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More practice - interest rate and monthly payments What are...

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FIN 3301 Name_______________________ More practice Due: Monday, October 5 Show all your work. Time lines, formulas, and inputs to your financial calculator as needed. Problem # 1 You have been offered a 7-year investment at a price of \$50,000. It will pay \$5,000 at the end of year 1, \$10,000 at the end of year 2, and \$15,000 at the end of year 3, plus a fixed but currently unspecified cash flow, X, at the end of Years 4 through 7. The payer is essentially riskless, so you are sure the payments will be made, and you regard 9% as an appropriate rate of return on riskless 7-year investments. What cash flow must the investment provide at the end of each of the final 4 years, that is, what is X? Problem # 2 You are buying your first house for \$220,000, and are paying \$30,000 as a down payment. You have arranged to finance the remaining \$190,000 30-year mortgage with a 7% nominal
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Unformatted text preview: interest rate and monthly payments. What are the equal monthly payments you must make? Problem # 3 Ken Williams Ventures' recently issued bonds that mature in 15 years. They have a par value of \$1,000 and an annual coupon of 6%. If the current market interest rate is 8%, at what price should the bonds sell? Problem # 4 Yest Corporation's bonds have a 15-year maturity, a 7% semiannual coupon, and a par value of \$1,000. The going interest rate (r d ) is 6%, based on semiannual compounding. What is the bond’s price? Problem # 5 Moussawi Ltd's outstanding bonds have a \$1,000 par value, and they mature in 5 years. Their yield to maturity is 9%, based on semiannual compounding, and the current market price is \$853.61. What is the bond's annual coupon interest rate?...
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