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Module9HWSol

# 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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