Bond Valuation
A 20-year, 8% semiannual coupon bond with a par value of $1,000 sells for $1,100. (Assume that the bond has just been
issued.)
Basic Input Data:
Years to maturity:
Periods per year:
Periods to maturity:
Coupon rate:
Par value:
Periodic paym
A
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Stock Valuation Template
Taussig Technologies Corporation (TTC) has been growing at a rate of 20% per year
1. Risk and Return
Financial managers and financial analysts have to be able to measure the risk and return
of capital projects in which their firms plan to invest and of securities the firm is
interested in adding to its investment portfolio. In effect,
Session 5
The cash flows often associated with an investment project may be classified according to
the time in the project at which they occur. The following table summarizes those cash flows,
some of which are then explained in greater detail.
A.
Initia
1)
You have the chance to participate in
a project that produces the following
cash flows:
Cash Flows ($)
C0
3,600
C1
C2
5,400 10,800
a. The internal rate of return is
13.75%. If the opportunity cost of
capital is 13%, what is the NPV of the
project? (A n
Bond Valuation
A 20-year, 8% semiannual coupon bond with a par value of $1,000 sells for $1,100. (Assume that the bond has just been
issued.)
Basic Input Data:
Years to maturity:
Periods per year:
Periods to maturity:
Coupon rate:
Par value:
Periodic paym
Chapter 2: Time Value of Money
The concept of time value of money is perhaps the most fundamental concept we study in
corporate finance. Business firms invest in two types of assets: financial assets and physical
assets. Financial assets are stocks, bonds
Chapter 5 NPV and Other Investment Rules
Gardial Fisheries is considering two mutually exclusive investments (if one is selected the other is eliminated). The projects' expected ne
follows:
Time
0
1
2
3
4
5
6
7
Expected Net Cash Flows
Project A
Project B
1)
Answer
2)
Answer
3)
Answer
a) PV of cash flows
b)NPV
4)
Answer
5)
Answer
If you invest $115 at an interest rate of 12%, how
much will you have at the end of seven years? (Do
not round intermediate calculations. Round your
answer to 2 decimal places.)
$
Lecture Notes on Stock Valuation
Our material for this session concerns stocks and their valuation. Chapter 9 of the text
discusses common and preferred stock, both in terms of their legal characteristics and
properties and in some ways of valuing them.
C
Bond Valuation
A 20-year, 8% semiannual coupon bond with a par value of $1,000 sells for $1,100. (Assume that the bond has just been
issued.)
Basic Input Data:
Years to maturity:
Periods per year:
Periods to maturity:
Coupon rate:
Par value:
Periodic paym
1
a)
b)
c)
d)
A 23-year U.S. Treasury bond with a face value of
$1,000 pays a coupon of 5.25% (2.625% of face
value every six months). The reported yield to
maturity is 5.0% (a six-month discount rate of
5.0/2 = 2.5%). (Do not round intermediate
calculati
Chapter 7 NPV and Other Investment Rules
Gardial Fisheries is considering two mutually exclusive investments (if one is selected the other is eliminated). The projects' expected net cash flows are as
follows:
Time
0
1
2
3
4
5
6
7
Expected Net Cash Flows
P
Chapter 7 NPV and Other Investment Rules
Gardial Fisheries is considering two mutually exclusive investments (if one is selected the other is eliminated). The projects' expected net cash flows are as
follows:
Time
0
1
2
3
4
5
6
7
Expected Net Cash Flows
P
Chapter 4.
a. Find the FV of $1,000 invested to earn 10% annually 5 years from now. Answer this question by using
a math formula and also by using the Excel function wizard.
Inputs:
Formula:
Wizard (FV):
PV =
r =
N =
FV = PV(1+r)^N =
1000
10%
5
Note: When