Module9HWSol

# Module9HWSol - Module 9 Chapter 4 D17 &amp; 18 We assume...

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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
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## This note was uploaded on 01/11/2012 for the course EIN 4354 taught by Professor Tufecki during the Fall '08 term at University of Florida.

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Module9HWSol - Module 9 Chapter 4 D17 &amp; 18 We assume...

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