This preview shows pages 1–2. Sign up to view the full content.
FIN 3301
Name________________________
Homework # 1
Due: Monday, February 22
Show all your work.
Time lines, formulas, and inputs to your financial calculator as
needed.
Problem # 1
Suppose a government bond will pay $1,000 three years from now.
If the going interest rate on
3year government bonds is 4%, how much is the bond worth today?
Problem # 2
Addico Corp's 2005 earnings per share were $2, and its growth rate during the prior 5 years
was 11.0% per year.
If that growth rate were maintained, how long would it take for
Addico’s EPS to double?
Problem # 3
You want to buy a condo 5 years from now, and you plan to save $3,000 per year, beginning
immediately
.
You will make 5 deposits in an account that pays 6% interest.
Under these
assumptions, how much will you have 5 years from today?
Problem # 4
What annual payment would you have to receive in order to earn an 8% rate of return on a
perpetuity that cost $1,500?
Problem # 5
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview. Sign up
to
access the rest of the document.
 Spring '10
 hooreman
 Finance, Interest, Interest Rate

Click to edit the document details