A debenture is selling for $106.68. It has a maturity of five years, a face value of $100 and a coupon rate
paid annually. What is the yield to maturity?
You are being asked to solve for kd, the implied yield. This can be done by calculating the IRR.
Manu
Cost of Asset: 100,000
Life: five years for tax purposes
Salvage Value: 20,000
Depreciation Rate (Prime Cost/Straight line) SLR = 1 / life = 1/5 = 20% (20% of Cost)
Diminishing Value/Reducing Value) Rate DVR = SLR x 2 = 20% x 2 = 40% (40% of the
book valu
Question Thirteen: Loans
Jack and Jill take out a housing loan to purchase a home worth $480,000. T
The loan is to be repaid in equal monthly instalments over a term of 20 year
the bank is 8.75%pa nominal with interest added monthly.
How much are the mont
I just received my car insurance notice in the mail. The payment conditions are set out below.
Either
(a) I can pay 1055.88 now, or
(b) pay 96.78 per month (a total of 1161.36, which is 10% more ). End of month payments.
(i ) Question what effective inter
Polycorp buys goods on terms 2/10, n/30, what is the nominal annual interest rate implic
Given
Discount Date
Nett Date
Discount %
Invoice Amount
Solution
m
d
10
30
2
100
20
2
Nominal Rate
0.3724
37.24%
What is the effective rate?
Solution
Effective Rate
Method One
Beginners Method (two tables one for tax and one for cash flows)
Discount Rate
15% k
Tax
30% t
Investment Allowance
20% IA
DV Depreciation
40% DR
Net Revenue
R
Y1
16,000
Y2
20,000
Y3
12,000
Salvage Value
TAX
Cash Benefits
Inv Allow 20%
Deprec
L