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Unformatted text preview: 1 An investor expects the value of a $1,000 investment to triple within 12 years. What is the expected annual rate of growth in the investment? 9.6% , check 1000 x 1.096^12 = 3000 2. A firm has a total debt of $1,000,000 and equity of $600,000. What is the debt/net worth ratio and the debt-to-total assets ratio for the firm? Show your calculations. 1000000/600000 = 1.67 times . 1000000/1600000 = 62.5% 3. Briefly, explain the implications of a negatively sloped yield curve. When ever a yield curve is sloped negatively it means that yield curve is downward moving the reason why a yield curve slopes downwards is the decrease in interest rates. 4. What is the present value of a $100,000 investment received 10 years from today, if the annual rate of interest is 6 percent? Show your calculations. 100000*0.558=55800 5. A bond has a principal amount of $1,000, an annual interest payment of $90, and a maturity of 20 years. What is 5....
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- Spring '11