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Module9HWSol - Module 9 Chapter 4 D17 18 We assume interest...

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Module 9 Chapter 4 D17 & 18 We assume interest rate is constant. The true cost of the loan is . Time, n B n-1 PP n IP n A n 1 $50,000,000 $10,000,000 $3,250,000 $13,250,000 2 $40,000,000 $15,000,000 $2,600,000 $17,600,000 3 $25,000,000 $15,000,000 $1,625,000 $16,625,000 4 $10,000,000 $5,000,000 $650,000 $5,650,000 5 $5,000,000 $5,000,000 $325,000 $5,325,000 D20 Equating the purchase price and payment received D21 Since the bond is purchased at par, yield to maturity will be the coupon rate, which is 6.5% ÷ 2 = 3.25% per 6 months, or 1.0325 2 1 = 6.61% per year. D22 Coupon payment = $10,000 × 0.065 / 2 = $32.50. Equating the purchase price and payments received Using Goal Seek, the yield is 3.67% per six months. Hence the annual yield is . D27 Number of stocks at the end of 20414 = 50 × 2 3 × 3 = 1,200. Equating the amount paid and received,
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A4 a) Period Interest Principal Total Loan Balance 0 -- -- -- $2,500,000.00 1 $75,000.00 $156,250.00 $231,250.00 $2,343,750.00 2 $70,312.50 $156,250.00 $226,562.50 $2,187,500.00 3 $65,625.00 $156,250.00 $221,875.00 $2,031,250.00 4 $60,937.50 $156,250.00 $217,187.50 $1,875,000.00 5 $56,250.00 $156,250.00 $212,500.00 $1,718,750.00 6 $51,562.50 $156,250.00 $207,812.50 $1,562,500.00 7 $46,875.00 $156,250.00 $203,125.00 $1,406,250.00 8 $42,187.50 $156,250.00 $198,437.50 $1,250,000.00 9 $37,500.00 $156,250.00 $193,750.00 $1,093,750.00 10 $32,812.50 $156,250.00 $189,062.50 $937,500.00 11 $28,125.00 $156,250.00 $184,375.00 $781,250.00 12 $23,437.50 $156,250.00 $179,687.50 $625,000.00 13 $18,750.00 $156,250.00 $175,000.00 $468,750.00 14 $14,062.50 $156,250.00 $170,312.50 $312,500.00 15 $9,375.00 $156,250.00 $165,625.00 $156,250.00 16 $4,687.50 $156,250.00 $160,937.50 $0.00 b) For an equal total payment plan, the quarterly payment will be
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