Chapter 14
Cost-Reducing Project
Nocera
Problem 1
Suppose a firm is considering a labor-saving investment. In year O, the project requires a
$11,700 investment in equipment (all figures are in thousands of dollars). This investment
is depreciated using th
Chapter 8
Dividend Discount Model
Nocera
Problem
Currently a stock pays a dividend per share of $43.37. A security analyst projects the
future dividend growth rate over the next five years to be 21.0%, 18.0%, 15.0%, 13.5%,
11.5%, and then 11.0% each year
Chapter 13
Project NPV
Nocera
Problem
Suppose a firm is considering the following project, where all of the dollar figures are in
thousands of dollars. In year 0, the project requires $37,500 investment in plant and
equipment, is depreciated using the str
Freeman 1
International Real Estate 372
Dr. Lewin
J.C. Nichols Community Builder
Luke Freeman
Freeman 2
1 Introduction & Early Life
Born outside of Olathe, Kansas in 1880, J.C. Nichols father had originally been a
farmer but became involved in a farmers c
1) ProjectType
a. MixedUse:developmentfeaturingrestaurants,entertainmentvenues,shoppingoutlets,
b.
c.
d.
e.
f.
andresidentialhousing
Location:LocatedintheAyalaCenter,91acremixedusecomplexinMakatiCity
MakatiCityisthecentralbusinessdistrictandthehomeofMetro
China
Real Estate Market
By Luke Freeman
Sara Campbell
Zack Urow
China
Worlds Workshop
1978 marked governmental change from centrally planned economy
to a market economy
Next 30 years China has averaged GDP of 9.8%
Economic development has been uneven (we
Hugemigrationfromruraltourbanareas
o Pollutionissue
o Unprecedentedgrowth
Peoplearebecomingwealthier,morelikeUSandconsumingmore
energy/resources.
o Notenoughtogoaround
Toomanypeopledoingtoomuchstuff
Thepacetheyaremovingwillsaveusorsinkus
o Dependingonhow
Chapter 13
Sensitivity Analysis
Nocera
Problem
We are considering the same project as problem 3. We are also assuming that the product
life-cycle of seven years is viewed as a safe bet, but that the scale of demand for the
product is highly uncertain. I a
Chapter 13
Forecasting Cash Flows
Nocera
Problem 2.
We are considering the same project as problem 1. For this problem we will be examining
the details of how you forecast the project cash flows. Suppose that Direct Labor,
Materials, Selling Expenses, and
Chapter 11
US Yield Curve Dynamics
Nocera
Problem 2.
For this problem, I am required to determine the relationship between the volatility of the
yield curve and the level of the yield curve. Specifically, for each five year time period, I
am asked to calc
Chapter 11
US Yield Curve Dynamics
Nocera
Problem
The question for this problem asks us how volatile are short rates versus medium rates
versus long rates. I am also required to calculate the variance of the time series of the
following (1) one-month yiel
Chapter 10
Using It To Determine Forward Rates
Nocera
Problem
Given the yield curve as published by the financial press, I am required to calculate the
implied forward rates at all maturities.
Methodology
To calculate the implied forward rate at all matur
Chapter 10
The Yield Curve
Nocera
Problem 1
To start, I was required to do research, which I did on the Wall Street Journal online
website, to obtain the U.S. Treasury Yield Curve. To do this I entered all of the current
yield to maturity rates for the fo
Chapter 9
Firm and Project Valuation
Nocera
Problem
I am required to perform instant experiments on whether changing various inputs causes
an increase or decrease in the firms value / share and by how much. I am asked the
following questions: What happens
Chapter 9
Firm and Project Valuation
Nocera
Problem
Starting from their historical financial statements, I was asked to forecast the expected
future cash flows for a real firm in two stages corresponding to two time periods. Stage
one is a finite horizon
Chapter 6
Price Sensitivity
Nocera
Problem
I am required to perform instant experiments on whether changing various inputs causes
an increase or decrease in the Bond Price and by how much. I am asked to increase the
following: The annual coupon rate, the
Chapter 6
EAR, APR, and Foreign Currencies
Nocera
Problem 2-3.
A 4-year treasury bond with a face value of $1,000 and an annual coupon rate of 6.5%
had a yield to maturity of 3.15%. This bond makes 2 semi-annual coupon payments per
year and thus has 8 per
Chapter 6
Annual Payments
Nocera
Problem
An annual bond has a face value of $1,000.00, makes an annual coupon payment of
$12.00 per year, has a discounted rate per year of 4.37%, and has 8 years to maturity. I
am required to calculate the price of this bo
Chapter 5
Sensitivity Analysis
Nocera
Problem 5.3
I am asked to consider a 30-year mortgage for $442,264 as in the previous section. I am
required to find out what would happen if the interest rate/year dropped from 9.21% to
7.95%. I am asked to find out
Chapter 5
Sensitivity Analysis
Nocera
Problem 5.2
In purchasing a house, you need to obtain a mortgage with a present value (loan amount)
of $175,000. You have a choice of: (A) a 30-year mortgage at an interest rate/year of
9.74% or (B) a 15-year mortgage
Chapter 5
Basics
Nocera
Problem 1
To purchase a house, you take out a 30-year mortgage. The present value (loan amount)
of the mortgage is $217,832. The mortgage charges an interest rate / year of 9.27%. I am
required to find out what the annual payment r
Chapter 23
Loan Amortization
Problem 1, Payment
Problem:
We are planning to purchase a house where we take out a mortgage. We are given the present
value of the mortgage or loan amount that charges an interest rate per year. We are asked to find
the annua
Chapter 8
Stock Valuation
Problem 1, Stock Value
Problem:
We have a stock that pays a dividend per share at $43.37. We are then given projected dividend
growth rate over the next five year, and a rate at which the dividend will grow there after
infinitely
Chapter 6
Bond Pricing
Problem 10e, System of five Bond Variables, Number of periods until maturity
Problem:
We are given 4 bond variables and are asked to find the fifth. Given, face value, discount
rate/period, coupon payment, bond price, to find the nu
Chapter 9
Five Equivalent Methods
Problem 1, Forecast Expected Future Cash Flow
Problem:
We are asked to forecast the expected future cash flows for a real firm in two stages
corresponding to the two time periods, based on the historical financial stateme
Chapter 10
The Yield Curve
Problem 2, Yield Curve EAR and APR
Problem:
Based on the yields we input from the U.S. treasury, we are now asked to consider a coupon
bond with a face value of $2,000, and annual coupon rate of $4.2%, making 2 semi-annual
payme
Chapter 11
US Yield Curve Dynamics
Problem 1, Volatility
Problem:
Based on the historical data of US bonds, we are asked to examine the volatility of the short rates
versus the long rates. We are then asked to calculate the variance of the time series of
Chapter 10
The Yield Curve
Problem 3, Yield Curve, forward rates
Problem:
We are asked to calculate the forward rates for these yields.
Methodology:
The forward rate is calculated with a formula, (1+yield to maturity)^time ) over (1=yield to
maturity)^tim
Chapter 6
Bond Pricing
Problem 10b, System of five Bond Variables, Coupon Payments
Problem:
We are given 4 bond variables and are asked to find the fifth. Given, maturity, face value,
discount rate/period, and bond price, find the coupon payment.
Methodol