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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
k7lrﬁimatersh ‘ 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 sigma3n and she expecls pay memes of 2.5% each year
ﬂuertaafncr. Calcalate x. @ M accumﬂﬁw Mia M W
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m. H luxfgi  A . “Harm 2. A thirtyvyear annuity has endnfmnnih 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 rimmm,r if i=3‘ir’u. wagY 4: 2. 0”“ Lear310.3; 3 Starling at the and nfyear 1, Brian inveats $2,ﬂﬂﬂ each year for 1Q yam in account A
naming5% cffecﬁvc annual rate. Intereat paymmts are made axmually. Ha reinveaia each altereat payment from Accomt A in Acmth B that cams 8%
effective annualiy. Betamine Eﬁan’ overall ammal yield rate aver ﬂ years. aamming he does not make any
aa‘ﬂadtawala dun'ng the 2] year period.
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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 $.13 i w
'w m (as; LDW 
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am  ﬂ“ﬂﬂ$‘ 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 bahtx 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?" * tm‘u "In—l PT Luili‘fwg'k {~66 = [Egg153
m teﬂea = mluqtmm‘t: "zenG1 LmMW {1?WJQS ._. m 'lﬂﬁmmﬁ =— H—lﬁgéﬂs So
Lgl'nngb‘g—gnxbfg: "ETER—hcm Let? W :1 QML‘UAQ : '7: L1.éll§eiﬁn : change] H —
int; 1' *  Drwid hnughr a house an 1 3’ Hill 11 and needs tn get a $3ﬂﬂ,ﬂﬂﬂ ﬁllyear 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 coupen 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. “frCM? 35f
CCPKE": (“LEO PM: 1 — PMT
7 47 l .u at): “* 3 XYZ corp’e 15year $1,0llll parvalue semiannual 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 1243
EvilHui“)? F¢‘e:\
1:5 va‘17LEL3i71 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 :. lS' F¢i=l
0691‘: 1~S [email protected]%
Cap E: "357 Ft': :3
04%: “same Hikes? 1:: t NW teal?— 1]. Assuming the maﬂcet is mbiuagc free, if a shemonﬂ] Zem Cnupcm Band
(ZCBJ yields 1.9%, a oneyear ZCB yields 2.3%, an Eightéenhmﬂnﬂ: ZCB ﬁelds
2.65% and a twnytar 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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 Fall '08
 Kong,L
 Math, Zem Cnupcm Band, cffecﬁvc annual rate, yield rate aver

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