Assignment3-Hadi Alaei

Assignment3-Hadi Alaei - Chapter 9 problem 24 Year Cash...

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Assignment 3 Hadi alaei Fundementals of corporate finance Chapter 7 problem 11 Fisher Effect: (1 + R) = (1 + r)(1 + h), where R = nominal rate r = real rate h = expected inflation rate R = r + h H= R- r H= 15%-7% H= 8% Chapter 7 problem 31 Bond M 1,100(4.5%, 16)(4.5%,12)+1,400(4.5%,12)(4.5%,28)+20000(4.5%,40) = 1447.49 Bond N = 20000(4.5%,40)= 3438.57 Chapter 8 problem 18 YLD%= 2.7 Stock(div)=1.36 YLD%= Stock(Div)/Closing price .027= 1.36/Closing price Closing price= 50.38 Closing price for yesterday = 50.38+0.23= $50.61 $50.61/14 = $3.61 per share 3.61*25m= $90,250,000.00 earnings Chapter 8 problem 23 D1 = 2.75 * (1+0.20) = 3.30 D2 = 3.30 * (1+0.15) = 3.80 D3 3.80 * (1+0.10) = 4.18 D4 4.17 * (1+0.05) = 4.39
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P5 = 4.39*1.05/(.13-.05) P5 = 4.60/0.08 = 57.50 For present value calculation: 3.3/(1.3) + 3.80/(1.3)^2 + 4.18/(1.3)^3 + 4.38/(1.3)^4 + 57.50/(1.3)^4 = $46.75
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Unformatted text preview: Chapter 9 problem 24 Year Cash Flow-$756.00 1 $4,293.00 2-$9,105.00 3 $8,550.00 4-$3,000.00 a. The maximum number of IRRs that there can be is equal to the number of times cashflows change signs, so the answer is 4 b. in year 3 because it becomes positive and has highest IRR Chapter 9 problem 25 At 6% cash flow with the initial investment of $925000 (865,000) 60,000 (801,400 ) 63600 (733,984 ) 67416 (662,523 ) 71460.96 (586,774 ) 75748.6176 (506,481 ) 80293.53466 (421,370 ) 85111.14674 (331,152 ) 90217.81554 (235,521 ) 95630.88447 (134,152 ) 101368.7375 (26,701) 107450.8618 87,196 113897.9135 207,928 120731.7883 335,904 127975.6956 a. No it should not be because at 10 year the IRR would only be at 3% and NPV would be -33863.23 b. . At a 17% growth rate the IRR would be 13%....
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Assignment3-Hadi Alaei - Chapter 9 problem 24 Year Cash...

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