Exam Melb. Sem.1 07 (A)

# Exam Melb. Sem.1 07 (A) - RMIT FINAL EXAMINATION...

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SECTION B Students are required to answer 8 of the below 14 question. The section counts for a total of 40 of the 100 marks available on the exam paper and each of the questions counts for 5 marks. Question 1 Explain in simply terms what you would need to know and how you would go about determining the interest and principal components of a loan repayment. Question 2 Five years ago Chris entered into a loan agreement to borrow \$200,000, and repay the loan over 20 years through equal monthly instalments. If the interest rate was fixed at 8% p.a. for the entire term of the loan, what is the amount of each monthly instalment: Question 3 Club Auto Parts’ last dividend, D 0 was \$0.50, and the company expects to experience no growth for the next 2 years. However, Club will grow at an annual rate of 5% in the third and fourth years, and, beginning with the fifth year, it should attain a 10% growth rate which it will sustain thereafter. Club has required rate of return of 12%. Calculate the value of the stock today. Question 4 You have just purchased 10 newly issued \$100 five year ABC Company Ltd.
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