Fin 516 Week 3 Homework

 

Click the below link to access the answerFIN 516 Advanced Managerial Finance Week 4 Qui A! Answer

FIN 516 Advanced Managerial Finance Week 4 Qui AnswerFIN 516 Advanced Managerial Finance Week 4 Qui Answer1" Question # $%C& C' (lease Inc" has a ca)ital budget o* +6,5-...- and it wants to /aintain a target ca)ital structure o* 6. )ercent debt and 4. )ercent e0uit" %he co/)an *orecasts a net inco/e o* +425-..." I* it *ollows the residual dividend )olic- what is its *orecasted dividend )aout ratio3$a' 4."61$b' 4,"25$c' 45"..$d' 42"2$e' 4"24 ," Question # $%C& F' Chocolate Factor7s convertible debentures were issued at their +1-... )ar value in ,.." At an ti/e )rior to /aturit on Februar 1- ,.,- a debenture holder can e8change a bond *or ,5 shares o* co//on stock" What is the conversion )rice- 9c3$a' +4."..$b' +4,"..$c' +44"1.$d' +46"1$e' +4:"6, " Question # $%C& (' Ang ;nter)rises has a levered beta o* 1"1.- its ca)ital structure consists o* 4. )ercent debt and 6. )ercent e0uit- and its ta8 rate is 4. )ercent" What would Ang7s beta be i* it used no debt- i"e"- what is its unlevered beta3$a' ."64$b' ."62$c' ."21$d' ."25$e' ."2 4" Question # $%C& (' Fir/ < has debt with a /arket value o* +,..-... and a ield o* nine )ercent" %he *ir/7s e0uit has a /arket value o* +..-...- its earnings are growingat a rate o* *ive )ercent- and its ta8 rate is 4. )ercent" A si/ilar *ir/ with no debt has a cost o* e0uit o* 1, )ercent" =nder the MM e8tension with growth- what is Fir/ <7s costo* e0uit3$a' 11"4$b' 1,".$c' 1,"6$d' 1"$e' 14".

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Week 3 Assignment 1
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1. Calculating the Number of Periods
At 8 percent interest, how long does it take to double your money? To quadruple it?

FV = PV (FVF) 8%, t = ?
$2 = $1 (FVF) 8%, t = ?
$2/ 1 = 2.0; so for FVF at 8 %, “t” is approximately 9 years.

2. Perpetuities
An investor purchasing a British consul is entitled to receive annual payments from the British government forever. What is the price of a consul that pays $160 annually if the next payment occurs one year from today? The market interest rate is 4.5 percent.

PV = C / r
PV = $160 / 0.045
PV = $3,555.56

3. Present Value and Multiple Cash Flows
Investment X offers to pay you $6,000 per year for nine…show more content…

How much can you withdraw each month from your account assuming a 25-year withdrawal period?
Note. You may use Excel to answer this question.

1st PMT = 800, I = 11/12 = .9166, N = 30 * 12 = 360
Solve FV = 2,243,224.67 Stock 1st PMT = 350, I = 6/12 = .5, N = 30 * 12 = 360
Solve FV = 351,580.26
Bonds FV of Stocks and Bonds = 2,243,224.67 + 351,580.26 = 2594804.93 2nd I = 8/12 = .67, N = 25 * 12 = 300 PVA = 2594804.93 = C*[1 + {1 / [1 + (.067/12)^300} / (.067/12)] = PMT(0.067/12,300,2594804.93) = 17,845.97 or 17846

6. Growing Perpetuities
Mark Weinstein has been working on an advanced technology in laser eye surgery. His technology will be available in the near term. He anticipates his first annual cash flow from the technology to be $210,000, received three years from today. Subsequent annual cash flows will grow at 3 percent, in perpetuity. What is the present value of the technology if the discount rate is 12 percent?

[210,000 / (12% - 3%)] / 1.12 = $2,083,333

7. Amortization with Equal Payments
Prepare an amortization schedule for a three-year loan of $69,000. The interest rate is 9 percent per year, and the loan calls for equal annual payments. How much interest is paid in the third year? How much total interest is paid over the life of the loan?

Year | Beg. Balance | Total Payment | Interest Payment | Principle Payment | Ending Balance | 1 | $ 69,000.00 | $ 27,258.78 | $ 6,210.00 | $

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