Determine Universal Life Policy Cash Flows

Finance: Universal Life Policy Table The following table provides information about a universal life policy. Fill in the Table Year 1 Year 2 Year 3 Cash value at beginning of year $10,000 Premium pa...

Risk & Portfolio Question

You have decided to invest all your wealth in two mutual funds: A and B. Their returns and risks are as follows: • the mean returns are rA = 15% and rB= 11% • the covariance matrix is rA rB rA 0.04 0.025 rB 0.025 0.032 You want your total portfolio to yield a return of 1...

Buy a Note or Money in Bank?

Suppose someone offered to sell you a note that calls for a $1,000 payment three years from today. The person offers to sell the note for $850. You have $850 in a bank time deposit (savings instrument) that pays a 6.77%APR with daily compounding; and you plan to leave this money in the bank unless y...

Finding the future values

(a) Will the future value be larger or smaller if we compound an initial amount more often than annually—for example, every 6 months, or semiannually—holding the stated interest rate constant? Explain your answer. (b-1) What is the future value of $200 after three years under 12% semiannual co...

Annuities: Future and Present Values

(a) What is the future value of a 3-year ordinary annuity (recall that ordinary annuities have end of year cash flows) of $200 if the appropriate interest rate is 12%? (b) What is the present value of the annuity? (c) What would the future and present values be if the annuity were an annuity due...

All About Annuities

(a) What is the difference between an ordinary annuity and an annuity due? (b) What type of annuity is shown in the following cash flow timeline? (c) How would you change it to the other type of annuity?

How long for a sum of money to grow, how to double an investment

We sometimes need to find how long it will take a sum of money (or anything else) to grow to some specified amount. (a) For example, if a company's sales are growing at a rate of 18%per year, approximately how long will it take sales to triple? (b) If you want an investment to double in 3 years,...

Future and Present Values

(a) If you deposit $200 in the bank today, what is its future value at the end of three years if it is invested in an account paying 12% annual interest, assuming annual compounding? (b) What is the present value of $200 to be received in three years if the appropriate interest rate is 12% (annu...

Savings Rates

When it comes to saving disposable income, Americans have a remarkably low savings rate. Find sources that compare the savings rates of Asian and European countries to that of the U.S.A. Discuss your observations and put the savings habits of someone you know on the scale.

Risk & Portfolio Choice

Assume that it is possible to borrow and lend risklessly at a rate of 4%. Also assume that the expected return on the tangency (i.e., the optimal) portfolio composed only of risky assets is 13% with a standard deviation of 18%. Below we list 6 pairs of expected return and standard deviation combinat...

Amortization

In this problem, you will create an amortization schedule for a car loan for 5 years with a fixed APR given. Steps to Perform: 2 In cell B10, enter the balance at the beginning of month 1. Format cell B10 as Currency with 2 decimal places. 3 In cell B11, enter the balance at the beginning o...

Acme Stock Options Problem

Acme stock is trading at $120 per share, and the company will not pay any dividends over the next year. Consider an Acme European call option and a European put option, both having an exercise price of $124 and both maturing in exactly one year. The simple (annualized) interest rate for borrowing an...

Shares of Novotel: Options example

Shares of Novotel will sell for either $150 or $80 three months later, with probabilities 0.60 and 0.40, respectively. A European call with an exercise price of $100 sells for $25 today, and an identical put sells for $8. Both options mature in three months. What is a price of a three-month zero-cou...

Applying Financial Analysis Tools

How to analyze a company financial performance, using the following tools: Profitability Analysis Profit Margin Analysis Asset Turnover Fixed Asset Turnover Rate of Return on Common Shareholders' Equity Earning Per Common Share

Business Math: Percentages, Original Price, Value of Investments

1. Of the 45 U.S. presidents, 4 have been assassinated in office. What percent have been assassinated? Round the percentage to two decimal places. 2. The total expenses for Claire's recent business trip were $1040. She put $884 on her charge card and paid the balance in cash. What percentage...

Forward and Futures

During the summer you had to spend some time with your uncle, who is a wheat farmer. Your uncle, knowing you are studying for an MBA at Harvard, asked your help. He is afraid that the price of wheat will fall, which will have a severe impact on his profits. Thus he asks you to compute the 1yr forwar...

Financial Project: Quantitative Reasoning

As an Ivy Tech student, you are making an investment in your education. This project will look at how that investment will pay off if you graduate and get a job in your desired field. The median annual income for a high school graduate is $25,000. This is the value that you will be comparing you...

Credit Card Calculations

1. Create an Excel spreadsheet that can do the calculations for the credit card below. Using formulas and the drag function of Excel (see the notes), find the values for 1 year of charges. With a beginning balance of $1950 and no additional charges, you will just pay the minimum payment each mon...

Share price and investment decisions of Zeus Solutions

Zeus Solutions (ZS), an online advertising company, expects next year's after tax earnings to be $20 per share. Its business is still expanding. It plows back 80% of its earnings. The ROE on its new investments is 15%. Its cost of capital is 12.5%. (a) What is the share price of Zeus Solutions? W...

Finance: Cost of capital calculations

1) You are an analyst in a major investment bank and have been assigned the task of determining the share price of Foodmart, a national supermarket chain. The stock beta is 1.286, Rf=3%, Rm=10%. The cost of debt is 6.82%. The tax rate is 34% and the firm is 40% debt financed. Calculate the WACC for...

Amortization Schedule Computations

John Gunho wants to purchase a condominium, he will be taking out a mortgage for the condo. The purchase price for the condo is $42,000 at an annual rate of 7.2%. He reviewed his options for the term, and he knows the effects of compounding interest, so he plans to take a one year term mortgage. (...

Orange County Health: Expected Dividend, Stock Price, P/E Ratio

Orange County Health, a health service company, is expected to generate $1 in earnings per share next year and in the years to follow, from its existing assets. It plans to announce a new program to expand its business. This new program will increase its plow back ratio from zero to 50% next year. T...

TVM, Share Price, CAPM Questions

1) What is the holding period return (percentage return on this investment) to an investor who bought 100 shares of Charter Oil nine months ago for $36 a share, received two $50 dividend checks, and sold the stock today at $38 a share? 2) What is the market price of a share of stock for a firm th...

Stocks and Averages in Excel

Hi I'm having some issues with the numbers below. I'm using Excel to complete all problems 1-15 however I only need help on the ones below. 1. You buy a stock for $20. After a year the price rises to $25 but falls back to $20 at the end of the second year. What was the average percentage return ...

Capital Structure and Dividends: Bed, Bath and Beyond Stock

Please take a look at Bed Bath and Beyond's stock prices here and help me answer the following questions: https://finance.yahoo.com/quote/BBBY?p=BBBY Please review the company's dividends over the past three years. Then, answer the following questions in Word (except for the Excel portion specif...

Steel mill production planning

A steel mill produces two types of steel alloy: boral and chromal. Production of each alloy requires three processes: Box anneal, Cold Roll, and Strand anneal. Production capacities are: Box anneal: 4,000 hours/month Cold Roll: 500 hours/month Strand anneal: 1,000 hours/month Production rates in...