Chapter 5 Homework Solutions
6. To answer this question, we can use either the FV or the PV formula. Both will give the same answer since they are the inverse of each other. We will use the FV formula, that is: FV = PV(1 + r)t Solving for r, we get:
Chapter 9 Homewok I Solutions
4.
When we use discounted payback, we need to find the value of all cash flows today. The value today of the project cash flows for the first four years is: Value today of Year 1 cash flow = $6,500/1.14 = $5,701.75 Valu
Chapter 8 Homework Solutions
2.
We need to find the required return of the stock. Using the constant growth model, we can solve the equation for R. Doing so, we find: R = (D1 / P0) + g = ($2.50 / $48.00) + .05 = .1021 or 10.21%
6.
We know the stoc
Chapter 7 Homework Solutions
5.
Here we need to find the coupon rate of the bond. All we need to do is to set up the bond pricing equation and solve for the coupon payment as follows: P = $870 = C(PVIFA7.5%,16) + $1,000(PVIF7.5%,16) Solving for the