Q3-3. You are considering two investment plans. Plan A requires you to save $100 per month
for 10 years. Plan B requires you to save $200 per month for 5 years. Assuming that both plans
earn the same rate of return, which plan accumulates more money?
For
Anthony Lawston
Homework #2
3-1
A. Compound Interest. $1,500 @ 7%
a. 3 years = 1,500 x (1 + .07)^3 = $1,837.5645
b. 6 years = 1,500 x (1 + .07)^6 = $2,251.0955
c. 9 years = 1,500 x (1 + .07)^9 = $2,757.6888
B. Interest earned from
a. Years 1 to 3 = (year
Chapter 4: Problems 4-1, 4-12
Chapter 5: Problems 5-1, 5-4, and 5-9
4-1
1. A best-selling author decides to cash in on her latest novel by selling the rights to the
books royalties for the next six years to an investor. Royalty payments arrive once per
y
Anthony Lawston
Homework #5
8-1, 8-4, 8-9
10-1, 10-3
8-1
Suppose that a thirty-year U.S. Treasury bond offers a 4% coupon rate, paid semiannually. The
market price of the bond is $1,000, equal to its par value.
a. What is the payback period for this bond?
Chapter 4
Answers to Concept Review Questions
1. Managers need to understand how bonds and stocks are priced because (1) firms regularly
issue stocks and bonds to raise money for investment (2) understanding how securities are
priced is helpful when condu
Quiz #1
1. One of the tasks for financial managers when identifying projects that increase firm value
is to identify those projects where
a. Benefits are at least equal to the project's costs.
b. Taking the project will increase the book value of the firm
Chapter 11: Problems 11-1, 11-2
11-1
a. 32-25 = $7
b. 10 x 25 10 x 25 x .07 = 232.5
c. 250,000,000 x .07 = 17,500,000
11-2
Net return earned =[(35-32)/32]x100= 3/32*100 = 9.375%
beta may be less than 1, because when market return exceeded 11%, the stock
Chapter 8: Problems 8-1, 8-4, 8-9
Chapter 10: Problems 10-1, 10-3
P8-1
A. 25 years
a. 1000 * .04 = 40
b. 1000/40 = 25
B. It may take 25 years to get the money back, but you do get it back. Because of this it is still
considered a good investment.
C. 30 y
20 Aug 2016
Rutter Unit 1 homework
Chapter 1: Problem 1-1
Chapter 2: Problems 2-2, 2-4
P1-1
a. $500,000 profit before tax
.35 tax rate
.35 personal tax rate
.15 capital gain tax
Partnership = 500000 x .35 = 175000
500000 175000 = 325000 after tax income
C
Chapter 6: Problems 6-1, 6-2
Chapter 7: Problems 7-1, 7-3
6-1
A. 49 45 = $4
B. (49-45)/45 = .088 or 8.88%
C. No. The answers do not depend on if you sell it or not after the year. That is what they are for
this year. They might be different for future ye
Finance Intro to Corporate Finance Book
Apples iPopping Results
On July 19, 2011, Apple Inc. announced its financial results for the third quarter of
its 2011 fiscal year. The company posted revenue of $28.6 billion and a net quarterly profit of $7.3 bill
10
Price = 50/(1+.06)t + 1000/(1.06)10
t=1
Price = 368+558.40 = 926
In calculating the price of the bond we have to calculate the present value of all interest
payments to be received over the life of bond (first term in above equation) and the
present va
Chapter 6: Problems 6-1, 6-2
Chapter 7: Problems 7-1, 7-3
6-1
1. You purchase 1,000 shares of Spears Grinders, Inc. stock for $45 per share. A year later,
the stock pays a dividend of $1.25 per share, and it sells for $49.
a. Calculate your dollar return
Homework#1
Chap. 1 (1-1)
Chap. 2 (2-2, 2-4)
Chapter 1
1. Think of another company or product besides Apples iPad, and note that companys
connections between other functional areas and finance.
A. Sonys Playstation 4 and Microsofts Xbox One, which were rel