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Q1. How would you choose the discount rate to apply to these cash flows?
Answer:
Economic Factors
: Inflation, Future expectation, and the I/R for the
economy.
Risks:
Systematic risk, Liquidity, Commodity, Price Risk (even foreign
exchange risk)
Q4)
a)
use financial calculator and input information
FV= 35,000
N=
6
I/Y= 8.4
PMT= 0
PV= ?
21,572.1
b)
FV= 35,000
N=
6
I/Y= ?
11.72%
PMT= 0
PV=
18,000
c)
FV= 35,000
N=
6
I/Y= ?
5.69788
* 2 =
11.3576
PMT= 0
PV=
18,000
5a. Ordinary Annuity
b.N = 6
I/Y = 8.4
PV = 0
PMT = 3000
FV = ? = 22230.94
c.N = 6
I/Y = 8.5764
PV = 0
PMT=3000
FV = ? = 22330.08
press 2
nd
ICONV =
8.4
C/Y = 2
EFF = ? = 8.5764
d. N=6
I/Y = 8.4
PV = 0
FV = 35000
PMT = ? = 4723.15
e. N=6
I/Y=8.4
PMT = 0
FV = 22230.94
PV = 13701.94
f.
annual
P/Y = 2
C/Y= 1
I/Y=8.4
N = 12
PMT = 1500
FV= ? =22688.38
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View Full Documentsemiannual
P/Y = 2
C/Y= 2
I/Y=8.4
N = 12
PMT = 1500
FV= ? =
22799.01
quarterly
P/Y = 2
C/Y= 4
I/Y=8.4
N = 12
PMT = 1500
FV= ? = 22856.88
Q7A. Now consider the schedule of payments from Table 1.
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 Spring '08
 Qayyum
 Liquidity

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