid by installments of 2250 TL at the end of each month for as long as necessary, plus a final smaller payment. If interest is at J12 = 12%, find the outstanding balance at the end of 7 years.arrow_forwardPlzz soon A contract can be fullfilled by making an immediate payment of $5564, or equal payments at the end of every month for 8 years. what is the size of the monthly payments at 9% per annum compounded quarterly?arrow_forward
- A loan of R22 000 is granted at 14% pa effective. The loan is to be amortized by forty-two consecutive equal monthly payments Rx. If the first payment is made ten months after the loan is granted, then Rx (rounded to the nearest cent) is equal to:arrow_forwardAn outright purchase of $20,000 now (a lump-sum payment) can be traded for 24 equal payments of $941.47 per month, starting one month from now. What is the monthly interest rate that establishes equivalence between these two payment plans?arrow_forwardTo repay a $400,000 loan you are required to make sixteen equal-sized repayments every six months. If the loan's interest rate is 5% p.a. compounded half-yearly, how much interest is paid in the first period? Group of answer choices $30,639.60 $20,639.60 $10,000.00 $20,000.00arrow_forward
- A monthly amortizing, $ 100,000 fixed-rate loan amortizes fully in 30 years and has a contract rate of 6%. Total initial friction costs equal $ 6,000 What is the monthly payment? The loan is pre-paid after 4 years. What is the loan balance? What is the EBC, if no pre-payment penalties are applied?arrow_forwarda demand loan of 7000$is repaid by payments of 3500$ after two years, 3500$ after four years and a funal payment after seven years. interfest rate is 9% compunded quarterly for the first two years, 10% compoiunded annuannly for the next two years, and 10% compounded mointhly thereafter. what is the size of the final payment?arrow_forwardSubject: Financial strategy & policy 1) A leasing contract calls for an immediate payment of $100,000 and nine subsequent $100,000 semiannual payments at six month intervals. What is the PV of these payments if the annual discount rate is 8 percent? 2) Siegefried Basset is 65 years of age and has a life expectancy of 12 more years. He wishes to invest $20,000 in an annuity that will make a level payment at the end of each year until his death. If the interest rate is 8 percent, what income can Mr. Basset to receive each year?arrow_forward
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