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HW # 1 - FIN 3301 Homework 1 Due Monday February 22 Name...

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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 3-year 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 What’s the present value of $2,000 discounted back 3 years if the appropriate interest rate is 8%, compounded semiannually?
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