Problem Set 1 FIN 7000
Problem 1:
(3pts) Part 1 [Calculate PV]:
Using the annual interest rate of 4 percent (i.e., r = .04), calculate the present values (at t = 0) for the
following payments:
a. $1,000,000 at t = 1
b. $1,000,000 at t = 2
c. $1,000,000 at
Problem Set 4 FIN 7000
(4pts) Problem 1: Calculate the annual internal rates of return (IRR) for the following investments (time t
is in years):
a.
b.
c.
d.
At t = 0, the cost is $100.
At t = 0, the cost is $150.
At t = 0, the cost is $100.
At t = 0, the
Problem Set 6 FIN 7000
Kodak used to primarily produce and distribute photographic paper and developing
materials for traditional (i.e., non digital) photographic methods. A sizable portion of
their business was home photography. Since they were one of th
1
Problem 1.
You have a project that is very similar to the types of projects in SleazeCo (an all equity firm).
On average the project is expected to generate positive cash flows starting next year (at t = 1 ) of
$400,000, growing at 5 percent per year fo
Problem Set 5 FIN 7000
Solutions (in bold)
Problem 1: The default-free yield curve on zero-coupon U.S. Government Treasury securities is given
below.
Maturity (in years)
1
2
3
4
5
6
Rate
.01
.015
.02
.025
.0275
.03
Currently you can buy a corporate bond s
Problem Set 4 FIN 7000
Solutions (in bold)
(4pts) Problem 1: Calculate the annual internal rates of return (IRR) for the following investments (time t
is in years):
a. At t = 0, the cost is $100. The cash flows are $100 at t = 1 and $250 at t = 3.
Solve f
Problem Set #3 FIN 7000
Solutions (in bold)
(5pts, 1ea) Problem 1: Let the effective annual rate be 5 percent (i.e., r = .05) for all maturities.
a. Calculate the present value of a perpetuity that makes annual payments of $1,000,000 every
year forever, w
Problem Set 4 FIN 7000
Solutions (in bold)
(4pts) Problem 1: Calculate the annual internal rates of return (IRR) for the following investments (time
t is in years):
a. At t = 0, the cost is $100. The cash flows are $100 at t = 1 and $250 at t = 3.
Solve f