problemset7

problemset7 - ECN801, V. Bardis Problem Set 7 1. (Similar...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECN801, V. Bardis Problem Set 7 1. (Similar to 7.32) A company that makes clutch disks for race cars had the cash flows shown below for one department. (a) State the equation for calculating the ROR of the project using the discount factor δ =1/(1+i). (b) Suppose the real solutions of this equation (i.e., values of the discount factor) are .77735, 2.2711, -1.1049, -2.7769. What is the project’s ROR? (c) What is the project’s composite rate of return, using a reinvestment rate of 15% per year. Year Cash Flow, $1000 0 –65 1 30 2 84 3 –10 4 –12 2. (7.33) For the cash flow series below, calculate the composite rate of return, using a reinvestment rate of 14% per year. Year Cash Flow, $ 0 3000 1 –2000 2 1000 3 –6000 4 3800 3. (7.36) A $10,000 mortgage bond with a bond interest rate of 8% per year, payable quarterly, was purchased for $9200. The bond was kept until it was due, a total of 7 years. What rate of return was made by the purchaser per 3 months and per year (nominal)? 4. (7.38) A collateral bond with a face value of $5000 was purchased by an investor for $4100. The bond
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/24/2011 for the course CPS 125 taught by Professor Panzer during the Winter '11 term at Ryerson.

Page1 / 2

problemset7 - ECN801, V. Bardis Problem Set 7 1. (Similar...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online