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172A 2011 Exam 2

# 172A 2011 Exam 2 - Tacy1 whn is age 25 malty currently has...

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Unformatted text preview: Tacy1 whn is age 25 malty, currently has \$_5ﬂ,ﬂﬂﬂ ‘m a retirement aeenunt that credits interest at 5.5%. [LII so she starts savhtg ﬁt. of her pay each She would like to retire at age 55 with \$2,.ﬂﬂﬂ,l} um in the Hﬁdrﬂe'ef eachyrear. year and depeeits it into the same retirement Her pay for the current year is ESGJJII'JI] and ehe’i expects pay increases of 2.5% eaehyear thereafter. I ' r k7lrﬁi-matersh ‘- I____,_._|.——-——--r----—-— wreak x. .. mam ® '5" 2,1.kg‘7. Calmﬂate x. Math lﬂA- Secondﬁzam- 11:13:11 Name: 1. Tacy, who is age 25 anally, mncnﬂy has \$5ﬂ,ﬂﬂﬂ in a reﬁxﬂnmt acchnt that credits interest at 5.5%}. She wmﬂd HI'EE to retire at age 55 with \$2,ﬂﬂ0,ﬂﬂﬂ 50 she starts gaming 36% 101? he: pay Each year and deposits it into the same reﬁrmnmt account in the middle of cachyear. Her pay for the: current year is sigma-3n and she expecls pay memes of 2.5% each year ﬂuertaafncr. Calcalate x. @ M accumﬂﬁw Mia M W I: "2:951:th r’kaﬂhlﬁg : {I737}! 2.6.1 ngt '21— = {a "a L‘i-S‘ 22f . u; . .42; MCLOEE 4- W;¢Cb¢1f)ﬁi.o3§)+ --. + mci,ﬂa (HEEL) 1'. __ 23-5 ' ﬂ '- WC[‘°§53 Q 3-1:, U"! 570, ‘36 1 1 p) {u Pd-ll' Vi m. H- luxfgi - A -. “Harm 2. A thirtyvyear annuity has end-nfmnnih paymmis. During the ﬁrst year, the WWE an: each \$12ﬂ. In subatquent years each payment iHEtﬂ'ISBS by \$5 over what is Was the prwiaus yuan Find the W of the rim-mm,r if i=3‘ir’u. wag-Y 4: 2. 0”“ Lear-310.3; 3| Starling at the and nfyear 1, Brian inveats \$2,ﬂﬂﬂ each year for 1Q yam in account A naming-5% cffecﬁvc annual rate. Intereat paymmts are made axmually. Ha reinveaia each altereat payment from Accomt A in Acmth B that cams 8% effective annualiy. Beta-mine Eﬁan’ overall ammal yield rate aver ﬂ years. aamming he does not make any aa‘ﬂadtawala dun'ng the 2|] year period. ' towwmkm\$mmﬁhmk ﬁ Hm 35:51am. What}. wait ‘3: Pu 3 1‘0&1‘+rbﬂ£t *‘ " 1‘an Fur v- u .. , up _T:a*”“"1“maqﬂﬁ {W K 1L3“ #[ﬂaw ll'tDW-‘T? 1.5% mi him (LC—(i k ‘i‘; : zurﬁm 4r lw;*gé'§§+il’tﬂ?'?? 1‘ aég‘ﬁ \$.13 i w 'w m (as; LDW - - g E- L.-' “if. y. m g - am - ﬂ“ﬂﬂ\$‘ CF¢L¢ 4. _ Ciputra borrowed \$141 at ﬁltrates: mic 6%, cm‘npnunded annually. He repays the loan with law! annual meals at the end of each year for 11 33mm. The loan is full},r paid off after 11 pagmenw. His loan baht-x after 3 payments is \$91,345.52. After 6 paymenm, it is 31413191. Calculate the ammmt of interest in the lﬂ'IJE thru'thc 13th WEE 5. Jihua hen-(me \$1ﬂﬂ,ll[lll at 6% enmpnmtdetl annually. She repays the loan with annual payments at the end of the year for 2D years. Each annual payment is 3% fess than the pagmaent ﬁnmtheyent before. _ Calculate the amount nf interest and pn’neipal paid in the 15'“ pﬁjfﬂ'bﬂnl‘. l yea #E Lﬂﬂmhl’Tﬂn? _ liﬁ‘: ‘11 ‘ h We we?" * t-m‘u "In—l PT- Luili‘fwg'k {~66 = [Egg-153- m teﬂea = mluqtmm‘t: "zen-G1 LmMW {1?WJQS ._. m 'lﬂﬁmmﬁ =— H—lﬁgéﬂs- So Lgl'nngb‘g—gnxbf-g: "ETER—h-cm Let? W :1 QML‘UAQ : '7: L1.él-l§eiﬁn : change] H —- int; 1' *- - Drwid hnughr a house an 1 3’ Hill 11 and needs tn get a \$3ﬂﬂ,ﬂﬂﬂ ﬁll-year mnngsge loan with mantlth psymmts at the end nf each mnmh. He was nffered three choices: 1. Interest rate: 6% per year, compounded menﬂﬂy, [I pnint 2.. Interest rate: 5.55% per year, enmpnunded monthly, plus 1.5 points 3. Interest rate: 5.25% per year, entnpnnnrlerl monthly, plus 3 perms David intewi's to keep the house for 7 years and then sell it and repay the loan. W’hich lﬂsn should he pick? Luau L r {:2 \$7. Lem; 1L ,- wrﬂ 1 «an m). L Silt—WV. 5”“ we“ 7> “Hill 1; *ssmxtl “:1 C-‘ﬁrﬂ‘f. 90 Lateral Ca ﬂu- lav—li— Chm/Lt- T. A 211] year \$Lﬂﬂﬂ par value band with quartedy cnrupuns has a 15% annual coup-en rate for the ﬁrst 5 years, 7% for the following 5 years and 3% for the last 11] years and redemption mine at \$1,200. This bond yields 15% compnundetl ennmﬂly. What is; the ptiee of this bond? cw Ct qu’k :LS’ TV?“ 12.0 CCP'L: [7‘s F691: '20 C431 3 2,0. “fr-CM? 35f CCPKE": (“LEO PM: 1 — PMT 7 47 l .u at): “* 3 XYZ corp’e 15-year \$1,0llll parvalue semi-annual Coupon hantl with annual eerupon rate of 'F% yields 3% eempmmdetl eemiantmallgs. ' Due to cash ﬂow pmhlmte, XYZ announces that it will not be ahk: to pay the required coupene fer the next 4 years. It ptapeees to pay them back to hand— heldets at the time of the 9m enupon is paid, mandated with 4% eompmmded emiatmwlly. ' Assuming that the maﬂeet yield rate changes to 10% (eempmmded eemihanmally) as a result of this change, what is the change in the market value of the hondae a result of this rauncmting? "-1; MK) :33: cf W” a; Net :- thgﬂé-‘H trial} I (45%: 2;: TFCFS 12-43 Evil-Hui“)? F¢‘e:\ 1:5 va‘17LEL3-i71 The dividends of :1 cm stock are expected to be 5L5 at the end of each em: 0f d1e next 3 years and \$2.5 for each of the following 4 years and \$3.5 for the 5 years fullewing that. The dhridends are expected te grow at a ﬁxed rate of 3% pet 5mm thereafter. Assume an annual effeetive interest rate of 3% CaleuIate the price 0f tlﬁs stock using the dividend dieemmt made]. CW: '40 Cq5l :. l-S' F¢i=l 0691‘:- 1~S [email protected]% Cap E: "3-57 Ft': :3 04%: “same Hikes? 1:: t NW teal?— 1|]. Assuming the maﬂcet is mbiuagc free, if a she-monﬂ] Zem Cnupcm Band (ZCBJ yields 1.9%, a one-year ZCB yields 2.3%, an Eightéenhmﬂnﬂ: ZCB ﬁelds 2.65% and a twn-ytar ZCB yields 3.ﬁ5%. What should he the pﬁoe of a mycar \$1,ﬂﬂl] 6% pathqu band with Berni- :mnual coupons and what is the quoted nominal {Em} yiﬂld rate 01' this bond? ok8g#é Pm 1:, {(35.1% ...
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172A 2011 Exam 2 - Tacy1 whn is age 25 malty currently has...

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