period, interest is earned on the original principal plus the interest earned during the first period. number of years Annuity a series of equal dollar payments made for a specified Annuity Due annuity in which the payments occur at the beginning of each period Perpetuity an annuity with an infinite life Amortized Loan a loan that is paid off in equal periodic payments Risk potential variability in future cash flows standard deviation -a measure of risk when looking at stock in isolation
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next 10 years. • a. If the appropriate discount rate for the asset is 8 percent, should you purchase it? • b. What is the IRR of the asset? Exercício 2 • You just took a $10,000, five-year loan. • Payments at the end of each year are flat (equal in every year) at an interest rate of 15 percent. Calculate the appropriate loan table, showing the breakdown in each year between principal and interest. Exercício 3 • You are offered an investment with the following conditions: • The cost of
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those savings would be $30 billion in Year 1, and $28.57 in current dollars (still discounted at 5%). HP executives valued the $1.5 billion in after tax cost savings as incremental earnings that extend into perpetuity. Since HP’s P/E ratio at the time was about 20, they valued the incremental earnings stream by multiplying the $1.5 billion by 20. Because the incremental earnings would occur in two years, HP discounted the associated $29.4 billion by about 15% per year. There is no attempt to
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simple interest. How much money will he have in ten years? | A. | $8,710 | | B. | $9,000 | | C. | $9,300 | | D. | $9,678 | | E. | $10,099 | 10 points QUESTION 2 1. According to the Rule of 72, you can do which one of the following? | A. | double your money in five years at 7.2 percent interest | | B. | double your money in 7.2 years at 8 percent interest | | C. | double your money in 8 years at 9 percent interest | | D. | triple your money in 7.2 years at 5 percent
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University of La Verne College of Business & Public Management BUS 500D Business Finance Online Assignment #4 This work represents 13% of your course grade. Please post to Blackboard by Monday February 29 at Midnight. Make sure your name is on all file titles. Question #1: WACC & Capital Budget Analysis (Chapters 9-10-11) – 75% Based on the inputs below prepare a capital budget analysis for this Base Case using the Net Present Value, Internal Rate of Return, Profitability Index
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Topic 1: Financial Markets 1. (a) From the viewpoint of the market maker: On the 4,000 shares: (4,000*102 1/2) – (4,000*102 1/4) = $1,000 Value of the inventory at the end of the day: (-6,000*102 1/4) = -$613,500 -Inventory is priced as the cost of goods sold, so the -6,000 shares are priced at the bid, at which the market maker bought the shares. (b) Profit from day 1: (6,000*102 1/2) = $615,000 -6,000 additional shares were sold day 1 at the ask price of 102 1/2; therefore, the profit from
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Corporate Finance Multiple Choice Test October 2010 On the following pages you will find 34 questions. The questions are intended to test your understanding of chapter 1 – 3, 5 – 14 and 17 in the 9th edition of the Brealey, Myers and Allen textbook including appendices but excluding quizzes, practical questions, challenge questions, and mini-cases. Therefore, the questions have been sorted according to chapters in the Brealey, Myers and Allen textbook. On the last paper you will see the following
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an investor lends you money and at the agreed date you must repay the money together with the fee charged for the use of the money, known as the interest * Interest is income from the money (capital) invested. * The capital originally invested is called the princible while the sum of the princible and the interest is called the future value. * Most interest transactions are described by the rate of interest, which is the ratio of the interest earned in one time unit to the principal
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Calculator Basics Calculator Basics Setting up your Calculator Find the 2nd Key in the upper left Setting the number of decimal places 2nd key then Format key Display reads DEC 4 then Enter, CE/C to clear display Setting payments to End of period (if BGN appears in display) 2nd key then BGN key (display BGN) 2nd key then SET key (display END CE/C to clear display Schweser Library Calculator Basics for the TI BAII PLUS® including the Professional Edition Schweser Library Calculator
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and she is required to work long hours during the week and even on weekends, leaving little time for outside interests. Her decision to work at this job is an example of (Points : ------------------------------------------------------------------------------------------------ BUSN 380 Week 1 Problem Set 1 FOR MORE CLASSES VISIT www.busn380study.com TCO 1 Time value of money relationships & applications; opportunity costs; personal financial statements -Problem Set 1
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